ReDigi Lets You Resell Used Digital Music, but Is It Legal?

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Your music collection: a hodgepodge trove of CDs and cassette tapes or digital songs you downloaded from iTunes and maybe even digital versions of some of those CDs you ripped yourself.

Also: an altar to bygone eras, like that one where you’d tear swathes of cardboard off giant shipping boxes, tilt the bill of your cap sideways, then see how many seconds you could spin like a top (only on your back) while jamming to Ollie and Jerry’s “There’s No Stopping Us.”

Your goal in 2012, with a music library grown wild: to squeeze a couple extra bucks from the music you’ve outgrown by reselling it, like that maxi-single copy of Baltimora’s “Tarzan Boy” you downloaded after a few drinks on iTunes, or music publisher Razor & Tie’s Totally ’80s CD twofer with gems like the J. Geils Band’s “Centerfold,” Nena’s “99 Luftballoons” and Tommy Tutone’s “867-5309/Jenny.”

(MORE: What ‘Ownership’ Means for Digital Media (Hint: Not Much))

The CDs you probably know what to do with. There’s stuff like Craiglist or eBay, or the odd local record store that still buys and sells tapes and CDs and even 8-track and vinyl albums. But what about your sprawling digital music collection? Do you remember where everything came from? Purchased through Apple’s iTunes store? Some other company? Copied from a friend? Downloaded from who knows where with the assistance of a file-sharing torrent? What if someone offered a way to find out what’s what — to sort through all the legit as well as not-so-legit stuff, then let you swap the former for songs you’d rather have?

Record Store Re-imagined

A company that calls itself ReDigi wants to make it so, offering a music exchange of sorts while at the same time juggling lawsuits from angry (and perhaps equal parts envious) record labels. The company, which officially launched on October 13, 2011, bills itself as a peddler of “recycled digital media” and “the world’s first online marketplace for new and pre-owned digital music.” Technically it fits that bill, since the world’s other most popular pre-owned digital music repository is less a marketplace than a peer-to-peer free-for-all — a collection of torrent sites and users joining hands in the digital ether to share anything and everything outside the framework of a marketplace entirely.

ReDigi aims to offer a legitimate, lawful alternative — a place for users to buy and sell used music that’s like an online version of “the used record store of old.” Employing technology it calls its “Verification Engine,” ReDigi say it can validate your music collection, then upload — but not copy, since that would be leaving something behind and technically unlawful — “legally acquired file(s)” to its servers, where it provides “free, unlimited” storage.

You can alternatively store your music in ReDigi’s cloud, stream it, buy new music through ReDigi’s storefront, or sell music from your existing collection to other users in trade for credits. The only caveat: At the moment, ReDigi is exclusively an iTunes shop, meaning you’re limited to selling and buying from iTunes’ music catalogue with its lossy encoding rates (256Kbps AAC).

And there’s at least one very serious other: Earlier this year, Capitol Records sued ReDigi in New York for copyright infringement, alleging that the company’s service is illegal on a variety of levels.

“While ReDigi touts its service as the equivalent of a used record store, that analogy is inapplicable: used record stores do not make copies to fill their shelves,” wrote Capitol attorney Richard Mandel in the complaint. “ReDigi is actually a clearinghouse for copyright infringement and a business model built on widespread, unauthorized copying of sound recordings owned by plaintiff and others.”

(MORE: Digital Music Sales Finally Surpassed Physical Sales in 2011)

The Recording Industry Association of America (RIAA) unsurprisingly agreed, writing that “even if ReDigi’s software and system works as described by ReDigi (i.e. that it deletes the original copy before it makes the sale), ReDigi would still be liable for copyright infringement.”

On February 6, 2012, a judge denied Capitol’s request for a sales injunction, and the next court-based square-off is due to happen this October. At stake: Big money — $150,000 per track of Capitol-owned material, if Capitol wins. But perhaps more importantly: the future legal status of used digital goods and whether they’re resalable in the same sense that their non-digital counterparts are.

ReDigi CEO John Ossenmacher doesn’t sound worried. When I caught up with him last week, riding the Amtrak Acela from his home base in Massachusetts to Manhattan, he told me the company was expecting a legal salvo from the outset. “We started the concept of ReDigi in late 2009, and a lot of the initial work on the company was looking at copyright law and looking at building a new, novel technology that would give digital transactions the physicality that the law typically sees.”

Ossenmacher says most of the law in America was written around physical goods, and when these laws were laid out back in the early 1900s and later codified in the 1970s, the Internet and much of how we do things today didn’t exist. Part of ReDigi’s challenge was determining how to bring to digital a sense of physicality such that, from a transactional perspective, it could be viewed as similar to (or “even better than,” says Ossenmacher) what’s happening in the physical world.

“That was the initial work of the company, a lot of that intellectual thinking, talking, brainstorming, meeting with lots of people, and then filing for patents,” he continues. “One of the things we found, since nobody else had been into this market, was that it was pretty wide open in terms of intellectual property, so we decided that rather than just go out there and launch something, we’d spend a lot of time and a fair bit of money — close to a million dollars in patent work — to protect what we’re doing and the way transactions can work, so we could do things that haven’t been done before, like the transaction between a buyer and seller where there is no copying involved.”

Ossenmacher clearly views ReDigi as a vanguard project, a company that’s treading where no one’s tread before, intending to settle questions that have been on most people’s minds for years as the shift to digitally stored goods escalates. Questions like “Can we re-sell our digital goods?” and “Should we be able to?”

MORE: Music Industry Can See The Light After ‘Least Negative’ Sales Since 2004

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