ReDigi Taken To Court For Resale Of MP3s 100512
October 5, 2012

Music Industry Takes ReDigi To Court For Resale Of MP3s

Michael Harper for — Your Universe Online

Retail becomes so much trickier whenever the product being sold can´t necessarily be “seen.” In fact, nearly every aspect of buying and selling goods is invisible these days, from direct deposit options from employers to the password-as-payment system found in Apple´s and Google´s respective app and music stores. So, when what is essentially a file is purchased through these means, what rights does the buyer have to this thing that can´t be touched?

This is the issue at stake behind a New York lawsuit between EMI Music and ReDigi, a business with an interesting idea.

If someone buys a thing and takes ownership of it and then realizes a few months down the road that they´ve grown tired of that thing, shouldn´t they be allowed to sell it again to a willing third party?  Well, ReDigi just so happens to be in charge of buying and reselling something invisible: MP3s.

ReDigi allows customers to validate their music (the service checks for legal purchase) before storing it in the cloud. Once there, users can either stream their music for free or put it up for sale. When another user buys these songs, the original owner earns credits which can be used to buy other songs on the site at a discount.

However, EMI is suing the MP3 reseller, claiming that digital files and music cannot be sold and resold in the same manner that tangible goods can.

The court battle between the record label and the online reseller begins today.

ReDigi launched in 2011 and say they experienced rapid growth in their first year of business. A lawsuit from Capitol, a sector of EMI, in January has slowed things down a bit. In addition to arguing that music can´t be sold and resold, EMI is also claiming that the only way for music to get passed around is by making copies, suggesting that those who use the service could easily sell back mere copies of their legal music, retaining the original file, while downloading even more copyrighted material at a steep discount.

For its part, ReDigi insists that its proprietary software effectively blocks such scams. After a song is uploaded into the cloud, it is then immediately erased from the user´s hard drive.

The court´s decision won´t only affect ReDigi and their users, of course. The outcome of this case could easily set a precedent for future cases concerning rights of ownership for all types of copyrighted digital files.

In fact, according to the BBC, Google has written a note to the judge, arguing they had a “special interest” in the way this case pans out.

As economics professor at Brandeis University Benjamin Shiller recently told the BBC, "I think it could absolutely transform the industry,”

"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," claims ReDigi´s CEO John Ossenmacher.

"ReDigi takes zero dollars and we create billions of dollars in wealth overnight “¦ We were surprised by the lawsuit.”

EMI´s lawyers have not yet issued a public comment on the case.

Court documents show that EMI had meetings with ReDigi before the suit was filed, but say they never approved ReDigi´s business model. Now, the record label wants ReDigi to pay out $150,000 for each song owned by EMI which has been sold on the service — a large sum no doubt, but nothing compared to the potential impact that a ReDigi win would have on the industry.

With or without a win, Mr. Ossenmacher has said ReDigi will continue to operate, even without the label´s permission.