The Double Standard in the Room: ReDigi and the (Now Illegal) Resale of MP3s

So much for your right to resell MP3 music files: a U.S. District court just decided that the resale of MP3 files -- where those files are transferred by copying -- officially violates the Copyright Act.

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So much for your right to resell MP3 music files: a U.S. District court just decided that the resale of MP3 files — where those files are transferred by copying — officially violates the Copyright Act.

If you want to resell a book, you can check out Abebooks, Cash4Books and half a dozen others. If you want to resell clothes, pictures or furniture, there’s Craigslist, your local consignment store or your neighborhood’s poles and signposts (to which people customarily affix pieces of paper with the words “Garage Sale!” sporting hand-scrawled arrows pointing the way). If you want to resell a CD or DVD, there’s SecondSpin, eBay, Amazon and dozens more. Lists of ways and places to resell used goods could probably fill a set of encyclopedias, and include both offline and online venues.

Humans have been exchanging secondhand goods for millennia. I’m in the process of doing it myself. Glancing through my condo this morning, currently half-packed in boxes (incidentally purchased used off Craiglist) for an upcoming move with piles of books, CDs, movies, clothes, pictures, computers, baby items, miscellaneous electronics, musical equipment, kitchen wares and furniture, I see nothing that isn’t resalable. I’d balk — and I suspect you would too — if someone told us we couldn’t resell any of this stuff.

And yet we’ve also, over the past decade or so, begun acquiring troves of items that pose significant resale challenges: intangible — but no less physical — digital goods, from MP3s and video games to videos and e-books.

But let’s say a store existed where you could resell digital music files, perhaps MP3s purchased through Apple’s iTunes Store. In fact such a store already exists: Music exchange ReDigi’s been allowing the purchase and resale of digital music since its inception in October 2011, calling itself “a free cloud service that allows you to store, stream, buy, and sell your legally purchased pre-owned digital music.”

Employing technology it calls a “Verification Engine,” ReDigi claims 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 says it provides free, unlimited storage. The one limitation, self-imposed, is that you can only buy and resell music purchased through Apple’s iTunes store — a limitation born of necessity, since this is how ReDigi says it determines a music file is legitimate and not something downloaded from a torrent site or ripped from a music CD never destroyed (or perhaps simply borrowed).

You can imagine how well ReDigi’s approach went over with record companies, already grappling with huge declines in album sales, the rise of music piracy and probably motivated by the allure of greater copyright control given the reproductive nature of the medium in which digital content lives. Sure enough, Capitol Records filed a complaint against ReDigi in New York in early 2012 for copyright infringement, alleging that ReDigi’s service was illegal on a variety of levels. The Recording Industry of America, no surprise, agreed.

That court case finally wrapped up a few days ago, and the ruling was anything but friendly to ReDigi. In the decision, the court wrote “The novel question presented in this action is whether a digital music file, lawfully made and purchased, may be resold by its owner through ReDigi under the first sale doctrine. The Court determines that it cannot.” Ouch.

The “first sale doctrine” is a legal principle that originated in a landmark 1908 case involving R.H. Macy & Company (Macy’s), in which the department store wanted to sell books at discounted prices. One of the publishers of those books objected, placing notices in one of its books, a fictional biography of Lord Byron titled The Castaway, that read “The price of this book at retail is $1 net. No dealer is licensed to sell it at a lower price, and a sale at a lower price will be treated as an infringement of the copyright.”

The publisher eventually sued Macy’s and the case wound up in the Supreme Court, where the Court ultimately determined that the publisher could dictate the “first sale” of a book, but that it lacked “the authority to control all future retail sales” after exercising “the right to vend” and receiving “a price satisfactory to it.” In other words, publishers have a right to the first-time sale of a book, but no claim on subsequent resale methods or profits. This so-called “First Sale Doctrine” was later codified in the Copyright Act of 1976, section 109, titled “Limitations on exclusive rights,” which stipulates that “…the owner of a particular copy or phonorecord [any "material object which embodies sounds"] lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”

When I spoke with ReDigi CEO John Ossenmacher last year, this is what he said about the First Sale Doctrine:

Copyright holders have certain protections under the law, but so do consumers once they’ve purchased the copyrighted good. First Sale Doctrine is what gives consumers the right to buy something that’s copyright protected, then resell it, give it as a gift, donate it to charity, or do whatever else you want to do with it in a lawful manner. The copyright holder’s ownership rights and ability to control distribution end as soon as they accept the royalty on the sale of the good.

And digital goods? “Merely a different format,” argued Ossemacher.

