Ever bought a song or an album on iTunes and, after a while, decided you didn’t like it? Did you wish you could sell it somewhere, to someone, for something, the way you might have done with an old vinyl record or CD? In 2011, a company called ReDigi figured out a novel way for iTunes music purchasers to do just that. But for the past few years, it’s been tangled up in litigation. In what may prove to be ReDigi’s death knell, the U.S. Court of Appeals for the 2nd Circuit has all but shut the business down.
Here’s how ReDigi’s resale market worked. Using ReDigi’s Music Manager software, consumers would upload unwanted songs to ReDigi’s Cloud Locker. Music Manager made sure that the iTunes songs being uploaded were lawfully purchased in the first place. It also uploaded the songs in small packets—little segments of computer files that are individually useless but that can be aggregated to make a complete music file. As a packet was uploaded to ReDigi, the same packet was deleted on the music owner’s computer. This process ensured that the complete song never existed in two places at the same time. It also ensured that the music owner didn’t retain on her computer a copy of the song she was selling. Once ReDigi had the song on its cloud server, it resold the music to a new owner. The proceeds of the sale got split between ReDigi, in the form of a transaction fee, and the original owner, in the form of credits used to purchase other music.
Sounds pretty great, right? Users got to sell used digital copies of music the same way they used to sell used albums and CDs. (Bonus: no warped albums or scratched CDs!) New music gets purchased by people who want it. And record companies had some assurance, because of the Music Manager software, that owners weren’t retaining bootleg copies of songs.
If only it were that simple. In 2012, Capitol Records sued ReDigi, claiming that just because a music seller got rid of all the copies of a song on her computer didn’t mean that she didn’t have an undisclosed bootleg copy on some other device not registered with ReDigi through Music Manager. In 2013, the U.S. District Court for the Southern District of New York ruled against ReDigi and basically said that its business model is illegal. ReDigi appealed but lost this week in the U.S. Court of Appeals for the 2nd Circuit.
The problem for ReDigi is in applying what’s called the first-sale doctrine. The first-sale doctrine says, essentially, that once a lawful purchaser buys a “particular copy or phonorecord” (i.e., the digital recording) of a song, she has the right to “sell or otherwise dispose of the possession of that copy or phonorecord.” According to the 2nd Circuit, though, “that copy or phonorecord” means just what it says—that specific copy. It doesn’t mean the copy that ReDigi makes when it uploads the song from a user’s computer or phone. That the uploaded copy and the now-deleted copy on the user’s machine are, in every respect, identical, just means that the former is a really good copy of the original. It doesn’t mean the new phonorecord on ReDigi’s server is the “particular phonocopy” that the original owner bought from iTunes. (As an aside, “phonorecord” sounds like it was made up by someone who thinks the internet is a “series of tubes,” right?)
So if a user has the right to sell her copy of her phonorecord of, say, “House of the Rising Sun,” but can’t upload it to ReDigi to sell it, how useful is that right? The U.S. Court of Appeals for the 2nd Circuit says that there is a solution to this problem. Instead of efficiently uploading her copy to ReDigi, she should just plan more carefully when she buys that sad song of debauchery, loss, and sin. First, she could save her new purchase to a cheap thumb drive with a bunch of other songs and create just that one copy of the song. Second, when she wanted to sell that mournful, tragic phonorecord, she could just mail the whole thumb drive to ReDigi. In this way, the purchaser avoids making any new, illegal phonorecords.
The court’s solution is unsatisfactory for a number of reasons. Who wants to save their music to a flash drive? Who wants to mail digital music anywhere? Why would anyone deliver a thumb drive by pony express or carrier pigeon when the internet was made for the purpose of quickly and easily delivering data electronically? How would music companies be assured, without using ReDigi’s Music Manager software, that the seller hadn’t kept a bootleg copy of the song? Finally, once ReDigi received the thumb drive, could it permissibly make copies of new phonorecords to load the snail-mail-delivered songs to its own cloud servers so that customers might buy them?
If it sounds like the law hasn’t caught up with the market demand for resale of digital media, that’s correct. The 2nd Circuit’s opinion makes clear that it’ll be up to Congress to change the law if there’s a change to be made. In the meantime, you might consider a Spotify subscription.