ReDigi Defends Used Digital Music Market

NewYorkCountryLawyer writes "ReDigi has fired back, opposing Capitol Records's motion for a preliminary injunction. In his opposition declaration, ReDigi's CTO Larry Rudolph explains in detail (PDF) how the technology employed by ReDigi's used digital music marketplace effects transfer of a music file without copying, but by modifying the record locator in an 'atomic transaction,' and how it verifies that only a single instance of a unique file can enter the ReDigi cloud system. ReDigi's opposition papers also point out plaintiff's own admissions that mp3 files are not 'material objects' or 'phonorecords' under the Copyright Act, and therefore not subject to the Copyright Act's distribution right, and defend ReDigi's used digital music marketplace and cloud storage system (PDF) on a number of grounds, including the First Sale exception to the distribution right applicable to a 'particular' copy, the Essential Step exception to the distribution right applicable to a copy essential to the running of a computer program, and Fair Use space shifting."

Comments

Man that sounds like a lot of effort

[Osgeld]

For some bullshit I doubt anyone wants, seriously you can buy the best the world has to offer for 99 cents a track, what kind of horseshit DRM system to I have to infect windows with and dance around just to save what? 25 fucking cents in the end?

Re:Man that sounds like a lot of effort

[AmiMoJo]

The issue is the first sale right, the idea that something downloaded is still your property and you can do with it as you wish. It is very important that these guys win.

Besides, clearly there is a market for used MP3s and for that matter used CDs, even if they only fetch pennies. Particularly for teenagers without real jobs or people who are simply poor that kind of money actually matters to them.

Re:Man that sounds like a lot of effort

[MrKevvy]

You answered your own question: 99 cents a track. For what they're paying the artists, plus distribution costs, 10 cents a track would be fair. But they're still charging the same for a bunch of bits from a server that costs a fraction of a cent to deliver as they did when that music was pressed onto a big vinyl disc by a multi-ton press, packaged with a printed cardboard sleeve and trucked to the store.

And the artist still gets 5% of it if they're lucky.

Re:Man that sounds like a lot of effort

[NewYorkCountryLawyer]

The issue is the first sale right, the idea that something downloaded is still your property and you can do with it as you wish. It is very important that these guys win.

Yes it is.

Re:Man that sounds like a lot of effort

[Anthony Mouse]

With all due respect, you're kind of thinking about this backwards.

Suppose a group of 100,000,000 people each have on average $500/year to spend on music. If tracks each cost $1, they each get 500 tracks and a collection of, say, 500,000 artists each gets on average $100,000.

Now suppose each track costs $0.10. Each buyer still has the same amount of money to spend, so now they can each buy on average 5000 tracks from the same 500,000 artists and each artist still makes on average the same $100,000.

Changing the price doesn't change the amount of disposable income people have, but it sure as heck changes the number of songs they can buy. And more volume means better network effects and more efficient markets (i.e. each artist gets heard by more customers, and so the ones with the best sound are the ones whose concerts get sold out, rather than the ones with the best marketing).

Re:If the file has a real value

[0123456]

"Then what gives them the right to tell us we can't resell it?"

The government does.

Issues such as fair use & first sale

[NewYorkCountryLawyer]

Since 2005 people have been asking me all kinds of questions about what you can do with your digital music after purchasing it. Now along comes a case where I'm actually litigating, and the court will be deciding, those types of issues, and the comments seem to be all off topic. Oh well.

Re:Issues such as fair use & first sale

[cdrguru]

I would offer that the answer in well over 90% of the cases is that your digital music is worth exactly what you paid for it. Nothing.

Now, in the small fraction of cases where someone has spent $10,000 filling up their iPod and is wondering how to (a) insure this against loss and (b) if this can be considered a valuable asset which is appreciating in value I think the answers to most of the world are pretty clear: no and heck no.

Apple built a very successful business out of selling digital music players that could potentially cost tens of thousands of dollars to use if people were paying for digital music downloads. The number of people that could afford to do this is very small - but instead of being a rich person's toy the iPod has become a major facet of popular culture.

If people were really spending $1 per song (and they aren't), these would be important questions. However, what we have created is an environment where a huge percentage of the population is (a) using digital music and (b) downloading it for free in spite of laws and successful lawsuits. It isn't right, it isn't good but it is currently a fact of life. The legal sales of digital music occupies such a small piece of the pie of digital music downloads that it is nearly irrelevant. And so we have someone that believes they can build a business on the back of this. Unlikely. And sounds like it is going to require considerable litigation to even see light of day.

