MP3s and the first sale doctrine

This story is making waves in my world today: MP3 resale violates copyright law, court rules

Basically, the first sale doctrine states that a copyright holder makes their money on the first sale of a work (like a book). After that, the person who bought the book owns it and has the right to sell it or give it to whomever they want. (They don’t have the right to copy the contents and distribute those; only to pass on the book they bought). 

As I understand it, the ReDigi business model tries to work within the framework of this doctrine: you sell your music to ReDigi. It transfers the file to their library, and deletes it from yours. Then the file becomes available for a single customer to purchase. When they do, it move to that person’s library, and disappears from the ReDigi inventory. It doesn’t reappear in their inventory until someone else sells ReDigi another copy of that song.

This is counterintuitive for a digital business model, because it doesn’t take advantage of exactly what has copyright holders shaking in their boots: that it’s easy and inexpensive to duplicate files. This is a digital business retrofitted to work within the legal framework of an analog world. This is tricky: It abides by the spirit of the first sale doctrine (“one” copy moving from hand to hand), but in practice, copies are certainly being made in order to transfer the files from place to place, and even to back up the servers that they run their service on.

Apparently, it has been ruled that this is akin to copyright infringement: you can’t sell or give away a file that belongs to you, without permission from the copyright holder. This is an alarming precedent.

But the part about this case in particular that I don’t understand is farther upstream. The article states that this applies to “songs bought on iTunes, Amazon, or other digital music venues.” OK. Well, as I understand it, you don’t actually own the songs you buy through those channels. Instead, these companies sell you a license to hold and use a copy of these songs. See: Bruce Willis iTunes inheritance kerfuffle from last September.

So yes, it seems to me that re-selling songs you bought on iTunes on ReDigi would be a copyright violation. But not because it’s wrong to sell something you own. Because you don’t actually own those files. It would be like selling a video you rented from Blockbuster, no?

Something seems wrong with this picture, but I can’t tell where the wrongness comes from:

  1. Journalist error: was she careless in choosing iTunes and Amazon as examples?
  2. ReDigi’s actual behavior: contrary to the claim that they vigorously check that files were legally acquired before accepting them, are they in fact violating the law by accepting sales of music that wasn’t properly purchased in the first place?
  3. My understanding of the landscape: have iTunes, et al., changed their terms of service so that you really do own the files for the songs you buy? Or (more likely) have iTunes, et al., negotiated special licenses with ReDigi allowing them to do this, but Capitol Records (plaintiff in the suit) doesn’t like it?
  4. Judge’s ruling: conflating files owned with files leased, and what you can do with them?
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