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ReDigi challenges the music industry’s business model… again

October 7, 2012 by Richard in Business Transformation with 4 Comments

ReDigi logo
Just when the music industry is getting to grips with making making in a digital world, digital disruption is hitting again. EMI/Capitol Records was back in court last week in its battle with startup ReDigi, a service that facilitates users to sell their digital tracks.

This time the music industry has the support of previous disruptors like Google and Apple, now the internet establishment.

ReDigi argues that just like physical music recordings that consumers have bought, digital tracks should have a value in the aftermarket and people should legally be able to trade them. EMI appears to believe the emergence of a second-hand market for legal digital music could harm the now robust first-hand sales. Google is concerned it could harm the fledging revenues of the cloud computing industry.

Who owns your iTunes music? You or Apple?

The ReDigi argument is compelling, and subconsciously one reason why I prefer to continue to buy CDs and transfer them to unlocked MP3 files. If I buy Digital Rights Protected music through Apple I am supplied with tracks that lock me into using iTunes and a limited number of registered devices.

While Apple’s iCloud service is convenient as it automatically stores tracks bought from iTunes, it does reinforce the question about where true ownership of the purchased music lies.

I buy in iTunes, I have to play it in iTunes, I have to use an iTunes registered device and it gets stored in Apple’s servers. It feels like Apple has retained ownership, and I have merely paid to access it on a limited basis.

Music streaming services like Spotify are much more transparent about where ownership lies, or rather where it doesn’t . A subscriber is merely paying for the right to play a track, they do not own it.

ReDigi is trying to facilitate a means by which I can transfer ownership of a track to somebody else, just like I might sell a CD I no longer want. That not only seems perfectly reasonable but it would make it clear that I own my music, not Apple.

Disrupting the disruptors

Another interesting angle on this story is that it is the second or third wave of digital disruption to hit the music industry. Now the original disruptors are under threat of disruption.

The first wave was digital music files, notably those distributed illegally which eroded price and the number of people paying. After many years, the industry has eventually embraced legal digital music and the price per track on digital is now about the same as on CD.

The music streamers like Spotify have been the second wave, offering ‘all you can eat’ music for a flat monthly fee. The average revenue per track is likely to be much lower than digital purchases. The streamers are the greatest threat to the ‘established’ business model of distributors like Apple.

We now have the aftermarket, which should again challenge who can control the digital rights of each file and could push the price per track down again.

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4 Comments

  1. ThomasOct 8, 2012 at 11:01 amReply

    “If I buy Digital Rights Protected music through Apple I am supplied with tracks that lock me into using iTunes and a limited number of registered devices.”

    While the iTunes TOS issues are still there, this hasn’t been true since Apple stopped using DRM on music in 2009, following a public letter from Steve Jobs in 2007 distancing Apple from the label-mandated DRM.

  2. RahulOct 8, 2012 at 9:10 pmReply

    Interesting post Rich. In fact a common argument for downloading music “free” is that in the old days I could share my CD with anyone I wanted. Now with the net I can transfer music I own to anyone. So is it piracy if Im not commercially gaining from it? Since it has now been accepted that the above is piracy (whether rightly or wrongly), if ReDigi becomes big it will challenge and raise these issues again.

    However regarding DRM Im pretty sure music from Itunes is now DRM free. The files are now downloaded in m4a (aac) format which can be transferred to non-apple devices. My entire library which is pretty much from Itunes works on my Blackberry.

  3. RichardOct 8, 2012 at 9:20 pmReplyAuthor

    Thomas, Rahul
    Thanks for your comments. GIven you have both pointed out that Apple is now DRM free you must be right! That said, it still stops me every now and then when I add a device or try to move files, but I guess that must be to do with legacy files.

    I suppose, the wider feeling is that I still feel locked in and don’t feel like I own my itunes music, as opposed to the files I have downloaded from CD. Maybe that’s just me…

  4. RichardApr 2, 2013 at 9:05 pmReply

    2 April 2013 – UPDATE
    ReDigi lost its court case today
    http://www.bbc.co.uk/news/technology-22000668

    The judge ruled that digital content ruled that copyright extends beyond the content’s first sale, so unlike a CD (which wears out) you can’t resell the files (which don’t wear out)

    This is a victory for the record labels (and movie studios) but is likely to be challenged again before long

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