Should we be able to resell the apps, music and ebooks we have paid for?

August 1, 2012
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It’s a question that has come into prevalence with the rise of digital media. Do we actually own apps, music, ebooks, and other content we use, and can we legally resell them individually, or along with our devices?

As one medium of information gives way to another, the question of ownership of content will usually come into place. This is especially important with the popularity of digital media. In one way, the analog medium has given way to digital, mostly due to convenience. It’s more convenient to buy digital music than physical CDs. It’s quicker to purchase and download e-books than go to the bookstore or wait for a hard copy to be shipped. You can buy apps with a tap of your finger — no more need to run to the store to buy a DVD installer.

But as formats have changed, the way we own the content is also changing. This has led to a variety of questions over ownership and transfer-ability. Do we actually own the music we buy? Do we own the software we download, or the music we listen to? Do we own that copy of Cut the Rope or Minecraft? Or are we merely borrowers at the mercy of the developer and platform provider?

As a corollary, questions also arise whether we can legally transfer these content to another person when we dispose of our devices. Can you sell your Samsung Galaxy S2 along with downloaded apps when you upgrade to the S3 (without including your Google Play credentials, of course)?

Licensing vs. ownership

It all boils down to ownership. When you buy a physical book, you obtain the rights to that copy, which includes both the medium and the content. However, e-book distributors would want to differ. For instance, Amazon’s Kindle terms of service only grants you a license to read the book, but you do not actually own it.

Digital Content is licensed, not sold, to you by the Content Provider.

Moreover, Amazon explicitly says you cannot transfer these rights. “You may not¬†sell, rent, lease, distribute, broadcast, sublicense, or otherwise assign any rights to the Digital Content or any portion of it to any third party.” This severely limits the ways you can dispose of the Twilight Saga Collection you purchased on a whim with 1-Click.

It’s the same with Android applications, or at least to some extent. Google Play’s terms of service is also explicit about not allowing you to “copy, sell, license, distribute, transfer, modify, adapt, translate, prepare derivative works from, decompile, reverse engineer, disassemble or otherwise attempt to derive source code from” applications, unless otherwise given specific permission by the developer (such as free and open-source apps, of course).

If Android has restrictions, then Apple is even stricter, and users cannot “rent, lease, lend, sell, transfer redistribute, or sublicense the Licensed Application.”¬†In fact, Apple even requires users to “remove the Licensed Application from the Mac Computer or iOS Device” before selling a device, such as an iPhone, iPad, iPod or Mac.

Barnes & Noble's Nook

GoodEreader Barnes & Noble’s Nook

Principles of Fair Use and First Sale

Of course, there are always ways of circumventing the restrictions of copyright and licensing agreements. In creative works, this mostly falls under the doctrine of Fair Use. This concept is mostly related to republishing portions of existing copyrighted works for academic and personal use, though. For instance, I can say that my quoting of the terms of service above will fall under fair use, since I am citing the content for educational purposes.

In terms of re-selling a medium containing creative works, such as music, applications and literature, the courts of law use the First Sale doctrine when determining the legality of an act of re-selling media.

However, even this doctrine is changing in nature, given the rise of digital media and broadband connections.

For almost a century, this doctrine has allowed individuals (or entities) who buy copes of copyrighted work to resell, rent or lend these out, in order to maximize public access. This is the very precept that allows public libraries and video rental shops to operate.

A 2003 Boston College Law Review paper by Ruth Anthony Reese suggests different approaches to different kinds of content, especially with the rise of digital networks. With the Internet offering split-second transmission of ebooks, multimedia files and applications, the validity of the first sale principle comes into question. With physical media, First Sale benefits secondary markets, rental businesses and lending facilities (such as libraries), because the public gains access to copyrighted content at a lower cost than buying a new copy of the physical medium.

There is a limitation to the First Sale doctrine, though, which is that transfer can only be made of the legitimate copy involved (such as the book you bought), but not additional copies.

It is argued that once digital content is copied from one device to another, this already constitutes reproduction, which may already be illegal in itself. It is difficult to re-sell digital media without first making a copy, which is like photocopying an entire volume of your grandmother’s Collier’s Encyclopedia and selling it to a friend at cost.

