Partner Article

Redigi case could be music industry boost

Laura Harper, Partner and Head of Creative Industries at Ward Hadaway, looks at the result of a recent court case in the US, and how it could help to stave off a potential digital threat to the music industry.

The music business in general and record companies in particular have been hard hit by the explosion in illegal music downloads and have seen the income from music sales decline.

While the success of legal download sites like iTunes has helped to stem the flow of money out of the industry, a new business called Redigi, which enables users to buy and sell legally purchased ‘used’ downloads, had potentially threatened revenues of record labels.

Alarmed by this, Capitol Records has taken ReDigi to court in the USA, arguing that its business model infringes copyright laws, and the court has ruled in favour of Capitol.

In the case, Capitol complained that the ReDigi platform, which was launched in October 2011, allowed the unauthorized reproduction and distribution of its music, including through the streaming of 30-second clips.

U.S. District Judge Richard Sullivan in Manhattan ruled that ReDigi was not authorized to allow listeners to use its platform to buy and sell “used” digital music tracks originally bought from Apple’s iTunes website.

The Judge said that ReDigi’s business profited directly from the sale of copyrighted recordings and that its activities were likely to have a detrimental impact on the main market for music.

This is a significant ruling, not just for the music business in the USA but also for the industry in the UK since ReDigi was planning to launch a European version of its website.

Record labels are finding it increasingly more challenging to make profits from music sales and the prospect of losing further potential revenue is not an attractive one for them.

However, it is unlikely to be the final word on the subject of the market for ‘used’ digital downloads, not least since both Apple and Amazon are applying for patents in the US for mechanisms which would allow customers to sell or transfer second-hand digital goods.

In addition, there have been suggestions that a ruling in the European Court of Justice may make ReDigi’s current business model legal in the EU.

What is certain is that the music industry is facing up to some major challenges in the coming years and I expect that many of these will be debated at Liverpool Sound City 2013, alongside some terrific live performances and an exhibition showcasing the latest technology in the music and digital arena.

The licensing of music in the digital age is the topic of a debate at the festival which will involve Creative Industries team Solicitor Carol Isherwood, alongside Colin Doran from Bandapp, Oleg Fomenko from Bloom FM, Andrea Leonlili from Digital Music Trends and Alex Vlassopulus from Omnifone.

As well as contributing to music debates during the festival, which runs from May 2 to May 4, the Creative Industries team will also be running the Liverpool Sound City Business Clinics where musicians and digital and music businesses can obtain free one-to-one advice in respect of their intellectual property queries.

In addition, Ward Hadaway will be an exhibitor at the Liverpool Sound City Expo - a trade exhibition divided into four main zones – music, digital, games and DJ – with industry exhibitors showcasing the latest equipment and developments in those sectors.

Liverpool Sound City has always proved to be a magnet for attracting the brightest and best new bands, ideas and developments in the music, digital and creative sectors and this year promises to be no different.

We are really looking forward to playing our part in the event and bringing our message of high quality, accessible legal advice to the event stakeholders, delegates and those taking part.

Ward Hadaway is playing a key role in Liverpool Sound City 2013 as Official Entertainment Law Firm for the three-day festival of the latest in the music, digital and creative industries. As well as being an official partner for the event, which takes place later this week, Ward Hadaway’s award-winning Creative Industries team will be involved in activities including panel debates on the future of the music business.

This was posted in Bdaily's Members' News section by Ward Hadaway .