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« Build a Community to Build a Music Business - What I Learned From Cliff Ravenscraft | Main | The Record Industry Innovation Prize 2009 »
Sunday
May252008

Reselling music, the value of music

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Let’s say you bought some tunes at the iTunes Store. DRM free. You don’t really like that music and want to resell it to people who like it. How much is it worth? Same price? Less? Nothing?

How much is a digital download worth when you resell it? Think about that for a moment.

(CC-BY foto: jenn_jenn)

 

Reader Comments (26)

Hmm, interesting question. I only come up with a host of other questions - would this come under questions of licensing? What would be owed to the original artist if a reseller were to be involved? Unless something is specifically released under a license allowing sale, could this even be allowed? Should the artist have a say? In some ways, an artist may even prefer something be given away at the second hand stage rather than sold as it offers promotion.

The nature of music delivery has shifted considerably for the musician. Personally, I like to offer DRM-free music with the idea that it will be shared. When someone purchases the music either from iTunes or my own site, I consider it more as a tip, rather than as a sale per se, the difference with the former being a direct acknowledgment and thanks for the work in creating the music.

The idea of resale obviously removes the artist from the equation. Though it doesn't answer the question, it is associated with the question.

I'm not really answering, but the post does offer some interesting thought.

May 25 | Unregistered CommenterKouorsh

The question is how often it is sold. If the download is sold once, it could be exactly the same price it had originally. If it was sold multiple times, the artist should get the money. But that's all theory.

Just spent the whole sunday afternoon on my veranday playing the Les Paul and enjoyed a time without thinking about the future of music in the digital age. ;-)

May 25 | Unregistered CommenterPeter Blue

Re-sell a digital download? Is this a trick? If it is, I fell for this once before on Dubbers "Money back guarantee" from his digital download store.

I mean is it being seriously considered that there would be a used mp3 market similar to the used CD, vinyl, or DVD market?

Surely artists of today realize that depending on a recorded music (product) sales as your cash cow is a thing of yesterday. Licensing is the more dependable route for "recorded" music...Maybe, surely even DVD product sales (concerts, videos, documentaries etc. etc.)

I think the future of the mp3 or what ever form the song comes via digital download will / is a medium for exposure and promotion and not the foundation for an income in the industry.

I mean really; "Welcome to the Used iTunes Store" is just not something I ever expect to see.

May 25 | Unregistered CommenterMilton

One step ahead of you here. I long ago registered the domain secondhandmp3store.com just for a bit of fun. Working on the details now... :)

But when you start from ridiculous premises, you can come up with quite creative solutions.

For instance, I actually think that iTunes is the one place that you could actually do a second hand mp3 store because of the way their DRM works. All a secondary market would require would be that the tracks be transferred to another account.

You'd sign in, 'sell' your used iTunes purchases for maybe 50 cents. Maybe you could put the price down if it hadn't sold after a few weeks...

Buyers would sign in, pick up the bargains, and at the point of sale, the site would automatically deregister the tracks from your computer and register it on the purchaser's account. If I was Apple, I'd take 20% on the deal for the transaction cost - and I'd launch it tomorrow.

Then you could spend your money on new songs, or cash it in.

My understanding of the second hand music market is that mechanical rights do not extend to resale. This is just an exchange between individuals, mediated by a professionalised 3rd party. Like selling a CD on eBay - only easier and quicker.

You could post 2nd-hand want lists that auto-purchase when someone sells the songs you want, and you could get people into purchasing and discovering music by browsing the 5 cent bargain bins, and walking away with digital armloads of music.

Honestly, I think this would work. I'm claiming this idea as property of the Music Think Tank. If you can do the tech, let's offer it to them. :)

Well I'll be damned!

