Simpsons Solicitors

Second-hand music goes digital

November 29th 2011

The launch in the United States of a new service called ReDigi, that purports to be a second-hard store for digital music, has come to the attention of music industry representatives as well as music consumers – and it’s going to be a potentially bumpy ride for the new startup.

Walk down any main street or jump on to an online auction site like Ebay or Trading Post and you will see a thriving market in second hand books, films and music. This material has been resold in hard copy form for years, without issue in most cases. But as more and more of our film, music and reading material is purchased in digital formats, the question of whether resale of this material is legitimate becomes more complex due to copyright issues.

So, how does ReDigi work? Users sign up and submit the music files they want to sell via ReDigi’s proprietary ReDigi Music Manager. ReDigi’s system verifies the music file to make sure that it is legitimate and then uploads it to ReDigi servers, where it is made available for purchase by another user. ReDigi deletes any copies of the music file that remain on the seller’s computer and does not allow the seller to retain or replace that music file on their own system once it’s been uploaded. The idea is that only one version of the file is being distributed at any time. Other ReDigi users can purchase and download the file offered for resale, which is then removed from ReDigi’s servers. Percentages of sales go to the relevant artists and labels.

The site raises some interesting legal questions. Firstly, distributing digital files to a third party often means making a reproduction of that file, which usually requires permission or licence from the copyright owner. Secondly, when users purchase the music file from the original vendor (such as Amazon or iTunes), there are usually terms and conditions agreed to before they are able to purchase the file and these terms may prohibit selling the files to a third party.

ReDigi states on its website that it is relying on the US First Sale Doctrine, which allows owners of legitimately acquired copies of copyright material to re-sell that particular material without interference from the copyright owner. The US-based RIAA, which represents the recording industry, has objected to ReDigi’s model and sent a cease and desist letter to ReDigi’s operators in which it responds that the first sale doctrine only applies to the particular copy purchased, arguing that “it does not permit the owner to make another copy, sell the second copy and destroy the original” [1]. Under ReDigi’s model, even though copies are deleted, a copy of the music is being made when it is uploaded to the ReDigi servers for resale and it is this copying that the RIAA argues is being done without a license. Further, RIAA objects to ReDigi allowing 30-second previews of songs in its database to users.

In Australia, resale of physical items is largely unproblematic in copyright terms, while the resale of legally purchased digital material remains a legally grey area. The first place to look are the terms and conditions under which the digital items were purchased to verify whether these allow sale of the material to another person. Beyond that it becomes a question of whether a reproduction or communication of the digital material has been made without the copyright owner’s permission.

Any legal action between the US parties involved in this issue will be informed by other decisions on resale of legally purchased digital material. Interested readers should see our October 2010 issue, which contains a round up of Vernor v Autodesk Inc, a US case that addressed sale of second hand software in the context of the first sale doctrine and software licences. You can view this at http://copyright.org.au/news-and-policy/details/id/1841/

To read more about this story go to: http://www.copyright.org.au/news-and-policy/details/id/2027/

[1] Letter from RIAA to ReDigi CEO CEO John Ossenmacher dated 10/11/2011

For inquiries relating to publishing and copyright law please contact Adam Simpson.