
ReDigi
Online marketplace and cloud-based service providing pre-owned, legally-acquired digital music.
Date | Investors | Amount | Round |
---|---|---|---|
N/A | €0.0 | round | |
N/A | €0.0 | round | |
N/A | $763k | Debt | |
Total Funding | 000k |
ReDigi Inc. was established in 2009 by co-founders John Ossenmacher and Larry Rudolph, with its online marketplace officially launching in October 2011. The company positioned itself as the world's first online marketplace for pre-owned digital goods, including music, eBooks, games, and software. The business model was designed to create a secondary market for legally acquired digital content, operating similarly to a used record store but in a digital environment. Users could sell their legally purchased digital music files, initially from iTunes, and buy used digital content from other users at a reduced price. Revenue was generated by taking a commission on each transaction.
The core of ReDigi's service was its proprietary technology. Users would download a "Media Manager" application that would scan their computer to verify that their digital files, such as music tracks, were legally purchased. Once verified, the files could be uploaded to ReDigi's cloud storage. The company developed a file-transfer method it called "data migration," which broke files into small packets to be moved to its servers. This process was designed to ensure that the original file was deleted from the seller's computer as it was being uploaded, thereby avoiding the creation of a duplicate copy. Once a file was sold, access was transferred to the new owner, and the seller's access was terminated. The platform also intended to provide a new revenue stream for artists and labels by giving them a percentage of the resale proceeds.
Shortly after its launch, ReDigi faced significant legal challenges. In January 2012, Capitol Records filed a lawsuit against the company, alleging copyright infringement. The central legal question was whether the resale of a digital file constituted an unauthorized reproduction, which is an exclusive right of the copyright holder. ReDigi argued its process was protected under the first-sale doctrine, which allows the owner of a particular physical copy of a copyrighted work to sell it without the copyright holder's permission. However, the courts ultimately sided with Capitol Records. In March 2013, the U.S. District Court for the Southern District of New York ruled that ReDigi's service infringed on reproduction rights because moving a file from a user's computer to ReDigi's server created a new copy, or a "new phonorecord," of the work. This decision was later affirmed by the Second Circuit Court of Appeals in December 2018. As a result of the legal battles and a $3.5 million judgment, ReDigi and its co-founder John Ossenmacher filed for bankruptcy in 2016. The company's website was offline as of December 2020.
Keywords: ReDigi, digital marketplace, used digital music, John Ossenmacher, Larry Rudolph, first-sale doctrine, copyright infringement, Capitol Records, digital resale, online marketplace, cloud storage, data migration, pre-owned digital goods, digital content resale, e-book resale, music resale, legal tech, digital media law, intellectual property