But what if you’re selling your Kindle, which contains books bought and downloaded from your personal Amazon account? Or, what about your iPod? If you sell your 160GB iPod Classic brimming to capacity with 40,000 songs, can you leave the songs intact for the next owner to enjoy?

Secondary market for digital goods: the case for ReDigi

Even with these issues in the air, there are a few startups that venture to support the secondary market for digital goods. ReDigi, for one, is a cloud storage for digital media. It is also a marketplace that offers iTunes users the ability to resell the tracks they no longer want. The system includes a verification engine that checks whether you have actually legally bought a track from iTunes.

ReDigi actually deletes the track in question from the user’s hard drive, in order to comply with the “first sale” principle of selling your copy but not being able to keep a duplicate copy in your possession.

Earlier this year, a U.S. District Judge has actually turned down the request of record label EMI for a preliminary injunction against ReDigi, saying a full trial will shed light to the “fascinating” technological and legal questions that involve such secondary markets.

Are cheap apps and e-books the solution?

The Boston College Law Review paper recommended for the content to be “sold” — or actually licensed out — at a lower cost, which will help improve access and therefore encourage demand. Subscription services are also a good alternative to outright purchases. Regular micro-payments over time assure the consumer access to the content and updates, while assuring the copyright owner a stream of income.

In effect, our ability to buy apps at $0.99 and ebooks at less than five bucks apiece and get these almost instantaneously is already the more economically viable and more gratifying alternative to rummaging for a copy of the book at the second-hand bookstore seven blocks away. With prices this low, there should probably be no incentive to buy a second-hand e-book, piece of software, or music track if it’s already so cheap and accessible on Amazon, Google Play or iTunes, anyway.

The only incentive for secondary markets would be for a person who has downloaded tons of ebooks or music tracks and want to recoup his investment in these when selling a device.

Should we be able to resell?

The short answer is no. You don’t actually buy an app, music track or e-book. You buy rights to use the software, listen to the music and read the e-book, and you cannot resell this right. At least not at this time.

But given the non-exclusive license that the publishers give you, you can play the music in a room full of friends, read an e-book aloud to your child, and play multi-player Fruit Ninja on your tablet with a friend. This is different from transferring the rights to another person altogether, and is within the fair usage principles.

The long answer may be a bit more complicated.

The difficulty here is the nature of the medium. It’s not tangible, and content can easily be copied (sans DRM, of course). And so who’s stopping a potential large-scale pirate from downloading a single copy of Justin Bieber’s¬†As Long As You Love Me¬†from iTunes and re-selling the track for 50 cents apiece? Oh, wait, why not even distribute it for free?

Getting back to the ideals (if not the exact spirit) of the fair use principle, there’s probably no harm in lending or selling your Kindle to another person with the e-books intact, especially if you’re not charging for each and every book on the device. You can sell the medium (which is the e-reader), which so happens to already contain a few electronic books.

Are you liable? Yes. The question is whether a copyright owner will actually spend thousands in tracking you down, filing a lawsuit and sustaining this litigation. On a user’s part, it’s a matter of using discretion and moderation. Can you sleep soundly tonight knowing you left a copy of A Dance With Dragons¬†in your Kindle when you sold it to a friend? Probably. Will a litter of kittens die if you forget to clear your iPod after handing it down to a relative? Maybe not. But charging a dollar for each music track is probably going too far, when the third party can simply buy these on their own.

New perspectives in “ownership”

It’s a matter of changing perspectives in the use and ownership of media. Physical books let users own both the medium and the copy of content in a tangible form. But with electronic formats, you buy access to the content, which can come in different forms: streaming, web access, mobile, cloud-based, and the like.

There are already calls for distributors and publishers to offer the ability to transfer licenses, although it will take someone to start with a really innovative business model for distributors to even consider allowing this. For now, there’s simply no economic incentive to let end-users resell their licenses. Amazon, Google, Apple and everyone else may as well offer full refunds for the content we have consumed and enjoyed as long as we “return” these. For now, perhaps we can be thankful for the fact that we have access to cheap songs, apps and music tracks even without having to buy them second-hand.

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