Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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March 10, 2011

Re-ReDigi: More Details Emerge About the Used Digital Music Marketplace
by David Harrell
ReDigi, the used digital music marketplace that is planning to launch this summer, has released more details about how the platform will work. I might be misreading it, but this part of the press release makes it sound as if only fingerprinted music files (Amazon MP3 and iTunes now individually watermark all of their downloads) will be eligible for sale:
The ReDigi Music Agent uses a sophisticated method of analyzing many aspects of the music file to determine its base eligibility, including identifying the song's digital thumbprint (a proprietary, patent pending, forensic analysis of key details associated with each specific file) and confirming whether the file has been properly acquired from an eligible commercial site. A music file determined to be "unverifiable" or "ineligible for resale" is not necessarily an illegally obtained file; it only means that the origin can't be identified or the source does not qualify.
And ReDigi will actually zap the song files from your hard drive and any synced devices:
...acceptable files are then added to the ReDigi music marketplace for re-sale and deleted from the original owner's computer. The files are also removed from any synced devices. ReDigi manages this process for users, so even devices synced over time will be updated with tracks that have posted for sale and sold tracks will be removed. Just like anything else you physically own, once you sell a music file, you no longer have the right to use it. By doing this, ReDigi provides even stronger copyright protection to labels and artists as it proactively removes these files to protect the owner and the appropriate parties.
The workarounds to this feature are obvious -- burning tracks to a CD-R before selling them, using a dedicated computer for selling tracks while maintaining the files on another machine, etc. -- though the same can be said for keeping copies of physical CDs that you sell, which also violates a strict "fair use" interpretation of copyright law.

The big question here is how music labels (and, perhaps, book publishers and software companies, as there are obvious implications for those industries as well) are going to react to ReDigi's effort to apply the first-sale doctrine to digital content:
"The technological development of the ReDigi Music Agent passes copyright and first-sale doctrine tests that have stopped other companies from legally being able to do this previously," says Larry Rudolph, CTO of ReDigi. "If you have bought it, you are allowed to sell it. Also, you are allowed to buy something that someone else legally can sell. ReDigi is the technology used for this transaction. It verifies the legal origin, a seller's right under the first sale doctrine and allows a user to resell a file that is verifiably his or hers to sell."
As Rudolph alludes to in the above quote, ReDigi isn't the first attempt at a used digital music marketplace. This 2008 Ars Technica article provides background on the first-sale doctrine and discusses Bopaboo, a previous attempt to give consumers a platform for selling their mp3s. While Bopaboo sought a licensing deal of some sort from music labels, it required the upload of a copy of each music file to its platform, something that legal interpretations of the first-sale doctrine don't provide for. And while the ReDigi approach seeks to ensure that only one version of a music file exists at a time, it can be argued that the version that ends up on ReDigi's servers is indeed a copy of the original purchased file.

Personally, I'm all for the application of the first-sale doctrine to digital media. But given that at least one major label group has been extremely litigious over digital music lockers (as in seeking the personal assets of a music locker company CEO), I'll be shocked if the major labels and industry groups don't mount a serious legal challenge. If so, I'd love to see the courts find for ReDigi and extend first-sale protection to digital goods.

One final thought: Assuming ReDegi overcomes any legal hurdles or harassment, the platform could actually give music fans an arbitrage opportunity of sorts -- the ability turn a profit on some digital files. That is, if you legally obtain "daily special" albums from Amazon MP3 (or the various freebie mp3s that Amazon offers), you might be able to sell them later for a higher price after the promotion is over and the tracks revert to their standard prices.

Related: A Marketplace for Used Digital Music?


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