You can sell your CD collection to whomever you like. You can even open a used CD store, on the corner or online. But you can’t resell your MP3s, nor can you operate a service that allows it.
That’s according to a US District Court decision now handed down in ReDigi vs. Capitol Records, one that steps into the murky digital waters of the ‘first sale doctrine’.
Whether ReDigi could have built a business off of re-selling MP3s is another question entirely, one that probably will never get tested. The company will probably now be forced to shut down or completely pivot, barring some sort of challenge. “ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods,” US District Court judge Richard Sullivan opined.
That’s the verdict, even though ReDigi expressly deletes the original copy after resale.
“It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.”
The Boston-based ReDigi seemed more academic than practical from the start, especially for a consumer base that often ‘resells’ MP3s for $0. But this goes beyond simple MP3 reselling, and could have a more important implications in film and books. The reason is that consumers typically listen to their music collection over and over again, a behavior only duplicated on a select number of absolutely favorite movies and books. Which means, other digital assets outside of music have greater resale potential.
+ February 7th, 2012: “Federal Judge: This ReDigi Thing Is a ‘Fascinating Issue…’“
But what about that first sale doctrine? Yes, ReDigi created a system that erased the original MP3 after the sale, a structure designed to mimic a physical transfer. But the first sale doctrine was ultimately deemed inapplicable to the ReDigi case, mostly because of the duplication involved. “The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era,” Sullivan wrote.
The next question is what level of damages, if any, ReDigi faces. Capitol Records is part of EMI, which is part of Universal Music Group.
The full decision is here.