FOR SALE: Pre-Owned Bitstream, Gently Used

They are not so common any more, but I'm sure you remember used record & CD shops. Now imagine them without the bricks and mortar. Or the bins. Or the records and CDs. Say what? Welcome to the biggest music-industry brouhaha since Napster.

Here's the deal: you sell your old music files, and then buy someone else's used music files. At first, the idea of selling a music file may seem odd. I mean, a file is an intangible thing. But obviously it's no more odd than buying a music file. As Socrates argued, our bodies are only containers for our immortal souls. Similarly, plastic discs with shaped grooves or raised bumps are only containers for the music they store. As attached as we are to the physical discs, it's really only the music we care about. (Can we say the same about our bodies and souls?)

All of which brings us to ReDigi. Boldly going where no other company has successfully gone before, ReDigi will buy your unwanted and unloved music files for about 32 cents, and then sell those used files for about 79 cents. Ebay is kicking itself for not thinking of that.

Like me, I imagine your first impulse was to profit immensely from this opportunity by selling the same file over and over about 100 million times. Alas, ReDigi guards against that. In fact, they have an elaborate system that ensures the file you are selling came from a legitimate source such as Amazon or iTunes; they will not buy files ripped from CDs. And, a program deletes the file from your computer when it is sold, and also checks to make sure the same file isn't added later (making sure, for example, that you haven't just temporarily moved it somewhere). Both intrusive and ingenious.

Here's the understatement of the day: ReDigi is probably operating in a gray area of the law. While they maintain the legality of their business model, the legal minds of the music industry (and I'm sure the movie and ebook industries have their legal minds sitting in on the meetings) would argue otherwise. For starters, the RIAA has already sent a cease-and-desist letter to ReDigi, arguing that their company infringes music copyright. But, of course, ReDigi argues that it is in compliance.

Here's the legal issue: The "first-sale doctrine" says that after you buy a copyrighted item, you own it and you are free to sell it. ReDigi's business model rests on this. Here's the catch: with digital goods, when you sell it to ReDigi, you make a copy of it, and under copyright law, making copies is not really kosher. Anticipating the challenge, ReDigi says it has developed an "atomic transaction" method that transfers the files without copying them. But here's another twist: when you "buy" a file from iTunes, do you own it, or is the music industry merely licensing its use to you? If there was no sale, you don't own the music, and can't resell it.

Legality aside, is there really a market for ReDigi? In a world where you can easily buy music files, or just as easily pirate them, does anyone really need a hybrid (whether legal or illegal) of both, with a price point in between? For now, no one, not ReDigi, the music industry, or courts of law know for sure.

One thing is certain: we haven't heard the last of this.