How ReDigi Lets You Resell Digital Music (and Why It’s a Big Deal)

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Yesterday I wrote about ReDigi, the digital music storefront where you can sell digital songs you’ve purchased through iTunes (or ReDigi) in trade for credits that let you buy new (or someone else’s used) digital tunes.

The company claims that ReDigi is simply the cyber-version of a used record store and that everything it does is perfectly lawful because its technology first validates, then transfers your music to its servers without copying. ReDigi’s argument is that it’s not like Limewire or Napster because what it does is analogous to a used goods merchant handing a seller cash for a CD or LP, not distributing the same song to anyone gratis.

I asked ReDigi CEO John Ossenmacher to explain how ReDigi’s validation process actually works, and he obliged in considerable detail, at one point calling the storefront’s technology “far superior to eBay and Amazon.”

Better than Amazon or eBay?

“When someone sells something to someone else on eBay or Amazon, that’s a marketplace transaction,” says Ossenmacher. “ReDigi is also a marketplace, it just happens to be an all-digital marketplace. So when someone posts something for sale on ReDigi, before it can even get into the ReDigi cloud, we verify its authenticity. The beauty of the digital world is, there’s lots of things you can do that you can’t in traditional storefronts. We do this whole forensic analysis, for instance, designed by a bunch of really smart computer programmers.”

(MORE: Coming Soon: A Softer Approach to Online Piracy)

Ossenmacher is referring to ReDigi’s team of developers and mathematicians — the company currently has around 15 employees and it’s led on the technical side by MIT professor and “principal research scientist” Larry Rudolph, who doubles as ReDigi’s CTO. In Rudolph’s online bio, he describes one of his current projects as “Doing my own start-up company (” since April 2010.

“With this team we built a really cool forensic engine that basically dissects an MP3 or Mp4 [song] or whatever it happens to be,” continues Ossenmacher. “It determines where the song came from, whether you’re the lawful owner, whether it was moved from one computer to another and so on. I mean there’s all kinds of stuff it can find out.”

When someone decides they want to sell something, unlike other resale marketplaces that have to grapple with authenticity issues like counterfeit goods (take jewelry, for example), Ossenmacher claims that ReDigi’s validation tools allow the service to know, beyond the shadow of a doubt, that what it’s allowing a user to upload is an authentic good.

“We verify it, then we actually move that original file from their computer — and this is pretty cool because of the technology — we actually move the original file up into their cloud locker,” explains Ossenmacher. “And we build at the same time a digital fingerprint for that. So think of something like Norton Anti-Virus or whatever antivirus software you might have. We put that fingerprint on our ReDigi server, then we basically monitor your computer for you.”

Wait a second: monitor your computer? Another cyber-eye-in-the-sky, keeping tabs on your digital comings and goings? If your klaxons and red flashers are going off, so were mine.

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

“It’s not to catch people at things,” says Ossenmacher, clarifying what the service does and doesn’t check. “ReDigi was meant to help people maintain compliance with copyright law, not come after them. So now whenever you connect something that wasn’t connected before, we scan it quickly and if we find that same fingerprint, we say ‘Hey Matt, we found a copy of that song you sold before on the iPod you just connected, please delete it.'”

Hands-Off (Mostly)

Ossenmacher is quick to point out that the ReDigi service itself will delete nothing, nor will it report anything it finds (legit or no) to a third party — that’s not what it does. He says ReDigi’s only purpose is to help you maintain compliance with copyright law.

“It’s not Amazon’s responsibility and it’s not ours, either,” says Ossenmacher. “We just want people to be lawful, we want people to understand that violating copyright law hurts people, because there are people whose livelihoods depend on their work. So we’ll say ‘Hey Matt, we found this copy, please delete it’, and you can elect to delete it or not delete it.”

There is a catch, of course: If you opt not to delete infringing files, ReDigi will eventually throw down a penalty flag and pull you out of the game.

“On the third time we find anything, we suspend your account,” says Ossenmacher. “We say look, until you clear up what you’re doing, we’re not going to allow you to use the service because you’re taking advantage of it. And so then your account’s frozen and any songs you have listed on the marketplace are removed from sale.”

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

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