RIAA isn’t buying ReDigi’s second hand digital music

A new website based in the US called ReDigi launched recently, offering consumers a way to sell their ‘used’ digital music files.  Second hand digital music markets raise some interesting copyright issues, with different implications for jurisdictions across the world.

In order for users to sell their preloved digital music files in an online marketplace, they must upload them.  This results in a transmission of the music file and a copy of that file being made.  However, under Australian and US copyright law, copyright owners have the exclusive right to communicate and make a copy of their work unless they grant a licence or otherwise give their permission. 

Another issue is the potential for users to sell files that were obtained illegitimately, for example through file sharing networks.  Secondary music markets could also be misused by sellers retaining copies on other devices or formats, such as on iPods or on CD.

The ReDigi system attempts to address these issues by requiring users to install software that facilitates a ‘verification and hand-off’ process.  The site claims that this ensures only legitimate digital music files (for example those purchased from iTunes) are sold and that any copies that a user has transferred to a phone or portable music player are deleted once a song is sold. 

Crucially for the purposes of copyright law, the service does not make copies of a central file but rather treats each file that users upload as unique.  So if there are 10 people wanting to sell a particular song, there will be 10 uniquely identifiable files of that song available for purchase.  As soon as a user sells a song, the software immediately deletes it from their computer and other devices (when next connected). 

As ReDigi’s hand-off process maintains each file’s unique identity, the site claims to be operating legally within the first sale doctrine that has developed in the US.  This doctrine essentially gives the purchaser of a copyrighted work an implied licence to sell that work, without requiring the copyright owner’s permission.  This provides a defence to the original purchaser where their act of re-selling the work would otherwise result in an infringement of copyright.

However, the Recording Industry Association of America (the US equivalent of ARIA) claims that the first sale doctrine does not apply to digital music files.  It argues that the doctrine only permits the owner of a particular copy to sell that copy, and does not permit another copy to be made even if the original is destroyed (or deleted).  It has sent ReDigi a cease-and-desist letter and is threatening legal action.

As there is no equivalent of the first sale doctrine in Australia, the legality of secondary music markets here is even less clear.

In addition to copyright issues, services like ReDigi could also face difficulties stemming from the terms on which consumers currently buy music from online music stores.  For example, in Australia, some online music stores sell music on a non-transferable basis.

If secondary digital music markets like ReDigi manage to successfully navigate the legal minefield ahead of them, they could potentially have a significant influence on the way consumers value digital music.

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