Before you get too worked up, bear in mind that the court’s job here was to test the legal arguments, and indeed, Judge Richard Sullivan makes it clear, if wryly, that “this is a court of law and not a congressional subcommittee or technology blog, [thus] the issues are narrow, technical, and purely legal.” The court isn’t saying whether digital content ought to be resalable, in other words — only that ReDigi’s technology amounted to copying. ReDigi claimed it was merely “migrating” files from a user’s computer to ReDigi’s servers, but the court alleges that “even if that were the case, the fact that a file has moved from one material object — the user’s computer — to another — the ReDigi server — means that a reproduction has occurred.”

That’s a problem, and I can’t think of a plausible way around it given existing computational methods for the transmission and storage of digital information. “Move” commands on computers still require “copying,” after all. ReDigi apparently suggested in oral arguments that its transfer method was more like the Star Trek transporter, whereby objects are converted into energy patterns and “beamed” to a target, but I’m not sure the analogy works. We don’t know if a Star Trek transporter would ever be physically possible, for starters, and how it might work remains a source of physical (and philosophical) debate, famously espoused in James Patrick Kelly’s Hugo-winning 1995 novelette “Think Like a Dinosaur,” wherein teleportation technology scans humans bodies, reproduces them at some destination (here, the moon), then destroys the original to prevent multiple copies from simultaneously existing. (Did Kelly anticipate ReDigi? It seems so.) Needless to say, unless you start playing semantic games with words like “migrate,” it’s hard to see how ReDigi’s approach wasn’t copying in the most basic, computational sense of that term. What the company was doing in terms of transmitting data from one hard drive to another certainly isn’t analogous to the Star Trek transporter — at least not in the way Star Trek explains it.

But let’s assume we could get past the copying issue, say you could somehow convince lawmakers to create exceptions to the Copyright Act less hostile to the transportation mechanisms currently used to shift digital content around. Even if those changes could withstand the full-on nuclear assault of the recording industry, you still wouldn’t be entirely out of the woods.

When I was in graduate school, one of my professors made the point that with the advent of digital, the notion of “originals” and “copies” died. He was right. Digital content is perma-new: It doesn’t deteriorate over time the way, say, that paper does, or magnetic cassette tape, or your vehicle, whether routinely driven or parked in a garage somewhere. If we each buy copies of Justin Timberlake’s The 20/20 Experience from iTunes, our digital copies of the song “Suit & Tie” are going to be identical (and, tampering or further compression aside, always will be). Content resellers (and creators) are thus upset about the notion of reselling digital content regardless of the legal viability of the methodology.

Then again, people resell non-digital items (books, CDs, clothes, furniture, etc.) as “new” all the time, whether that’s a pair of concert tickets, the sold-out collector’s edition of a video game or a deluxe, signed, limited-run edition of a book. While recognizing the argument about digital content’s ever-newness as valid, I’m less persuaded that this necessarily renders it non-resalable. “Newness,” “sameness” and “valued” aren’t always the same things, and even where they are, it’s surely not incumbent on consumers who buy a digital object to protect the copyright owner’s market by sacrificing a time-honored practice like being able to resell it, is it?

Despite the court’s narrowly legal verdict, the more important philosophical question of whether we ought to be able to resell digital goods legally acquired remains unanswered. You’ve probably already surmised I think we ought to (be able to), whether that involves creating new computational mechanisms for “moving” content, or coming up with a definition of “move” that — whether it involves copying or not — passes the legal test. Of course what I’m arguing for depends to an extent on whether you believe secondary markets ought to exist in the first place. I’m assuming most do, whether that involves digital music stored and conveyed by way of physical optical media like a compact disc, or electronically by way of solid state drives, cables and routers.

In any case, contrary to what some are saying, it’s far from game over for ReDigi. The company argues it’s already abandoned its original copy-based technology — dubbed “ReDigi 1.0″ in the court decision — and that its current methods are compliant with copyright law. Indeed, here’s part of ReDigi’s official reaction to the court ruling (a ruling ReDigi says it plans to appeal):

We are disappointed in Judge Sullivan’s ruling regarding ReDigi’s 1.0 service technology. For those who are unaware, ReDigi 1.0 was the original beta launch technology, which has been superseded by ReDigi 2.0 the updated service incorporates patent pending “Direct to Cloud Technology” and “Atomic Transfer Technology” that the court stated are not affected by its recent ruling. Judge Sullivan specifically stated that; referring to ReDigi 2.0, “the court will not consider it in this action” and “while ReDigi 2.0, 3.0, or 4.0 may ultimately be deemed to comply with copyright law – a finding that the Court need not and does not now make.”

So in summary, ReDigi 1.0 is dead — long live ReDigi 2.0 and beyond.