The purpose of this guide is to educate the bargain-hunting musician or home/project studio owner about some of the possible pitfalls of buying second-hand music software, especially on Ebay where you may not have much recourse against a seller. It may also be useful to potential SELLERS of music software they no longer need. This guide addresses resale (or new sale) of LEGITIMATE retail software. It goes without saying that, if you are contributing to the problem that created this whole mess by buying pirated software, you are on your own. One of the four elements of a valid contract is "legal object," which means if you contract to purchase or sell illegally copied software, your contract is legally unenforceable and you have absolutely no recourse against the other party. If you hire the mafia to murder your spouse, and they don't do it, you can't sue them for non-performance. Neither can you send Ebay or Paypal to collect your money back if you buy from a pirate (you can, however, try to turn him/her in outright).

The key point to understand is that software -- be it virtual instruments, virtual rack gear or virtual multi-track recording software -- is not the same as its hardware counterpart in the eyes of the law, nor in the eyes of the company who created it for original sale. That's because it's impossible for the average joe to buy a $5000 Avalon pre-amp and start cloning it for repeated sale on Ebay. So, when you purchase a Mesa Boogie, a Korg M1 or an Alesis reverb, you own that piece of property outright, and can -- with few exceptions -- do what you like with it: sell it, set it on fire, put milk on it and eat it for breakfast.

Software simulations of that same amp, synth or effect, however, do not bestow upon a buyer the same rights. Hardware is PATENTED; software is COPYRIGHTED. There are subtle differences, the most important being that the owner of the copyright sells, not the product itself, but a license to enjoy the use of the product. Casablanca never sold anyone a KISS song outright. Neither you nor I own LOVE GUN, Paul Stanley does (unless he sold it to Paul McCartney or something). The record company only sold the right and opportunity to listen to the song (with the additional caveat it not be played publicly)... the physical album or CD on which the song resides was merely the vehicle for transporting the song to the licensee. What makes it seem like we own the music is that nobody ever tried to restrict the transfer of those physical CDs; but they certainly have made a fuss about copying them -- and now that songs are being delivered digitally via the internet, those digital copies do contain protections that outright prevent their resale. Copyright owners can choose the terms on which they license their product, and they express those terms in the legal tangle of words that is their licensing agreement.

As former music CD buyers, we expect that we have the right to sell a software CD on the secondary market once we no longer want it (especially if we duly delete the product from our own computer before listing the sale). Software companies, as stated in their licensing agreements, are quite adamant that is not the case. Unlike a music CD, most software contains one or more protections to prevent any but the original buyer from installing it. These protections may include mandatory registration, activation, or tying the software to a "hardware key" (commonly known as a dongle). The dongle, not seen much in the productivity software realm, is extremely common among music and video software. Activation of the dongle may (Steinberg) or may not (Korg) be separate from the registration of the product.

So, what all that background info leads to is this: If you are a buyer, there is an extra layer of dilligence you must perform before deciding to bid. It is not enough to simply research features, system requirements and price when dealing with music software. You really MUST learn the REGISTRATION RULES. Is registration required to operate the software, or merely to have access to updates and tech support? If the former, you may not be able to actually use the software without registering/activating it, and you may be required to pay a rather daunting "license transfer fee" to the original manufacturer to do so. If the latter, ask yourself if you can do without those benefits (start by checking the company website to see if there are updates worth having). Perhaps ask the seller if he/she would be willing to download and burn to an included CD all the updates available under their current registration to prevent you having to pay the fee (realize that this is a kissing cousin of piracy, and also that some clever updates check your registration before installing). If you have bought something requiring a hardware key, and the key is not included in the auction (lost, forgotten, never had it, whatever), you have purchased a pretty coaster. If the seller registered the product and there is a transfer fee, and you have not taken that fee into consideration when bidding, the purchase may not be such a great deal after all -- which is exactly what the manufacturer wants. By making the used product less competitive, they encourage buyers to go ahead and buy new copies (theoretically, anyway -- I personally believe they are driving an equal or greater number to buy from pirates, who can sell for pennies on the dollar, underselling the legit seller who is just trying to recoup his investment in a product he no longer uses). In any case, the company gets another $50 bounce on something they already sold for full price. Pretty nice deal for them; not so great for you as a secondary buyer. Even if you are buying new, and the product is not from an authorized dealer (as with Ilio software), there is STILL the possibility your registration may not work, or you may be denied tech support, etc. If the auction does not specify all this information, ask the seller, and keep that answer on file. Avoid any auction where the seller claims complete ignorance. Believe it or not, contract law differentiates between strict negligence and innocent negligence. When a seller says, "I think..." or "As far as I know..." or "I'm not an expert...", he or she is actually employing a clever defense. You will be hard pressed to prove legally that the seller intentionally deceived you when such claims prove to be false.

