Fixing ReDigi: NFT Tethered Sound Recordings

34 Pages Posted: 10 Aug 2022

Date Written: August 1, 2022

Abstract

One of the problems with digital sound recordings has been how to permit the lawful resale of music fixed in freely copyable, nonrivalrous digital files. Historical Congressional resistance and the recent 2018 decision in Capitol Records, LLC v. ReDigi Inc., seem to foreclose any such possibility of digital resale, or the extension of copyright’s venerable first sale doctrine to digital files. In Capitol Records, the Second Circuit noted the impossibility of lawful secondary resale without an act of reproduction facilitating further distribution. By focusing on Section 106(1), the Second Circuit avoided having to resolve the more difficult first sale implications of DRM technologies.

This Article argues that NFTs (non-fungible tokens) are the first DRM technology to permit lawful digital resale, with many musicians, like Calvin Cordozar Broadus Jr., known professionally as Snoop Dogg, paying serious attention. Just days before his February 2022 Super Bowl Performance, Mr. Broadus sold his latest album, Bacc on Death Row, as an exclusive, limited-time release of NFT stashboxes for $5,000.00 each. Sales of his NFT totaled $44.3 million in just five days, with the industry predicting that the NFT marketplace for sound recordings will become a multibillion dollar one as early as 2025. More importantly, NFTs, like BODR, are the first tethering DRM technology that adequately addresses the public policy concerns raised in the legislative history and subsequent Registrar of Copyrights 2001 report on the Digital Millennium Copyright Act rejecting extension of Section 109’s first sale doctrine to digital files.

However, the promise of ownership of NFT tethered sound recordings may be an empty one, when viewed through the lens of the Copyright Act. Despite industry marketing, copyrights are a statutory monopoly, and do not create property interests, making the question of ownership an unsettled one. Further muddying the waters are industry agreements containing downstream royalty provisions. Congress has two immediate paths in response to consumer adoption of NFT tethered sound recordings: (1) do nothing, and allow Section 115 to control the imposition of downstream royalties on NFTs; or (2) amend Section 119 to recognize a digital first sale doctrine for NFTs.

Keywords: NFTs, Copyrights, DMCA, Blockchain, DRM

JEL Classification: K

Suggested Citation

Catanzaro, Zachary, Fixing ReDigi: NFT Tethered Sound Recordings (August 1, 2022). Available at SSRN: https://ssrn.com/abstract=4182902 or http://dx.doi.org/10.2139/ssrn.4182902

Zachary Catanzaro (Contact Author)

St. Thomas University ( email )

16400 NW 32nd Ave
Miami, FL
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
37
PlumX Metrics