I think the question of reselling digital music is absurd in the face of reality. It would take someone deeply convinced that people are buying digital music and spending tens of thousands of dollars on it in the face of overwhelming evidence to the contrary. Quite an ability to delude themselves it what it would take. It probably says something about a lawyer willing to take on such a client as well.

Re:Issues such as fair use & first sale

[Maximum Prophet]

Here's some questions the court or legislators should decide:

My parent/sibling/spouse has died and left me $20,000 worth of music I don't listen to. Can I sell it? (or should digital music evaporate when the "owner" dies)

I had a large collection of physical CDs stolen. Can I listen to my backups? Can I sell the backups when I'm done with the music? (or will the record companies help me get my collection back?)

I want to buy an digital copy of a song from a new website. How do I know it's legit?

I'm not really interested in what the answers might be today, as much as I'd like to know what the answers should be. Is it even possible to have strong protections for artists without the occasional incidence of stormtroopers kicking down grandma's door?

Re:Issues such as fair use & first sale

[Maximum Prophet]

think the question of reselling digital music is absurd in the face of reality. It would take someone deeply convinced that people are buying digital music and spending tens of thousands of dollars on it in the face of overwhelming evidence to the contrary. Quite an ability to delude themselves it what it would take. It probably says something about a lawyer willing to take on such a client as well.

It's not the government's job to prop up a dying business model. Aluminum used to be very expensive, even more so than silver. The top of the Washington monument is aluminum, at the time a precious metal. Should government have stepped in to guard the value of someone's aluminum store, when the Hall–Héroult process made it almost worthless?

The cost and value of creative works is being adjusted due to the Internet and cheap storage. Some businesses will thrive, and others die off.

Re:Issues such as fair use & first sale

[NewYorkCountryLawyer]

Thanks for posting regarding this story, Mr. Beckerman. I've followed such stories with great interest since a friend of mine had a ridiculous situation where he licensed a movie for showing in his venue then received a C&D the date of the showing. Please be aware that some of us truly appreciate the work you do and your communication with us here.

Thank you. The support of the Slashdot community means a great deal to me. We are living in an interesting time, where 10 large, politically connected corporations -- 4 record companies and 6 motion picture companies -- are on a rampage to save their dying business models and to deflect blame from their management for allowing their businesses to die. Instead of investing in the future, and building better technology, they spend hundreds of millions of dollars on nonsensical litigation. Very sad. I look forward to the day when they have been beaten back.

Re:Issues such as fair use & first sale

[NewYorkCountryLawyer]

It's not the government's job to prop up a dying business model. Aluminum used to be very expensive, even more so than silver. The top of the Washington monument is aluminum, at the time a precious metal. Should government have stepped in to guard the value of someone's aluminum store, when the Hallâ"Héroult process made it almost worthless? The cost and value of creative works is being adjusted due to the Internet and cheap storage. Some businesses will thrive, and others die off.

And I can think of a record company that is dying off, but not before it wastes even more of its money on frivolous litigation.

Re:You know, for this to have marginally more supp

[Rosy At Random]

Every time products get deliberately borked in order to sell non-borked versions at a higher price, a part of me gets very angry. I can see the commercial sense in it, but it does not stop the anger.

Re:"First sale" doesn't really apply.

[MozeeToby]

So? If I started a bookstore with a single copy of each book and printed a new copy for each customer on demand I'd still be bound by first sale wouldn't I? Who cares when the copy is made.

Re:"First sale" doesn't really apply.

[Xtifr]

Doesn't matter--they have the rights to copy and they're selling that copy. Therefore, under first sale doctrine, you should have the right to resell that copy. The fact that your copy was made on-demand should be completely irrelevant. If it were an on-demand printing press or CD burner, you'd have the right to resell the book or (physical) CD, even though it was generated on-the-spot. Why would it be different for a file?

In fact, a DVD or BluRay is simply a set of files that have been copied to an intermediate storage medium. What possible reason can you offer for suggesting that the rules are different simply because the storage mechanism is different?

Re:"First sale" doesn't really apply.

