This article leaves out the relevant facts. [1]
See, http://copyrightblog.kluweriplaw.com/2022/05/09/andy-warhol-...
After Prince's death, Vanity Fair Magazine purchased an image rights license to run the Warhol painting on it's cover.
The original photograph was, at the time, also available for license.
Goldsmith argued that Warhol's work was commercially competing with their original photograph.
Note that the context was not space on gallery walls but the cover of a magazine, and there was not a question of whether the cover of magazine constitutes fair use...I mean the Warhol foundation would almost certainly have sued if Vanity Fair had used the Warhol image without a license.
To put it another way, the case is not about Fair Use directly, but about competing image rights. I mean, since nobody is going to confuse a magazine cover with an original Warhol, for the Warhol Foundation's fair use claim to stand, then Vanity Fair's cover would be sufficiently transformative to constitute fair use.
Not that there'd be anything wrong with that. Warhol's been dead 25 years. Seems like enough time for the works to be in the public domain, to me. YMMV.
[1]: The Atlantic seems to have given up on journalism in recent years...Jobs bought it in 2017.
The competition you mention is directly part of fair use, specifically the fourth factor: Effect of the use upon the potential market for or value of the copyrighted work. https://www.copyright.gov/fair-us
I am not a lawyer.
My understanding is that lowering the value of the original work is an argument against a particular use being fair use.
Which is to say that Fair Use is not intended to further commercial competition.
And that the purpose of copyright is to forestall commercial competition.
Of course I could be wrong.
Do images of soup cans or thoughts of fifteen minutes of fame come to mind when you’re viewing the Goldsmith photo?
Both Warhol’s works and Vanity Fair can be seen as celebrations of, well, celebrity vanity.
What I’m getting at is that it seems Vanity Fair chose the Warhol for the cover because it means something very different than the original photograph and that Warhol’s baggage could easily be what the editors needed for the intended effect.
Sorry for not being clear
I’m not arguing that Vanity Fair’s image choice wasn’t a better way to convey the intended mood of the moment.
The painting is fair use.
The magazine cover isn’t the painting.