Blast from the past

February 12, 2012
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Vinyl is back! Suddenly, it is fashionable to say that the LPs and 45s of yesteryear sound so much better than an MP3 and are even preferable to the clinical audio from a compact disc. The few remaining black disc replicators now work flat out on new content while enthusiasts seek “blasts from the past” on second-hand vinyl, in record exchange stores that are the custodians of our musical heritage.

The sound from a well-used second-hand vinyl album picked up at a car boot sale or purchased for pennies in a jumble sale might not be high fidelity, especially when the stylus hits a scratch and throws the needle to the next track. From these random acquisitions, however, a generation of record lovers has discovered music and artists that have shaped tastes and buying habits over the years. The trade in pre-owned media takes place outside the letter of the law but before the arrival of digital media it attracted very little attention unless it took place with criminal intent.

The issue of who owns second-hand content has come to a head with the arrival of ReDigi, a website from a company that describes itself as, “The online marketplace for pre-owned digital music.” Capitol Records in the US alleges that, “ReDigi is a clearing house for copyright infringement and a business model built on widespread, unauthorised copying of sound recordings.” The company seeks an injunction under US law that would mean ReDigi could not buy and sell iTunes tracks that originally were acquired legally through Apple. It also asked for punitive damages of $150,000 (£95,000) per traded track.

The problem for Capitol Records, and any other parties that attach themselves to this case, is a clause in the 1976 Copyright Act in the US that specifically allows the first purchaser to sell or give away a lawful copy without obtaining permission from the rights owner or further restriction. Thus, there is no contractual relationship between subsequent recipients and the original content seller. No such right exists in the UK although most consumers assume wrongly that they can dispose of entertainment content as they please whether or not money changes hands.

Any UK resident who gave a digital disc as a gift at Christmas might find it difficult to adhere to the precise letter of the law. If a CD or DVD is bought for someone else as a gift, it will be almost impossible to assign the agreement with the rights owner to the eventual recipient. The precise legal position of a relative or friend who receives a digital download or access to streaming content has yet to be determined. The “terms and conditions” might bind the original purchaser but it’s difficult to say if they could they extend to the parents or guardians of a child who received a copy of Universal’s “Despicable Me” .

The wording on the pack of a typical disc reads, “Unauthorised copying, lending, renting, exchanging, hiring, public performance or broadcast of this optical disc or any part thereof is strictly prohibited. Any such action establishes liability for a civil action and may give rise to criminal prosecution.”

Content from the cloud is subject to similarly onerous conditions: “You may not copy or display the Digital Content except as permitted and you may not sell, rent, lease or assign any rights to a third party.” To enforce such terms and conditions in a sharing world could prove very difficult at the least.

The challenge for the entertainment industry as a whole that is brought by the arrival of ReDigi is the potential to disrupt the consumers’ concept of what they can and can’t do with the products they think they own, specifically: “Can digital data be bought and sold like any physical commodity?” There must be an enforceable legal position on the ownership of digital files downloaded legally, whether paid for or free, if the industry is to convince consumers that content in the cloud can ever be an alternative to physical media.

ReDigi claims that it can verify any music file uploaded to its system to ensure that it was acquired legally from an eligible source before it is de-authorised on the source device and authorised on the buyer’s system. No data passes directly from buyer to seller. The firm substitutes a new version through its “Atomic Cloud transfer system.” Crucially, it also claims to pay royalties to the content creator for every transaction.

“For the first time in the second-hand music market, ReDigi supports artists directly,” the firm says on its website.

Unsurprisingly, Capitol Records does not see the upstart service in quite such a rosy light. The music label argued in a letter to the court, “ReDigi is a profiteer trying to earn money by processing sales of infringing copies of Capitol’s sound recordings. This case is clearly and specifically about ReDigi and its users copying files for the purposes of transfer and sale for profit to other users.”

Judge Richard Sullivan denied an application by Capitol for a preliminary injunction, which would have stopped ReDigi in its tracks, but the case will continue to court in due time. The outcome will set a precedent that will have implications far beyond a few three-minute audio tracks from iTunes and touch film and games content as well as application software.

Unlike pre-owned physical media, which suffers the degradation imposed by handling, sticky fingerprints and the heat of the sun, a digital file is identical every time. Google is aware of the implications of the case and tried to cuddle up to ReDigi in a legal move that sought to support their case. Capitol Records and the record industry countered that their action poses no threat to the concept of cloud computing, a relatively high-risk strategy that could come back to haunt them later in the case.

Although the court’s decision, when it comes, will apply in the US only, other jurisdictions will have to address the issues raised and content owners in the UK should start thinking about their position now. The ReDigi web site, if it continues, will prove yet another challenge to an embattled industry.

Improbably, vinyl has survived the onslaught of both compact disc and digital downloads. Whether the music industry is ready to cope with yet another upheaval is far from certain. Superficially at least, ReDigi looks to be a good idea, one that Capitol Records should probably have embraced at birth rather than try to strangle with a lengthy court case.