Transfer Pricing Associates

US Court to Rule on ReDigi Mp3 Music Resales

post Tuesday October 16, 2012


The US court is now facing a case regarding ReDigi’s alleged disruptive business model on the resale of legally purchased media files. Music giant EMI is suing ReDigi for copyright infringement as it claims that the “first sale doctrine” does not apply. This lawsuit could potentially set a precedent over the media industry.

ReDigi is a platform for online, second hand digital material and claims to be the first of its kind. It compares itself to a “modern day used record store”.

However, according to EMI this is not a viable analogy as used record stores do not make copies to fill their shelves and by making copies there is no way to guarantee all the original owner’s copies have been deleted.

John Ossenmacher, CEO of ReDigi says “Most lawful users of music and books have hundreds of dollars of lawfully obtained things on their computers and right now the value of that is zero dollars, ReDigi takes zero dollars and create billions of dollars in wealth overnight”.

When making use of the platform, the users are required to download a proprietary software that checks if a file has been bought legally. If it has been approved, then it is erased from the seller’s drive and uploaded to ReDigi’s server. The software is designed to prevent sellers from reinstalling the file onto their computer and also offers scan libraries for illegal music.

EMI however claims that it is questionable whether ReDigi can determine if the files were obtained legally in the first place, and that ReDigi has acknowledged that there is no way to know whether sellers retain copies of the files uploaded.

EMI demands a penalty of $150,00 for every song in its catalogue that has been sold through the ReDigi service since its inception. Legal experts argue that even though it seems like a large amount, it is nowhere close to the financial impact to be suffered if it is judged to be legal. This case calls for an update to the copyright statute to include digital media as opposed to the tangible form.

In Europe, a similar case arose in the past where the court rules in favor of UsedSoft, a German company reselling Oracle software as they argued that an author of a software cannot oppose the resale of his 'used' licences”

The CEO of ReDigi argues that irrespective of the court’s decision, ReDigi will continue to exist and may even expand into the ebook market.


Image Source: Free Digital Photos

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