The exhaustion principle in copyright and modern digital markets

The exhaustion principle, or first-sale doctrine, limits rightsholders’ control after the authorised sale of a tangible copy, enabling resale, lending, and preservation. In digital markets, however, this principle has largely become irrelevant, as distribution models now use licensing and technologies that prevent secondary use. This paper examines how the disappearance of copyright exhaustion affects key markets for intellectual property – with examples from books, music, video, and software – along six dimensions: access, preservation, privacy, transactional clarity, user innovation, and platform competition. Drawing on legal doctrine, case law, and economic literature, this commentary discusses both the erosion of these benefits and possible remedies, including forward-and-delete technologies, common law exhaustion, relaxed anti-circumvention rules, and enhanced fair use provisions for libraries. The article argues that digital distribution arrangements may have shifted the balance of rights too far towards commercial (intermediary) rightsholders and that differentiated regulatory reforms could be needed to restore a socially beneficial equilibrium that preserves both long-term market efficiency and user rights.