The Major Labels Don't Want You Selling Used Mp3s, for Good Reason

The music industry's crusade to stop a second-hand market for digital downloads is about more than technophobia.


The major music labels have had an impossible enough time propping up their profits in a world of 99-cent iTunes tracks and Internet radio. So while it's a bit disappointing from a consumer perspective, it comes as no great surprise that they're battling what might be the next big -- and logical -- step in the digitization of our music collections: a market for used tracks.

TheĀ Boston Globe today has a takeout on the courtroom showdown between EMI-owned Capitol Records and ReDigi, a startup that offers customers a way to buy and sell secondhand digital music. The company lets users load old, unwanted tracks into an online music locker, where others can purchase them for around 69 to 79 cents a pop. In the meantime, ReDigi's special software wipes the songs off the seller's hard-drive, as well as any devices that sync with it. It also verifies that the original files were purchased legally to prevent users from pirating music and selling it "used" it for a profit. At the moment, the service only allows customers to trade in tracks bought off iTunes, because unlike companies such as Amazon, Apple's user agreements don't stop customers from reselling its music files.

Despite all of these precautions, Capitol is accusing ReDigi of (what else?) copyright infringement, arguing that the company's method for transferring tracks between customers amounts to illegally duplicating files. But the fight that's now unfolding between them could have wide implications for all digital media. Per the Globe:

The case is making its way through federal court and is expected to determine the legitimacy of a secondary marketplace for these downloads. But it could also bring a landmark decision on how copyright law applies to digital albums, electronic books, and feature films that are downloaded on the Web, according to legal scholars.

If the court rules in favor of ReDigi, it could pave the way for used digital music and other digital products to be resold, just like CDs and books at stores.

Is Redigi's business model kosher under our current copyright regime? I'll leave that to the courts. But I do think it's worth pondering what it would mean if music fans could suddenly buy and sell "used" music in the form of pristine digital downloads.

On the one hand, it's tempting to write off this suit as yet another episode in the music industry's chronic history of technophobia. Americans have long been allowed to resell, rent or give away physical copies of books, albums, and movies under the "right of first sale" -- a legal doctrine we can thank for modern conveniences such as DVD rentals. Thanks to Amazon, it's also been a very long time since anybody's access to a cheap used album was limited by the collection at their local record store. A service like ReDigi simply pushes all of those rights into the digital age. And one could argue that the ability to resell mp3s will make them more valuable in the long-term, giving the labels leverage to charge higher prices.

That said, Capitol has a real reason to fear a digital used market. Namely: the files never disappear. They don't get scratched. The jewel cases don't crack. They're always the same little compressed bundles of data as on they day they were first downloaded. It's fundamentally different from a physical product, which declines in value over time. And while ReDigi wouldn't be an infinite reserve of cheap music, one imagines that as it grew, it could put a notable dent in new music sales.

The question is: who, besides fans, would actually stand to benefit from this? ReDigi argues that creating a thriving used market will ward off piracy, which may be somewhat true. But that could be used to argue in favor of literally any service that lowers the price of a song. Moreover, the people using a service like ReDigi are likely the sorts of individuals who already pay for their music. It's hard to see what the incentive is for labels, or the major digital music merchants such as Apple, to cooperate with this. Google has expressed concerns that the legal arguments against ReDigi could place limits on cloud storage services. But that doesn't necessarily mean they care about music fans' abilities to unload their old Motown collection

And that's why I imagine that, unless ReDigi can win a broad decision that guarantees everyone right to resell a download, the company might not be long for this world. After all, Apple could just change that user agreement of theirs.