Resale Rumble in the (Digital) Jungle – can you legally re-sell digital music?

November 2011

Internet, record labels, music publishing

For some time now there have been articles and comments about the legality of ‘re-selling’ legally acquired MP3s and other digital download music and video files by consumers. Now a new platform called ReDigi has been launched with exactly this activity as its core business model, offering a new model where consumers can legally buy and sell ‘second hand’ downloads.

TechCrunch offers this opinion, accepting that there are a number of legal points to be considered (not least when bearing in mind the tumultuous and lawsuit-heavy history of the sale and distribution of music on the internet):

With the rise in the digital distribution of music, movies, software, and more, there has come surfeit legal confusion over whether or not the so-called “first sale doctrine” applies to digital transactions.
Basically, under the first-sale doctrine, once the person who owns the rights to, say, a CD sells a copy of that work, the owner relinquishes control of that individual copy. Once that copy is in a new user’s hands, they own it and can do with it as they please, including reselling, lending, or giving it away.

However, Some have claimed that the first-sale doctrine does not apply to digital downloads, for instance, when that digital property has been licensed to the buyer, rather than explicitly sold. In the case of Vernor vs. Autodesk, the software corporation sued Timothy Vernor (an online software reseller) for reselling its software on eBay, saying that, under the terms of use, the software had been licensed to him, not sold; thus, they claimed that he did not own the right to the software and could not lawfully resell their product.

In 2008, the Washington District Court sided with Vernor, ruling that the software was in fact sold, upholding Vernor’s right to resale. However, that decision was subsequently overturned in September 2010 by the 9th U.S. Circuit Court of Appeals, which was followed on October 4th of this year by the Supreme Court’s decision to decline hearing the case, allowing the Court of Appeals’ verdict to stand”

Surely this is bad news for ReDigi? Well, ReDigi says it has done its homework and has taken legal advice – and actively supports the music industry. They say that this is a new business model where ReDigi will check to make sure the item on sale is a legal download and also that the service ensures that the vendor deletes their existing copy when transferring a copy file to the purchaser. ReDigi say that their technology enables a music file to transfer from one user to another without allowing multiple copies to exist at the same time. The service requires customers use its ReDigi Music Manager client, a platform that according to the company first verifies that the digital song was legally purchased and then removes the music file from the original owner’s computer and synced devices. Previously owned songs are stored by ReDigi until they are resold, at which point the track and license are transferred to its new owner. In ReDigi’s own words (from a Facebook post):

ReDigi is launching a “Recycled Digital Media” or used music marketplace ( where owners of digital music can sell and purchase digital music files. We have done extensive research and have spent many hours with well respected law firms in Boston, NYC and LA.  We strongly believe that this marketplace will provide and protect the rights of consumers as they were provided for under [the] US Copyright Act and the first sale doctrine.  Just because things have gone digital doesn’t mean that people have given up their hard fought for rights, each individual has the right to sell their legally purchased digital goods. The ReDigi marketplace is NOT about file sharing, it is a method of facilitating the legal transfer of music between two parties.  The ReDigi approach is novel, it verifies that the track was properly acquired, manages items selected for sale within the sellers music libraries to prevent multiple copies(protecting the seller from copyright infringement), and facilitates an even greater level of copyright protection than the previous CD market.  Even just a few years ago technology did not support a readily viable solution.  ReDigi has made it a reality for the millions of music users and the billions of legally downloaded tracks that exist in the world today.

One blogger noted this: There definitely needs to be a way of transferring ownership of music. 10 years ago, if I died, somebody would inherit my CD collection. Today, if I have a $20k iTunes music collection, how can I pass that onto somebody when I die? what exactly happens to it?”. Well, ReDigi CEO John Ossenmacher said  “By allowing consumers to sell their used digital music, we are giving digital goods a resale value for the first time ever and opening a new realm of what is possible in the digital age.” But is it legal, even when Ossenmacher states “We are excited about the innovative programs that we have created to support artists and labels ….. As we move forward, social responsibility will remain one of our highest priorities” ?

The impact of “Terms of Sale” is certainly one of the factors that need careful consideration. Its not a new debate – but it is suddenly in the news in the news again with a new twist. Back in February 2006 Macworld ran an article titled Make Mine With Music which looked at the legality of selling pre-loaded iPods. Fred von Lohmann, an attorney with the Electronic Frontier Foundation, described the process as a “gray area” saying that though the practice would be perfectly legal were dealing in traditional media, digital copies were different and the rules that apply to them then remained to be settled. Making a copy of purchased songs and going back and deleting the original didn’t necessarily fix the problem said von Lohmann, adding “I don’t see why the copyright owner is hurt by that, but technically if they wanted to they probably could come up with a legal theory to go after [the vendor].

At the time the Recording Industry Association of America (RIAA) said this

“This is, in our judgment, a very clear legal issue … selling an iPod pre-loaded with music is no different than selling a DVD onto which you have burned your entire music collection. Either act is a clear violation of U.S. copyright law.”

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