The secondhand market has been a strong feature of the music industry ever since music was fixed in a tangible medium, so it's only natural that this secondary economy would evolve to encompass, "secondhand" digital music as well - at least if the court of appeals hadn't shut it down.
Guest post by Bobby Owsinski of Music 3.0
If you’ve ever owned physical music product like vinyl or CDs you know that there’s a market for “pre-owned” albums. People have made a living from the used market for decades, so it was natural to believe that this same idea would transfer to digital music as well. ReDigi was one of the first virtual marketplaces for used digital music, but the courts recently dealt a major blow to the concept as it ruled that such sales infringe upon the exclusive rights of copyright holders.
The U.S. Court of Appeals for the Second Circuit ruled in favor of the record labels that a virtual marketplace to resell digital music files as if they were secondhand albums violates copyright law. Capitol Records had originally brought the suit and had previously won a $3.5 million judgment in federal court in New York City.
Physical product like records and books are bound by what’s known as the First Sale Doctrine, which allows the owner to sell that copy without copyright liability. The court decided that Doctrine did not apply to digital music however.
The fact of the matter is that this was a lawsuit about yesterday’s technology, since the world has since transitioned to streaming. The market for downloads has dwindled and continues to decrease at a fast pace, and that includes the desire for used digital files.
Where this could make a difference is in the audiophile market where many users still download 96kHz/24 bit and higher files, and conceivably users might look to sell them at a later time. That said, many have also transitioned to hi-res streaming services like Tidal, which makes the entire concept moot.
Still, a precedent is set here. You don’t own your digital music files just like you really don’t own software that you buy. You license it only, and have limited rights beyond using it.
This decision by the courts just made the used market for anything digital much tougher.
Redigi’s website is currently offline with a “Find out what’s next message.”