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Saturday, February 18, 2012

Capitol Records Sabotaged Music Business

A service selling pre-owned digital music files complained that Capitol Records company is sabotaging its business.

Music service ReDigi has been operating for several months now and positions itself as a modern-day used record shop, offering customers a platform to purchase and sell used music files.

Media reports prove that Capitol Records were trying to get the service close down for copyright violation, but failed to do so, when a New York federal court judge refused to issue an injunction that would have effectively brought the service down. The case will continue in August.

The music store claims that Capitol leaned on another venture, Rdio, to pull the plug on offering album art and 30-sec playable tracks for ReDigi's service. Rdio licenses material from record labels like Capitol Records and charges users $10 per month to stream unlimited music to various devices, including smartphones and PCs. So now ReDigi isn’t able to show album art and has started pulling in sound snippets from the world’s known service YouTube instead of Rdio. The lawyers of the used MP3 service said that since Capitol had been denied an injunction, it switched to some extrajudicial tactics in order to accomplish what they failed to obtain in court.

ReDigi pointed out that it had signed licensing agreements with Rdio for these services, but Rdio abruptly halted them last week without any notice. Capitol Records will have its work cut out. The new service exists thanks to the first-sale doctrine, saying that people in lawful possession of copyrighted content have the right to resell it. However, this right was questioned in regards to digital music. 4 years ago a federal judge threw out UMG Recordings' claim that it retained perpetual ownership of promotional CDs.

In this copyright case, Capitol Records claimed that the service was responsible for contributing to copyright violation and was demanding the judge immediately order the outfit to remove Capitol-owned content. The company also wanted damages of up to $150,000 per each song against ReDigi.

If the judge agreed, this could have killed the ReDigi business. The service claims that its account owners have a right to upload their iTunes files into the cloud, and assures that when a file is sold, no copy is made, because ReDigi's technology simply doesn’t allow the original uploaded file to be accessed by the seller after sale

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