It Is Now Illegal to Resell Your MP3s (Thanks ReDigi)

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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.

Image: James Nash (aka Cirrus), licensed via CC BY-SA 2.0

10 Responses

  1. wallow-T

    I’m waiting for inheritance to be addressed.

  2. Andy_0)))

    I’m okay with this. I never fully understood the concept anyway, or why people would buy ‘used’ MP3s when ‘new’ ones are so cheap already.

  3. Visitor

    I was pretty worried the sale of all those used mp3’s was going to undercut my CD sales. Whew!

  4. RecklessOpinion

    The judge’s decision pretty much blows up ReDigi’s whole business model, but I don’t think the headline here is justified, given the highlighted text on the LH side of the document:
    “Section 109(a) still
    protects a lawful owner’s sale of her
    “particular” phonorecord, be it a computer
    hard disk, iPod, or other memory device
    onto which the file was originally
    If you could set iTunes to download your purchases onto a thumb drive (“other memory device”), that drive and the music on it could be sold without producing an additional/infringing copy, right? (IANAL)

    • Visitor

      ….. or if your original mp3 purchase is delivered to or is stored in cloud service.
      Which would raise separate legal question. Is purchase of digital file really even a purchase or simply a limited license to use?

  5. Central Scrutinizer

    I read that redigi 2.0 resolves this legal problem.
    Also, they intend to appeal this decision.

  6. Visitor

    I wonder how this affects Amazon’s Auto-Rip, or other similar “buy physical, get the digital immediately” offerings, if at all?

  7. Faza (TCM)

    Not a particularly surprising decision. Some folks I’ve discussed this with have trouble grasping the fact that the element covered under the first-sale doctrine is the physical medium to which a licence is attatched. Once a record label surrenders a CD, for example, they have no say about what happens to that particular bit of plastic.
    But that says nothing about the recording fixed on that bit of plastic. Here the label retains the entirety of its rights and only grants a limited private licence to the “bearer” of the CD, as it were.
    With MP3 files, there’s no physical artifact and thus no question of what the buyer owns. It all boils down to the licence he has obtained and I cannot think of any licence that would impart reproduction rights (apart from the statutory ones of backups, device transfer etc.) on a consumer – such licences cost a lot more than 99 cents. In short, ReDigi was trying to use a naive interpretation of the transaction involved (I’m still buying music, right?) to paint “buying” (actually licencing) MP3’s in the same light as buying CDs (a physical item, with licence attatched). So much for that legal theory.