Physical vs. Digital
Note that I’ve judiciously avoided the term “nonphysical.” That’s because if you ask a physicist whether a digital item is also a physical one, she’ll invariably answer “of course.” You can’t touch a digitally stored song with your hands and fingers the way you can a record, it’s true, but suggesting that a digital good is “nonphysical” flouts elementary physics. Digital products are still physical ones, we just interface with them differently. Ossenmacher agrees.
“That’s a core point,” he says. “When the law was written, it was not written to specifically include digital, nor was it written to specifically exclude digital, just like the law was not written to specifically include a CD versus an LP or a cassette tape. It was written in such a way that the good is copyrighted. So where the law has taken this, and we’ve seen it when the judge denied the preliminary injunction against Capitol, it’s…what we’re doing is, we’re still protecting the copyrighted good. Some people say ‘Is it tangible?’ You use the word physical. But is it tangible? Is it a tangible thing? Well, copyright protects something that’s tangible, so it’s a piece of art, it’s a book, it’s software and so forth. Software can be considered a different kind of tangible than a piece of artwork, for example, but what makes it tangible is that it does something.”
Consider music itself, says Ossenmacher, something that involves the use of one of our core senses. How do we interact with music? We listen to it, of course. So what does copyright law actually protect? “The thing you’re listening to,” says Ossenmacher, adding “What some people don’t fully understand, is that copyright law protects the copyright good, but there are also exclusions to copyright law.”
(MORE: How the Business of Streaming Music Will Change Culture…For the Better)
Ossenmacher is referring to something called “First Sale Doctrine,” a concept 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.”
“Copyright holders have certain protections under the law, but so do consumers once they’ve purchased the copyrighted good,” says Ossenmacher. “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? “They’re merely a different format,” says Ossemacher.
With ReDigi, the original copy of the digital good a user downloads gets uploaded to the ReDigi system and, according to Ossenmacher, the buyer and seller never simultaneously own it. “The transaction is similar to someone handing you $5 for a used CD,” he says. “When you sell something in the ReDigi market space, you instantaneously no longer own it. There is no copying in the transaction at all.”
(MORE: Big Media Goes Easy with ‘Six Strikes’ Anti-Piracy Measures)
ReDigi’s validation system hinges on a key concept: Scanning your computer and any connected media to determine whether you have other copies of the song you’re selling and removing them to ensure you’re not keeping backup copies for yourself (when you sell to ReDigi, you’re not allowed to retain what you’re selling in any way, shape or form). But what about people who keep copies of music backed up to CDs or DVDs, or other storage mediums that aren’t physically connected to the computer running ReDigi’s validation utility?
Ossenmacher answers by way of a rhetorical analogy: “Imagine someone went to Best Buy, bought a CD, ripped it to their iTunes library, it’s on their MP3 player, their iPhone, their iPad, whatever they have, say two or three devices including their computer hard drive, and then they go to eBay or Amazon and list it for sale without destroying their backup copies. Is that eBay or Amazon’s problem?”
It’s not ReDigi’s responsibility to play policeman, in other words, any more than it is Amazon’s or eBay’s or any other merchant’s if someone reselling an item chooses to operate in a way that’s unlawful and completely concealed from the merchant.
But wait — isn’t that basically the same argument outfits like Napster or Limewire and more recently The Pirate Bay have made? That they’re simply the vehicle or medium and not responsible for what users elect to share, legal or no?
“The reason those guys got in trouble was because what they were doing was unlawful distribution,” says Ossenmacher. “What happened there was, I the user of Limewire am posting my MP3 through the service, and millions of people using Limewire are downloading that MP3, so now Limewire is distributing that copy, which I may or may not have paid for or lawfully obtained. That distribution was totally unlawful.”
(In part two of my interview with Ossenmacher, coming tomorrow, we talk more about the technical aspects of ReDigi’s validation process, it’s new artist syndication program, how ReDigi handles files it suspects are unlawful and what streaming, subscription-based services like Spotify herald, long term, for ownership-based services.)