ReDigi fights for right to sell used digital music

Record companies seek to kill the golden goose

A New York court is hearing legal arguments that will decide if there can be a legal market in second-hand digital music, an idea strongly opposed by record companies.

ReDigi, a Boston,MA startup, opened its virtual doors last year with a scheme to allow the resale of people's digital music collection if it has been bought on iTunes. Users download ReDigi's software, which checks if a track has been legally bought, transfers it to the new owner, and ensures that the original is deleted from the seller's system, all for a fee of around 5 to 15 per cent of the song's cost.

The response from the recording industry was swift. In January, Capitol Records, now owned by Vivendi, filed suit to have the service shut down immediately. In February, however, a judge ruled that ReDigi could carry on in business until the current case had been to court. The music company is asking for $150,000 in fines for every track ReDigi has resold since it started in business.

The key to the case is the legal principle of "first sale doctrine", which allows people to resell their property on the open market. But the doctrine hasn't been applied to digital music because technically there is no product that can be resold without making a copy, which would break the copyright provisions music buyers now sign up to.

ReDigi's argument is that the first sale doctrine does apply, since the original file is transferred and no copying takes place. In court filings it has also pointed out that the system is safer than reselling CDs, since multiple illegal copies can be made from a CD and distributed, while their ensure only the original track is resold.

As a further sweetener, the company introduced an Artist Syndication Program in June. "All artists who sign up for the Artist Syndication program are paid every time one of their secondhand tracks sell in the marketplace," a ReDigi spokeswoman told The Register. "The cut they receive is significant. In fact, they often make more from the sale of a pre-owned track on ReDigi than they do on the sale of a new track on other sites."

But this hasn't stopped the legal barrage. The record company insists that any resale of its artist's work breaks the rights it holds to the track regarding sale and distribution. When someone buys a piece of digital music they don't technically own it as a piece of property, rather as a license to use it in certain specific situations, the argument goes.

That doesn't make a particularly grabby advertising headline when you're trying to sell music, but it's what people sign up to when they join iTunes. As the recent fake reports into Bruce Willis suing for the rights to sell his iTunes collection show, there's a growing realization among digital music users that they don't actually own what they buy, they just sort of "rent" it.

As El Reg's Richard Chirgwin has suggested, the record company has a pretty strong case. While almost nobody actually reads the terms and conditions behind digital music, the legal eagles of the music makers (and Apple, for that matter) should be able to preclude a service like this from becoming legal.

This is a pity, since something like this would be a great benefit to music fans and potentially to artists and the record companies themselves. There's a reason why books such as High Fidelity are best-sellers – used record stores play a key role in broadening many people's tastes in music without breaking the bank.

Of course, the music companies would rather you bought every piece of music new from them, and Apple doesn't want to see the margins it makes in iTunes sales face any competition. But what's good for them isn’t necessarily what's good for the music consumer – or ultimately for the industry. ®