May 25 | Unregistered CommenterMilton

I'd like to see some sort of affiliate scheme running in iTunes, Tunecore, Nimbit etc so that fans who get other fans to buy your stuff get some sort of a cut - affiliate marketing is everywhere on the internet apart from music, which seems crazy to me

Ok it's not reselling, but it's related

To me reselling drm free mp3 sounds like reselling air. If anything is freely available, its market value reduces to zero. Right?

But let us continue and for a moment contemplate on how second hand goods are sold in the real world.

Usually it is simply connected to the wear and tear that the goods have gone through. A car that has been driven 10K Km is of more value than a car that has been driven a 100K, given the models and make are the same.

A book that looks really worn down is far cheaper than a book that looks like it was just on someone's shelf.

An MP3 does not show any wear and tear, CDs or hard disks do, but not the digital file. So technically it should sell at the same price as it was bought at. Now that seems a rip off.

Clearly the first buyer has either derived some pleasure from the mp3 or has found it utterly boring or wants to sell it to raise some cash for a different project. Either way the buyer expects the seller to write off some value from the original price. Does sound a bit irrational, but is that not how people think when selling/buying second hand goods?

The above realisation raises a different question - if we agree that selling a second hand mp3 at its original price is a rip-off, why is it not a rip-off to sell an mp3 in the first place?

May 27 | Unregistered CommenterKulpreet

Like anything, it's worth what you can get for it.

The issue as I see it is that a digital product doesn't seem rare. With physical products, you know there is only one. With digital stuff, there could be 1,000,000 versions of it, each just as good. And that will kill the value...to some people.

Perhaps the way to do it is to attach the digital product to a "holder." That's all a CD is. Maybe a hard drive or iPod?

Hi there. It's my first comment ever and my English is quite crappy, so bear with me... First of all I think we can't compare 2nd hand stuff in the real and the digital world. When I resell my car (no one would buy this thing but just let's assume...) the buyer has it from now on (same with mp3s) but I don't. So the car 'travels' from one owner to the next. An mp3 would not travel, it would be copied (every copy an original, remember?). So a few questions come to my mind: Why the mentioning of 'not liking' the music? He could sell it whether he likes it or not because he still keeps his file. He would need to delete (an extra activity) the mp3 on his computer after he sold it. Now why would he do that? Wouldn't he rather have a go at selling it more than once. Now this may sound weird but if he had his own blog-myspace-website-shop-network-rss-whatever-thing he could even sell it more often than the itunes store in the first place. He couldn't? Why? It's used, remember? No one can stop me from selling my used car even if it is 'protected' by the manufacturer. This point doesn't come up in the real world because the used good exists only once (in that same condition, colour, area, etc.). I'm not a lawyer but is there a law that would forbid the reselling of used music? And if yes, where does it end? How often could I resell the mp3? Once? Twice? a million times? With writing this another point arises: Would this even be REselling? Where is the RE if every copy is an original? Who would buy the itunes file if one could get that same file as 'used' for half the price? Where do all these questions lead us?
Does music have a countable worth at all? And if yes, how much? The price of a cd is calculated on all the costs that led to its manufacturing. But is the artist's creativity really involved in this calculation? The process of really creating the song? Could it be that the one thing the song is about doesn't even appear in the whole calculation process? Furthermore, could it be that this might be the only factor that counts in the digital age where everybody is able (more or less) to produce hq-recordings on his home computer?
I guess I could go on for aeons with this comment but I'm kind of scared already...
I hope this is not complete rubbish, my imagination sometimes leads me to strange places...

May 28 | Unregistered Commenteraudiot

This is why my iTunes second hand store scenario works. You're not selling the file, you're transferring authorisation.

So let's say I've downloaded a track from iTunes for $1 (I'm rounding for simplicity), and then I want to sell it through the 2nd hand marketplace. I indicate that I have it for sale, and so iTunes lists that track as being available second hand. They are the intermediary. They don't buy them back - they sell on behalf and take a commission.

You come along and give the iTunes second hand store 50 cents. They give me 40 cents. The track is de-authorised from my account so I can't play it any more, and it's authorised in your account so you can download it and listen to it.

