At Monday's CEO Roundtable, co-hosted by Tools of Change and Publishers Weekly, ReDigi Inc. founder John Ossenmacher talked about his company, which offers a new platform for consumers to re-sell their digital goods, particularly content.
ReDigi, which became embroiled in a lawsuit with Capitol Records shortly after launching, made headline once again recently, when Amazon announced it was going to try the start-up's business model. (Earlier this month, Amazon said it was going to create a marketplace for the buying and selling of used books, which was, until that point, the sole domain of ReDigi.)
During the event, which featured a presentation from Ossenmacher interspersed with questions from the crowd--a mix of media, print industry veterans and executives at digital start-ups--various questions arose. Among the most pointed were those about cannibalization, and first sale vs. license.
The way ReDigi works is that it allows consumers to buy and re-sell digital content they have already purchased. Unlike other marketplaces that cater to this exchange on hard goods--be it eBay or a used bookstore--ReDigi allows the original artists and publishers to claim a percentage on each sale. Though Ossenmacher did not provide hard numbers, his main pitch to publishers was that with ReDigi there is now an opportunity to capitalize on sales that they have never made money off of in the past. As Ossenmach put it: "The bigger picture for publishers is that there are billions of dollars on the table."
By applying unique software it has developed, ReDigi can track all conent brought into its system, one which is agnostic to file format. (In other words, whether you have a Nook or a Kindle, you can re-sell your e-books on ReDigi.) Ossenmacher also said ReDigi has the capacity to use this software to track not just sales, but also behavior. How long a consumer engages with an e-book, how often they access it, how many pages of it they read--ReDigi can track all of this behavior.
Although ReDigi has a minimum price that consumers need to set their content at--Ossenmacher did not provide that figure--it does not dictate any terms of sales. And, on each sale (as well as each ensuing re-sale after that), a percentage is given to the publisher and author. For some in the room, the question was about license vs. sale. This notion has long been in play in the digital world, with questions regarding "ownership" of digital goods. Is a consumer "buying" a book when they pruchase an e-book from Amazon, or is that consumer licensing digital content that can still be controlled by the retailer or publisher? The question has significant implications for the way consumers can interact with their content after purchasing it.
The other interesting aspect of ReDigi is that it is a closed marketplace. In other words, a user can only purchase content within the ReDigi ecosystem with funds they have earned from other ReDigi sales. ReDigi does also allow DRM files. How ReDigi allows files with DRM to be shared is something that Ossenmacher said, skirting a complex technology breakdown, is a solution that is "simple and elegant."
While other members of the crowd inquired about cannibalization, referring to the fact that working with ReDigi could mean lost potential sales on new editions, Ossenmacher said he thinks this will not happen. He said that the users in the ReDigi marketplace tend to be passionate listeners and/or readers who want to see artists properly remunerated. Ossenmacher explained: "Part of the social-ness of ReDigi, as weird as it may sound to some people in the this room, is that our users want money going back to the artists."
