Resale of Digital Music: Capitol Records v. Redigi

Abstract

In January 2012, Capitol Records (a label of EMI Music) sued ReDigi (a secondhand marketplace for digital music files) for copyright infringement. This paper discusses the legal framework of the resale of digital music files and analyzes the legal arguments made by the parties in the lawsuit. It also explores the economic function of secondhand marketplaces and asks whether current copyright law adequately reflects the changed technological environment and whether the resale of digital music should be permissible as a matter of policy.

It is argued that ReDigi should prevail in court since no copying takes place in direct connection with the sale transactions and the copying necessary for uploading to, and downloading from, ReDigi's cloud is protected by fair use under the space shifting doctrine. Furthermore, this paper argues that secondary markets for digital content should be respected as the result of a free market process.

Keywords: copyright law, fair use, digital media, space shifting, music industry, music locker, secondary markets, first sale

JEL Classification: O34, O33, O38, K29