The track never left my computer, but ownership is transferred.

You get a bargain, I get to recoup some of my purchase price on an unwanted track and iTunes get to make a bit of extra money on the same track, even though there are actually no more playable copies in existence than there were before (workarounds notwithstanding).

I see, but why should itunes do that? If you (as the seller of the track) need itunes to transfer authorisation - meaning you can't resell the mp3 without itunes' help - wouldn't they rather sell a 'new' file to the buyer? If the buyer wants the track he would be willing to pay the full 1$ as long as itunes wouldn't go with the second-hand-thing. I'm not sure if I'm making myself clear (I hate my English...).
And one more thought on this: wouldn't the whole authorisation action create another kind of scarcity?
Thanx for the answer, I'm thinking about this value-of-music idea for days now and it seems kind of hard to form a clear statement about it. For example, I read a few hours ago that the value of something is defined through how much use it is for someone (is that even a sentence?). Meaning a juicy steak is worth more to you when you haven't eaten in maybe 10 hours than directly after a big meal. To a vegan it's worth nothing at all and to an Ethiopian its value is unmeasurable. With music it would be similar, a song you like is worth more to you than one you don't care about. But that's not it, time's a factor too...and the mood one's in as well. This would lead to the thought that the value of a song changes continuously.
Well, that second half of this comment has hardly anything to do with the second-hand-idea. Just random thoughts...

May 28 | Unregistered Commenteraudiot

I wouldn´t want to resell Music i don´t like.

May 28 | Unregistered CommenterKnorz.

Why must all digital recorded music be the same price? Perhaps a different price could be charged for the purchase of a track that can be infinitely copied/shared (a la Creative Commons)? Or perhaps if someone wanted to purchase a stem/layer of a song, why not have a different price for that (much like radiohead sold stems for its remixable release contest). I mean, they're already charging extra for ringtone use! So, the price you pay should relate to how you will use the song. The notion of one size fits all pricing doesn't really seem to work anymore!

May 28 | Unregistered CommenterGavroche

What a post, and kudos to all for seriously stimulating thought! Still sitting w/it...wondering what Bruce thinks?

May 28 | Unregistered CommenterDg.

Perhaps when people purchase something that they can get for free elsewhere, they are purchasing the intangible benefits as much, or more so, than the actual product. Why do people purchase .99 cent downloads? For the convenience, for the security and for the uniformity, and not because of the price.

Any used MP3 proposition that does not enhance the non-price related, intangible benefits already offered for .99 cents...is doomed to fail. Also, does "used" imply not wanted or unpopular? Any song/product sitting in the used store would have to be "as popular" as other alternatives, as secure, as convenient, and as uniform as the real thing..

Wow - here's where we differ. I absolutely prioritise second hand (pre-loved) music over the new stuff. I love music that other people have owned. Either they didn't like it / didn't get it (philistines!) or they needed the cash for personal reasons and I get a bargain as a result. Win!

I love browsing through the second hand stores. You can't get everything that can be bought at full retail - but it's where you stumble across the weird and the wonderful.

I love music that other people discard. It had never even occurred to me that people might see it as a negative thing. I mean - why would you like music that other people liked?

My impression was that castoff MP3s would not be able to be used - ever again - on the original buyers' machine. So, if you are casting them off for good, then perhaps they suck. We all know used CDs are done differently - rip, copy, burn, trade. There's no knowing if the original CD purchaser still has a copy. Unfortunately, a secondhand MP3 store would never work the same as the secondhand CD store.

I am actually amazed at the thought of second hand CD's as worthy of "crate digging" status...Which is a little of what I perceive in Andrew's comment. I had not thought of CD's in that way.

For those of you who may not have heard the term before, "crate digging" is the practice of rummaging through second hand vinyl stores looking for that "rare groove"...I am sure it is an all around audiophile thing but I am familiar with it from DJing.

