Who Owns Digital Goods? (Hint: Probably Not the Customer)

eBookAccording to a legal ruling filed on Saturday, March 30, 2012, consumers don’t have the right to resell digital media that they have purchased from the copyright owner. Peter Kafka, from All Things D, reported that U.S. District Judge Richard Sullivan sided with Capitol Records against ReDigi, a site that allows users to resell the music in their music library.

This finding is in direct opposition to the first sale doctrine that exists with physical media. I understand the reasoning behind this. Digital media is infinitely copyable and therefore someone could keep a copy of the media and then resell a copy online. That is pretty hard to manage if a third party is handling the sales. The flip side of that is that the price of a lot of digital media, especially ebooks, is no cheaper and sometimes more expensive than the physical copies. With no cost in raw materials and less cost in download vs transportation of the physical goods, that shouldn’t logically be the case.

So, since the courts are leaning towards not allowing resale and the prices seem a little high to some, where does that leave us? Well, if people are unhappy enough, sales of digital media might drop (unlikely), illegal downloading may increase (possibly) or the companies providing the digital goods might come up with their own way to resell their goods. While it doesn’t seem likely that the copyright owners are forward enough thinking to push for the last, it would probably be the best solution for everyone.

I envision the situation like this. If you want the ability to resell a digital good, you agree to purchasing a copy with the rights to resell. That version would cost the same as a copy without DRM (or minimal DRM), but would include copyright protection that would require you to verify the DRM periodically to use the digital goods. Ideally, the frequency would be long enough that you could go on vacation without internet without losing access to your digital goods before you return. Let’s say monthly.

Then, when you want to resell the media, you login to the store you purchased it from, click resell on the digital good and you get a credit towards another purchase. Maybe 10-25% of the purchase price. When that sale is completed, your file is deleted and the server is updated to prevent you from accessing that file again if you have another copy. Problem solved. Plus, you have a credit, so you’re going to be making another purchase. As a result, the money continues to flow to the copyright holders. In addition, no cheaper copies are available for anyone to purchase because those “files” won’t be “resold”. Everyone has to buy new copies, so copyright owners always earn their cut unlike it has been in the past with physical media sold through used book and music stores.

Will all consumers like this model? Probably not? Do I? It’s not ideal because it makes things a little more complicated, but it’s better than what we have now. And in this paradigm, you still have the option to stay with DRM free if you prefer it, which I think I would in most cases. Now, if any company wants to take me on as a consultant to help them with this, you know where to reach me!

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