The Next Era of Digital Media

The advent of digital media, including online music stores, e-books, and the ability to purchase and/or rent movies with one click, has resulted in an increase in individual copies of such media only previously seen with the invention of the printing press, the 8-track, and the VHS. None of those creations can come close to reaching the explosive upturn in media that the Internet has allowed, however. With this start comes the question of where digital media will go next in terms of growth and expansion.

One of the areas most likely to be successful is that of digital media reselling or lending. This raises major intellectual property issues and will also be of great concern to publishers, movies studios, and recording companies. Amazon and Apple, arguably two of the largest digital media providers, both recently began forays into the area by filing patents to essentially create systems or markets for their customers to resell or swap their digital media.

Amazon’s patent is set to be similar to its current online marketplace for used, tangible media in that it would allow users to exchange or sell their digital media, for a reduced cost. Each user would have two lists, one with items available to other users and another similar to a “wish list,” detailing media the user wishes to obtain. Amazon would earn a commission on that sale, much as eBay does on all of its sales. Each original piece of media would be removed from the seller’s “library” or “collection” and transferred completely to the buyer, thereby ensuring that copyright laws are not infringed.

The patent filed by Apple is very similar to Amazon’s in that it also removes the original file from one user to another, ensuring that there is no copying. Apple seems to have been more specific about proceeds going back to the original copyright owners, with a system based upon time and the number of transfers a piece of media has experienced. It also allows for temporary, partial, and delayed transfers, as well as loans of digital media.

Both of these potential systems may face competition from the largest current digital media resale company, ReDigi. That company allows users to sell their iTunes files by ensuring they were legally bought, then deleting them from the seller’s computers and devices. In this manner, the company claims that there is no copyright infringement because the original work is kept intact, with no copying. However, the company is currently defending a copyright infringement suit brought by Capitol Records and could potentially shut down should the judge rule for the recording company. One major defense argument that has the potential to be applicable to all types of digital media is Section 117 of the Copyright Act. That section essentially says that a new copy of a computer program (the question is whether digital media files meet this definition) is not a new infringement of copyright if its creation is an essential step in using the program in conjunction with a machine. ReDigi argues that an mp3 file is a computer program; thus, liability does not attach to reselling such files.

Whatever the outcome of the current ReDigi litigation or the respective patents filed by Amazon and Apple, it seems certain that digital media is headed towards an era in which prices will decrease for “used” copies, much as they have with tangible books, CDs, and movies. This will have enormous impacts on the major entertainment industry players as they will be forced to rethink their revenue models, but they will certainly innovate, as they have at every other turn.

—

* Stephen C. Pritchard is a second year law student at Wake Forest University School of Law. He holds a Bachelor of Science in Information Systems and Operations Management, with minors in Economics and Political Science, from the University of North Carolina at Greensboro. Upon graduation, he intends to practice corporate and entertainment law.