Do You Own Your Digital Media?

ReDigi is a start-up launched in October 2011 that claims to be “The World’s First Pre-Owned Digital Marketplace”. Users are asked to sign up and submit the digital music files they wish to sell. ReDigi’s system verifies the file to check that it is legitimate and then uploads it to ReDigi’s servers, where it is made available for another user to buy. While a music file on iTunes costs around US$0.99, a “pre-owned” digital music file will set consumers back about US$0.69. The premise, according to founders Larry Rudolph and John Ossenmacher, is that if a person buys digital media, they should have the right to sell it too – in the same way that physical goods like books or clothes can be resold.

Makes sense, right?!  Especially if you own the music that you download. Well music recording companies do not agree.

Is a second-hand store for legally obtained digital music and movie files legal just like stores for second-hand clothing and books? This is the question raised by a lawsuit in New York between Capitol Records LLC (EMI) and ReDigi Inc. The hearing took place on October 5, 2012. EMI has sued ReDigi’s for copyright infringement. EMI’s demands ReDigi to pay a penalty of $150,000 for each song in EMI’s catalog that was sold via the service since its launch.

EMI argues that the process of removing a file from one computer, “re-selling” it and moving it to another computer inherently involves reproduction – and unless there is a permission or license from the copyright owner, this amounts to breach of copyright. There are also concerns that there is no guarantee that all the original owner’s copies have been deleted. EMI is demanding ReDigi pay a penalty of US$150,000 for each song in its catalog that was sold through ReDigi since its launch.

ReDigi responds by saying that there is no “reproduction” involved in the process, and “there is never an instance where the music file exists in more than one place or can be accessed by more than one user”. It argues that its software is designed to prevent sellers from reinstalling a sold song to their computer. ReDigi’s key argument focuses on the US first sale doctrine, which allows owners of lawfully acquired copies of copyrighted material to re-sell that particular material without interference from the copyright owner. In Australia, the resale of physical items is largely unproblematic in terms of copyright law; however, the resale of digital material is a grey area.

There are usually terms and conditions agreed to before customers can buy files from online marketplaces. For example, iTunes’ terms and conditions do not explicitly prohibit customers from reselling their purchases.  Will music providers take it upon themselves to change these terms and conditions if this case is not decided in their favor? Are we loosing our right to actually own digital media? How long before we are merely licensing everything and paying the same rate we would’ve paid to own this media in another form? Should we cling to CDs and cassette tapes in order to have an actual ownership interest in the music and other digital media we purchase?

This decision made in the case will be far-reaching. Not only will the rights we have in music we download be forever affected, ReDigi has already announced plans to expand its business into the e-book market.  This could lead to another judicial battle between ReDigi and digital book companies (such as Amazon) over whether digital book can be resold after it has been lawfully purchased.  Ownership in digital books has already come into question in cases where Amazon has deleted consumer purchases and denied access to their account for what they call a “violation of their purchases. But what about the digital books legitimately purchased by customers? If we do not own the original there is little chance consumers will have the right of resale.

I am very interested to see how Capitol Records LLC (EMI) v. ReDigi Inc. plays out. This will have a lot of bearing on the standards set for our rights as consumers as it relates to digital media. I think whatever the decision this is the start of a very long legal battle. I hope that the ownership rights of consumers are a legitimate consideration and that a compromise can be reached that protects both the consumers and the record companies.

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