There is nothing more satisfying to me as a DJ than spending an hour at a rummage sale flipping through endless stacks of vinyl and finding that "rare groove" (especially if I can walk away with a stack of vinyl for around $5!)...But I never saw CD's in that light. Looking back I suppose I have done the same thing with CD's but not in the same volume.

Having said that, I honestly can't perceive that I would ever think of a "used" mp3 in that way. The reason for this can be attributed greatly to the ability to scour the web for "previews" of tunes and even more so to the practice of file sharing.

Sure it would be nice to get the song for less than .99 but how much less could it actually be? And in our disposable income environment (the music buying environment) what is a few cents difference? I think it is not worth the hassle that establishing such a system would entail.

It seems like an awfully lot of extra programming on the business end and a few too many extra clicks on the consumer end at the current pricing (i.e. .99). Now I might see it being viable in the realm of full length LP releases...But the shuffle button and the way consumers consume these days leads me to believe that option is falling off...

see: http://www.cityonahillpress.com/article.php?id=1264 (Copy and paste that if it doesn't link.)

It's been a wonderful and lengthy discussion though!

May 30 | Unregistered CommenterMilton

I'm with Bruce and Milton here. Maybe we're thinking about this too much in a 'musician-or-at-least-someone-who-is-somehow-related-to-the-music-business-way', meaning we're buying, collecting, searching for, listening to and thinking about music in a different manner than the average consumer. When I asked my girlfriend what she thinks of a second hand mp3 store, her answer came quickly: "It's only 99 cents, man!"
I think it would become interesting with whole albums or maybe collections of somebody. Getting a whole album for 5 bucks instead of 10 is not a bad deal and buying a mixture of let's say 15 songs from someone who has a similar taste to mine could be quite intriguing. It's like the "people-who-bought-this-also-bought-that-list" on Amazon. That's where profiles of the sellers would come into play - with links to social networks or something.
But for single tracks - I don't know - it seems not worth the effort.

May 30 | Unregistered Commenteraudiot

I think the "loss of resale" has been generally overlooked in discussions of digital music pricing. And -- while Andrew's iTunes idea is intriguing -- given the precedents established by the software industry, I doubt there will ever be a legal market for "used" digital music files.

For what it's worth, here's an analysis from last year of some of the top-selling albums in iTunes. I compared the prices of digital albums to the difference between the price of the new CDs and their respective resale values to calculate the "loss of resale premium" that purchasers of digital albums are paying:

http://digitalaudioinsider.blogspot.com/2007/11/digital-pricing-conundrum-part-iv-loss.html

May 30 | Unregistered CommenterDavid

Its worth as much as they are prepared to pay for it.

May 30 | Unregistered CommenterJohn

The question is moot. Apples ITunes TOS doesn't allow for reselling:

http://www.apple.com/legal/itunes/us/service.html


May 30 | Unregistered CommenterChet

Look again. The TOS just doesn't allow you and I to resell. Doesn't stop Apple themselves from reselling. Nothing in there prevents them from setting this up.

To my eyes, it looks worded just so that they can establish exactly this sort of service, while preventing a third party from doing the same.

Why can't we resell iTunes music? Because iTunes haven't built the resale platform yet.

I sure all of this applies to books as well

June 2 | Unregistered CommenterChuck

"selling back" to the service for store credit sounds like more of a reasonable idea. It makes no sense to "sell used mp3's" to another person. How is a digital file new or used? It doesn't exist. It is just information that resembles something. Could you sell music to other people that you have listened to from your own brain?

August 25 | Unregistered CommenterI Halve Gnomes

There are already people selling Mp3 online - a full year membership ay US$1 to US$4.99! But how do you know if it's just a SELL and not a RE-SELL? Like someone mentioned, you can't really ascertain wear and tear of an mp3 like you do with a cd or dvd.

But whether it is legal, perhaps someone from iTunes or EMI or SONY can shed a light on this?

October 23 | Unregistered Commenterkelly

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