updated 10:25 pm EST, Tue November 15, 2011
Trade group demands access to sales records
The Recording Industry Association of America has sent a cease-and-desist letter to ReDigi, threatening to sue the company over its marketplace for "used" digital tracks. The trade group demands that ReDigi shutter its operations, erase references to RIAA member artists from its site, "quarantine" current digital copies and provide access to sales records.
ReDigi allows users to upload unwanted music and list the tracks for sale, earning $0.20 per track for unsold uploads and an additional $0.12 per track once the content sells. The money is actually "coupons" that enable users to purchase tracks that have been listed for sale by other ReDigi users. Tracks are sold at a slight discount over iTunes, with popular songs listed for $0.79.
The company argues that its service is legal, relying on technology that claims to verify that tracks actually originated from legitimate sources, such as iTunes, and a subsequently wiped from a user's hard drive and synced devices before being sold to other users.
"This is how ReDigi stays legit, and how you now have access to an incredible marketplace where rights long accepted in the physical world may now be applied to digital goods," ReDigi writes in its FAQ.
Aside from the debate regarding source verification, the company is relying on the "first-sale doctrine" as a legal defense. The doctrine allows individuals to transfer ownership of a legitimate copy of a copyrighted work.
The RIAA argues that ReDigi's marketplace is still in violation of the first-sale doctrine, as the Copyright Act only protects sales of a "particular copy." The organization claims the the company must make a copy of each track and delete the original, which is not explicitly covered by the doctrine.
"[The Copyright Act] does not permit the owner to make another copy, sell the second copy and destroy the original," the RIAA wrote in its letter to the company. "Thus, even if ReDigi's software and system works as described by Redigi (i.e. that it deletes the original copy before it makes the sale), ReDigi would still be liable for copyright infringement."
It remains unclear if ReDigi will concede and shutter its services, or hold its ground and risk a court battle. [via Ars Technica and CNET]