[AcidPenguin9873]

What possible reason can you offer for suggesting that the rules are different simply because the storage mechanism is different?

It's the same reason that pro-piracy advocates use: IP goods are not the same as physical goods. If IP can't be stolen (it's merely being copied), then there's no way to enforce sale of a "used" IP either. There's absolutely no way to enforce that when you sell your copy of the IP, that you are selling the your original copy and not merely a copy of your copy.

All the pro-piracy advocates say that IP shouldn't try to operate using an artificial-scarcity business model to make it seem like a physical good. Well, without (artificial) scarcity, there is also no logically-consistent argument for sale of "used" IP either.

Pick one: artifical, government-enforced/DRM-managed scarcity + first-sale doctrine, or IP-should-be-free + no used sales. Those are your logically consistent options.

Re:This is extremely laughable.

[wierd_w]

This is not explicitly true. Many products are routinely sold that can be obtained for free, given the labor of obtaining is a sufficiently arduous task. The person is really buying the convenience of a harvested product.

Take for instance, oxygen, or nitrogen gas. (Especially nitrogen). You gan collect copious quantities of it for free. However, the task of harvesting and refining it is nontrivial, and possibly expensive in both time and invested infrastructure. As such, somebody that basically just pumps and superchills ordinary air, and in so doing fractionally distills out the nitrogen and bottles it (the nitrogen itself is still free), they can sell it as long as there is a demand.

Another example is dirt. You can scoop up dirt for free too, but people still buy it routinely.

See also: manure, compost, etc.

The value of the files, which can be easily sourced, is in the increased convenience of the service, and any implied goods accompanying that service, such as legal indemnification for posession. (Eg, you won't get sued by the riaa for downloading it.)

This value is set by what peope are willing to pay for it. Profitability can only occur if the price people are willing to pay is greater than the costs of offering it for sale.

You could argue that it could never be profitable... that's a reasonable argument. But you can't argue that it can't be sold. (One can sell at a loss.)

The real problem here is that this operation sets real limits on what the ACTUAL market value for the recording industry's digital products really are, instead of the artifically insisted upon values presented in court during infringement cases, and also the cumulative effects that such a service would produce.

Specifically, the recording industry relies on continually reselling copy from its back catalog. (60s and 70s classic rock, 80s music, 90s music, etc...) there is a demand for this because the old storage mediums break down with age, and require replacement. A digital resale locker like redigi permits the new sales of theroetically unaging copies (mp3s don't wear out....) to change hands potentially unlimited numbers of times. Coupled with continued first hand sales, an increasing supply of second hand files can theoretically end up in redigi's possession, saturating the market.

This will greatly impact the ability of the riaa and member labels to continue to snack on replacement/redundant copy sales, which accounts for the vast majority of their revinue stream.

That's why they hate redigi, and also why we should embrace redigi.

Re:This is extremely laughable.

[dgatwood]

You can't resell something that cannot be adequately protected through DRM, period.

Sure you can. It's actually quite easy. You're missing a fairly fundamental concept, which is this: what is necessary to prevent playback of copies is not required to merely prevent sale of those copies. To do the former, it must be impossible to get a decryption key without proving that you are the current owner. This is fundamentally impossible to do in an unbreakable way, and the harder you try, the worse the customer experience is. By contrast, to do the latter, you need only the ability to uniquely identify each sold copy of a file. This requires nothing more than a guarantee from the companies that sell the original tracks that there will never be two identical copies of the track, plus a verifiable, ideally signed marker of some sort to determine authenticity.

In other words, to support resale of commercially-sold tracks, you need only take advantage of the watermarks that most or all of those services put in the tracks to begin with. Tracks are usually sold with additional info in the track's metadata that ties it to a particular user's account so that if it gets pirated, it can be traced back to the person who illegally distributed it.

This means that every digital download is unique and trivially verifiable as authentic or inauthentic without the need for actual DRM that would limit your ability to play the file. Thus, all that is necessary is a central database that every reseller talks to, in which the current ownership of every track that gets sold is tracked based on which account purchased it originally.

At least I'm assuming this is how they're doing it. It's certainly the most straightforward and obvious way to do it.

What this does not do, of course, is prevent you from making a copy before you sell the track. However, resale of physical CDs and DVDs has exactly the same problem, making this argument largely irrelevant as far as drawing a legal distinction between the two types of resale.