Join Transform 2021 for the most important themes in enterprise AI & Data. Learn more.


You might think that you have the right to resell your digital copy of “Born To Run” — but you’d be wrong.

Last January, Capitol Records sued MP3 reseller startup ReDigi, which calls itself  “the world’s first preowned digital marketplace.” Capitol Records’s claim?  By letting people resell their MP3s, ReDigi was facilitating the unauthorized reproduction of copyrighted works.

This weekend, U.S District Judge Richard Sullivan agreed [PDF], arguing that ReDigi’s software “infringes Capitol’s reproduction rights under any description of the technology.”

“ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods,” Sullivan wrote.

Sullivan also argued that ReDigi wasn’t protected by the first-sale doctrine (which says that once people buy copyrighted works, they are free to sell them) because ReDigi never actually sells the original version of a work — it sells copies of it.


Above: The world’s first used digital marketplace could be the world’s last.

The case underscores just how inherently troublesome the idea of a digital resale market is. Not only does “second hand” not translate particularly well to the digital word, but digital files also open up resale markets to new, mostly unstoppable forms of fraud: Because of the basic copy-friendly nature of digital files, there’s little preventing someone from coping their MP3s before throwing them up on ReDigi’s marketplace. And while ReDigi’s software scans for that sort of subterfuge, it’s obviously not able to scan files that are not on people’s’ computers.

In that sense, digital resale markets are hugely different from your local second-hand book store. When you sell your copy of The Power Broker, it’s gone (unless you took a trip to FedEx Kinko’s and copied it beforehand — but you wouldn’t do that, right?). Digital goods are by their very nature copyable, which makes it very tough to prevent people from abusing the resale system.

The big question now (besides how much ReDigi is going to owe Capitol Records) is what the court’s decision means for Amazon and Apple, both of which are mulling similar digital resale services. Whichever way the tech giants go, it’s clear that the only way they can avoid ReDigi’s fate is to equip their digital files with really severe digital rights management. After all, how else will they ensure that people don’t cheat the system?

The case also underscores the confusing relationship between ownership and digital goods, which, well doesn’t actually exist.


VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative technology and transact. Our site delivers essential information on data technologies and strategies to guide you as you lead your organizations. We invite you to become a member of our community, to access:
  • up-to-date information on the subjects of interest to you
  • our newsletters
  • gated thought-leader content and discounted access to our prized events, such as Transform
  • networking features, and more
Become a member