Selling “Used” Digital Music. Interesting Idea, But Lots of Issues Remain

The record industry nearly melted down when used record stores first started popping up decades ago. They felt that if a record was to be resold, then the label, the artist and the rights holders deserved to be compensated. There were several challenges over the legality of used record stores, but I can’t remember any of them being successful.

It came down to this: once someone purchased a physical copy of a recording, then they were the owner of that copy and free to do whatever they chose with that piece of plastic. The label, the artist and the rights holders had already been paid with the initial transaction and we’re entitled to anything more. It was like buying a used car; the manufacturer already go their cut when the car was sold new.  You didn’t have to pay them again. This is known as the “first sale” doctrine.

Digital music is another matter. If you’ve ever bothered, for example, to read the iTunes End User License Agreement–and really, no one has–you’ll notice some interesting subtleties.  While the lack of any digital rights management (DRM) allows you to move songs around freely, this isn’t the same as what we used to do with CDs and vinyl. Why? Because CDs and vinyl records are material objects. A digital file is merely a reproduction of the original work–and something that can be reproduced over and over and over again at zero cost.

You see the issue.  A company called ReDigi–they want to specialize in “used” MP3s–has run into all sorts of legal issues.  Read about their latest defeat in the courts at Billboard.