If you are a potential seller, and you are trying to be honest with your auction, you need to be aware of the rules regarding the product you are trying to sell. Does the license forbid resale of any kind? Do you have the dongle? Have you both activated and registered the software? Can your buyer register/activate it? Is there a fee to do so? Who pays that fee, you or buyer? Some resale information may be found in a FAQ on the manufacturer's website -- or it may NOT, because some of them want to make it that much more difficult for you to resell (if they allow resale at all, more on that below). If you consider this all too much work, then an honorable seller will at least make clear in the auction that there are risks and unanswered questions for which you are not willing to be held liable. Being up front about the unknowns puts the onus on the buyer for doing the research and figuring the risks into his/her bid price. Expect your product to sell for less, however, if you aren't willing and able to provide definitive answers to these questions. After all, they are extremely important! No buyer wants to pay $300 for a disc that doesnt' work, or pay $25 under retail only to learn they must spend $50 more to earn the license. The best course of action is to contact the software company, ask the right questions, pay the fees and terminate the registrations, and figure all that into your opening or reserve price. Buyers will still not pay you equal or more than retail; but they will pay a lot more for software with no stories or risks associated.

Fxpansion, Steinberg, Korg and Ilio all make fantastic software, and they take different approaches regarding their resale.

Fxpansion, makers of the awesome BFD drum software among others, has this policy in place:

1. If you're the seller, you must contact us in advance of the sale. If you're the prospective second-hand buyer, you must check that the seller is cleared to sell. If in doubt, contact us.
2. There is a flat $50 fee per product for a license transfer, which can be purchased from our online shop.
3. Review copies, NFRs (Not For Resale copies, sometimes used for in-store demos), etc., cannot be transferred under any circumstances.
4. We reserve the right to refuse a license transfer request.

Many other companies charge a fee as well as forcing annoying copy protection (such as challenge/response, dongles, CD-checks etc.) on their paying customers. Several well known companies do not allow license transfers at all!

Once a transfer is authorised and the fee has been paid, the new owner is entitled to exactly the same upgrade paths and technical support resources as if they had bought the product new.

As Fxpansion intimates, Steinberg, makers of CUBASE & Nuendo and many virtual instruments, may have both a hardware dongle and a $50 license transfer fee. Steinberg's Cubase SX3, for example, has separate key activation and software registration, so it's theoretically possible to activate their hardware key and use the software without ever registering the software, at the expense of tech support. A buyer should find out what the seller has done with regards to activating and registering, so they know whether there will be fees involved.

Korg's MDE-X has a dongle which is activated concurrently with registration of the software. Korg's site doesn't mention license transfer in any FAQ that I could find, but a phone call directly to Korg has revealed that they do not allow second-hand buyers to activate their product.  In other words, if you bought this software and activated the dongle (a requirement to use it even once), you own it forever -- or at least until you sell the entire computer onto which you installed it.

Ever notice that the fantastic (and priced accordingly) Vienna Symphonic Library and the fabulous virtual piano Ivory, do not pop up for sale on Ebay? The reason is that's Synthogy's parent company, Ilio, takes Korg's total ban on resale one step further: they monitor Ebay daily and remove any auction for their items, new or used. Ilio's licensing agreement FORBIDS transfer of their product under any circumstance. You cannot sell it, you cannot give it away; it does not belong to you. In other words, you have paid a one-time, non-refundable $320 fee to use Ivory, not to purchase it in the traditional sense, and you aren't getting any of your money back, period. Additionally, their dealer agreement forbids sale of their new software on Ebay.  As a seller, you need to realize that Ilio is going to cancel your auction within 24 hours of posting it, so save yourself the trouble of listing. As a buyer, you need to realize that, even if somebody tries to dodge the incoming missile by setting a BUY IT NOW price and listing for only 24 hours in hopes a buyer pulls the trigger before Ilio does their daily check, and even if the product is new in the shrinkwrap, Ilio will not support that product if you bought it on Ebay. I quote from their website:

Q: What happens if I purchase a Virtual Instrument or Sample Library from Ebay or an unauthorized dealer?

A: No ILIO authorized dealer is permitted to sell on Ebay. Buying a product from Ebay or an unauthorized dealer will not only void your license, but you risk legal action if you use the product in your work. In addition, purchasing from Ebay or an unauthorized dealer does not guarantee the usability of the product. For example, you may receive a burned duplicate with no documentation that may not install properly, and has no support, and no possibility of upgrading.

Q: Is it OK to sell the used disc to someone if I'm finished with the project that I needed it for?

A: NO, absolutely NOT. Unlike your musical gear, music CDs, or even software, you cannot give away or sell this disc to someone else. YOU DID NOT PURCHASE THE DISC. YOU PURCHASED A LICENSE TO USE OUR SOUND RECORDINGS IN YOUR MUSIC. This license cannot be transferred by you.

Wow, that's pretty hardcore, isn't it?

Is Ebay a viable alternative to paying full price on expensive retail music software? Maybe. If you add registration to the research you do on each product, and you make sure sellers are up front with you about the registration status -- or at least up front about their ignorance and the potential risks -- and you figure those risks into your bid, you can probably still find a deal. For example, if it takes $50 to register Cubase, and you're getting it for $50 on Ebay -- that's still a significant savings over retail, eh? As we say in real estate investing, every problem has a price tag. The key here, as in any purchase transaction, is to take potential problems into consideration when determining what you're willing to pay.

Is hoping to sell your used music software on Ebay to recover some of your cost a hopeless endeavor? Maybe. If it's from Ilio or Korg, forget it. If it's not, just make sure you go through the steps necessary to make it worth a buyer's bid. If that means spending $50 each to unlicense it, or offering it cheap and warning buyers about the fees and risks, so be it. If you genuinely don't need it anymore, any money at all is better than none; and those licensing fees and requirements aren't going to end some day just because a new version has hit the street and made yours obsolete.