Australia: From vinyl to digital - the second hand digital music market and implications for copyright

Last Updated: 2 February 2015
Article by Katrina Crooks and Wen Wu

Along with the well-publicised free iTunes release of its new album Songs of Innocence late last year, U2 has also released the album as a double white-vinyl LP. Of course when U2 started out in the early 1980s, all music was on LP, followed by various other physical formats. Who could forget the 1980s tape, followed by the technical breakthrough of the 1990s CD! Today, while vinyl seems to have turned the corner into retro cool, we mostly expect to download music at the touch of a button, keeping music on our devices purely as electronic files. This is certainly convenient but what happens when your music tastes change? It's easy enough to take those records that now make you cringe to the local second hand music shop, but can you sell unwanted second hand digital goods?

From a copyright perspective, the sale of second hand records, tapes or CDs has never posed a problem. It is readily accepted that a second hand sale of a "genuine" physical item does not infringe copyright in the material on it (homemade mix tapes are another story). However music sold in digital form presents more difficult copyright questions. A single digital file is never truly "sold" to another person but rather another copy must be made. Additionally, what iTunes or any other online music store really "sells" you is a licence to make and use a copy of an album on your device. So, a resale would really be an attempted assignment of a copyright licence.

What does the law have to say about all this?

The situation overseas

In the United States, the digital music re-sale model was taken up by ReDigi, which decided to chance its arm on the copyright position.

ReDigi provided a market to facilitate "resale" of unwanted digital music files between users. ReDigi did not buy or sell the files itself, however as the fate of creators of peer-to-peer file sharing software has shown, this in itself would not allow it to escape potential liability. ReDigi used various technical measures to replicate insofar as possible the nature of a sale of a physical product. First, ReDigi's software scanned a user's computer to identify music files which the user purchased from Apple iTunes or another ReDigi user. Once the music files were identified, the user could upload any of the files to ReDigi's server, and the digital music file was deleted from the user's computer. On "sale" of a file, the seller's access to the file on ReDigi's server was terminated and the file was transferred to the purchasing user.

In 2013, the US District Court upheld a claim brought by Capitol Records against ReDigi for copyright infringement in its sound recordings1. ReDigi had argued that it was effectively "migrating" files from one computer to another. Since the US doctrine of first sale allows the owner of a lawfully made copy to sell that copy, it argued there was no infringement.

The Court rejected these arguments. It was irrelevant that the user's copy is deleted from the user's computer, since a new copy was still created on ReDigi's server, a copyright infringing act. ReDigi's infringement was not excused by the first sale doctrine sale, among other reasons because the new copy on ReDigi's server was not lawfully made. The Court noted that: "Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. ... The first sale defence does not cover [ReDigi's business] any more than it covered the sale of cassette recordings of vinyl records in a bygone era."

Across the Atlantic, the Higher Regional Court of Hamm in Germany also held in 2014 that a contractual clause prohibiting resale of digital audio books was not inconsistent with the principle of exhaustion (the European equivalent to the doctrine of first sale) in the German Copyright Act. The Court distinguished the case from the CJEU's earlier decision in UsedSoft v Oracle, which held that the resale of licences for enterprise software was permissible in appropriate conditions. It found that UsedSoft considered the specific interplay between the EU Software Directive and applicable copyright law and so was not generally applicable to other digital content. Under European law therefore, it appears that the resale of computer programs may be allowed, but resale of other copyright works in digital form is prohibited.

Australian position

Back in Australia, based on copyright law as it currently stands, we do not believe the resale of digital goods would be permitted.

As far as sound recordings are concerned, one of the exclusive rights of the copyright owner is the right to make a copy of the sound recording. In other words, making a copy of the sound recording without permission of the copyright owner infringes copyright. In any "resale" of a digital music file, a new copy of the sound recording must be made on the purchaser's computer. Accordingly, unless permission to "resell" the file (ie, make a new copy of the file) has been given by the copyright owner or an exception in the Copyright Act applies, "resale" of a digital music file would appear to infringe copyright.

The Australian Copyright Act does not include a general doctrine of first sale or principle of exhaustion. We note that in the recent Australian Law Reform Commission report on Copyright and the Digital Economy, eBay raised the issue of exhaustion of rights, and the ALRC noted the effect that such a principle could have in facilitating the resale of second hand digital goods2. However, the ALRC did not further consider the issue as it considered it to be outside the scope of its terms of reference.

As to whether any permission is granted by the copyright owner for resale, we must firstly consider whether there is any express permission. This could vary from service to service. Under the Australian iTunes Store Terms and Conditions, use of purchased content is limited by Apple's "Usage Rules". Users are only authorised to use the content "for personal, non-commercial use" and the user agrees not to sell purchased content. Any "resale" of iTunes content is likely to fall outside of the express permission given in the iTunes Store Terms and Conditions.

Lack of express permission is not necessarily fatal if permission to "resell" the content can be implied. In the case of a specific prohibition of resale such as contained in the iTunes Store Terms and Conditions, it is clear that an implied permission could not be read into the agreement. Even in cases where there is no specific prohibition, relatively strict conditions must be satisfied before such a term could be implied, for example that it was necessary to give business efficacy to the contract, or that it was very well known custom or was a normal incident of sale of digital goods. It seems unlikely at least today, that an implied right of resale would meet such tests.

Possible future developments

While we think that any law reform to allow the general resale of digital goods is unlikely in Australia in the near future, this is not an issue which is going to go away.

Following the judgment against it in 2013, ReDigi announced in early 2014 that it has been granted a patent for technology which allows for resale of music files without the making of a copy. Its system apparently works by having any purchased music immediately stored in a ReDigi cloud facility. The user can play the music by downloading from the cloud. If they want to sell, ownership of the cloud-based file transfers to the purchaser without, according to ReDigi, any additional copies being created. While this may overcome the copyright issues, one wonders how this would stack up contractually under the iTunes terms and conditions, which specifically prohibit resale.

Meanwhile, hot on the heels of its success in its claim against the ReDigi company, Capitol Records has now successfully joined the founding co-owners of ReDigi, John Ossenmacher and Larry Rudolph in its proceedings personally, prompting some to speculate that the damages claim could force ReDigi out of business.

The Capitol – ReDigi battle is far from over, and as those of us still valiantly clutching our CDs are forced to accept that we are a dying breed, it seems that one day this copyright issue will need to be grappled with in Australia too.


1Capitol Records, LLC v ReDigi Inc., 934 F.Supp.2d 640 (2013)

2ALRC Report No. 122, [1.30]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Shelston IP has been awarded the MIP Global Award for Australian IP Firm of the Year 2013.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Katrina Crooks
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions