Legal Woes Mount for ReDigi Used MP3 Biz

 

EMI files suit against
the digital file reseller barely two months after the RIAA sends
cease-and-desist letter.

 

By Fred Mills

 

When ReDigi launched last year billing itself as the
“world’s first used marketplace for digital music,” staking a claim to being a
store whereby users could sell all those MP3s that had been filling up their
hard drives, a lot of industry watchers definitely squinted, and hard. The
start-up’s entire business model, after all, depends on what some said was a
unique – if not downright erroneous – reading of the First Sale Doctrine, that
legal principle which allows owners of CDs, LPs, 45s, DVDs, etc. to turn around
and re-sell the items at the used record store, yardsales, eBay and other
venues.

 

While ReDigi reportedly vetted said business model thoroughly
with its lawyers, naysayers’ counter-argument was that the transfer of an MP3
to another person is an entirely different function from dumping a used CD onto
a shop’s trade counter – that it necessarily involved copying/duplicating the
MP3 for sale, something that is NOT permitted as part of the First Sale
Doctrine. To sell MP3 through ReDigi (putting things very simply here): you
first download the company’s software and install it on your computer, and then
at that point you can select the MP3s you have that you want to sell and upload
that information to the ReDigi website and wait for someone to buy ‘em. Or, if
you are purchasing MP3s through ReDigi, download them to your player and
organize them once you’ve paid your money.

 

ReDigi indicates that its system removes the MP3s from the
seller’s hard drive at the time of purchase, which of course would be necessary
to meet the First Sale criteria  -otherwise,
the only alternative would appear to be selling the entire physical hard drive,
iPod, etc. that is housing the MP3 in question. Of course, in one sense it’s
kind of hard to get your head around the idea of transferring an MP3 over the
internet and taking it off your hard drive as two parts of a single action
equal to handing a store clerk a CD as he is handing you back five bucks.

 

For some reason there hasn’t been a lot of discussion about what
would seem to be a very obvious question: what if the original owner of the MP3
has copied it to some other device like an iPod? Couldn’t that person sell the
MP3 on his hard drive, then after the sale turn around and copy the track
that’s on his iPod back to the hard drive and start the resell procedure all
over again, and infinitely? Back in the pre-digital era, someone could easily
make a tape copy of an LP or CD before trading it in or selling it – or, with
the advent of CD burners, dub a copy to CDR – but the likelihood of that person
then being able to sell the cassette or CDR copy was very, very slim.
(Street-corner pirated CDR vendors notwithstanding.) On the ReDigi FAQ page this matter is addressed very vaguely, indicating that the hard drive removal
process also includes removing the MP3 from “all synched devices” (such as an
iPod) “as soon as” the sale is confirmed, but one can easily read through the
lines of that statement and see how readily the removal procedure could be
thwarted – for example, not having the iPod attached to the computer at that
time and then making sure that the track(s) in question has its box un-checked
for any subsequent synching. Or simply transferring the MP3 to another computer
altogether and installing the ReDigi software on it.

 

Anyway, in November the RIAA, not surprisingly, had a
similarly hard time getting its members heads around the above-mentioned idea
and sent ReDigi a cease-and-desist order on behalf of Universal, Sony, Warners
and EMI, claiming that the transaction as described is in fact “copying” the
MP3s. ReDigi, naturally, countered that there’s no copying involved, presumably
due to the remove-from-hard-drive aspect of the transactions.  “When our transaction goes from one
person to another, there’s no copying involved in that transaction,”
ReDigi CEO John Ossenmacher said.

 

Billboard.biz has been covering this and it’s well-worth
reading, particularly if you are intrigued by the whole concept of whether owning a digital file is analogous to
owning a physical album; of whether you’ve purchased a “recording” or merely a
“license” when buying an MP3 from iTunes or Amazon; and in particular whether
it’s even possible to transfer an MP3 to another person without the procedure
involving what most of us think of as “copying.”

 

Meanwhile, the whole thing heated up to a new level on
Friday when EMI filed a lawsuit against ReDigi, alleging that the company
“makes multiple unauthorized copies in violation of copyright law.” According
to a report at Cnet.com
, ReDigi indicated they would “fight it vigorously” in
the upcoming battle over the interpretation of First Sale as it applies to
digital goods. As Cnet notes:

 

“ReDigi and its users are making and distributing
unauthorized copies of that original file,” EMI said in the complaint.
“The Copyright Act defines ‘copy’ and ‘phonorecord’ as material objects in
which a work or sounds are fixed respectively…Neither ReDigi nor its users
resell the original material object that resided on the original user’s
computer. Rather… [ReDigi and users] duplicate digital files both in
uploading and downloading discrete copies distinct from the original file that
originally resided on a user’s computer.”

 

Cnet also touched upon the whole issue discussed above of
MP3 owners potentially making multiple copies of their tracks.

 

Here’s betting that before the week is out the three other
big major labels will also file lawsuits. Let the games begin, as this is all a
matter that to date has not been tested in court. Part of me feels like ReDigi
has a righteous cause, as I have always been a staunch supporter of consumer
rights, which First Sale clearly addresses. My prediction, however, is that
ReDigi will put up a good fight for as long as its resources last (but knowing
it is up against the deep pockets of the major labels, don’t count on that
being a protracted fight), and while it may have a number of advocates in its
corner, the courts will be loathe to wade too deep into re-interpreting First
Sale and will rule against ReDigi, which will then go out of business.

 

 

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