A stock exchange for used music and movies
Used CD's and DVD's appear to be an almost-ideal market for an exchange-style market, matching multiple buyers and sellers.
Right now, there are a lot of used CD dealers, and some auctions on eBay and similar sites. Used music (and movies) has all the characteristics which would make it a good candidate for a market modeled on the stock exchanges:
Individual CDs of the same artist and album are essentially interchangeable, given a few parameters (i.e. condition).
There are multiple buyers and sellers in the market at any given time.
The cost of completing a trade is low, especially if the market is smart enough to match nearby buyers and sellers (avoiding the postage to mail a CD or DVD)
Here's how a CD/DVD exchange would work:
Buyers and sellers would both log onto a web site, where they can enter orders to buy or sell music. Sellers enter the artist/title, minimum price, condition, and the minimum sale price. Buyers enter the artist/title, desired condition, and maximum purchase price. When a buy and a sell order match (i.e. there's a buyer willing to pay at least the seller's minimum price), the system splits the difference, notifies the buyer and seller of the sale, removes those two orders from the system, and charges the seller a small commission (perhaps $0.05). The buyer is responsible for paying any postage/shipping, which can be standardized in the U.S. (single CD's cost just a little over $1.00 to mail in a jewel case).
At any time, the bid and ask (i.e. cheapest sale price and most expensive purchase price) for any artist/title and condition are available on the web site, so buyers can decide if, for example, it is worth an extra $2.50 to get Billy Joel in mint condition vs. scratched with the liner notes missing.
And that's it! Buyers can find deeply discounted CD's and DVD's, probably for less than the used music shop, and with almost any title available somewhere. Sellers can get a better price than the used music shop would offer, and can choose between selling something immediately (to whatever cheapskate buyer is available), or waiting for a better price.
There are a few refinements to this simple exchange which would also make sense:
* Distance-based bids: a buyer may be willing to pay more for a CD/DVD available within driving distance, to avoid paying shipping. Buyers could enter two bids, one for nearby, and another for distant. Posted bids (to be consistent) would all be for distant buyers; but a nearby buyer (being willing to pay more) is more likely to get matched.
* Reputation scores: Just like on eBay, it helps to know if the buyer/seller has a good reputation. This could be implemented by giving both the buyer and the seller the opportunity to back out of a sale after examining the history of the other party.
* Piracy prevention: A simple mechanism for buyers to report suspected pirate copies--for example, I doubt much of Madonna's music was ever sold on CD-R. These reports would be forwarded to the appropriate authorities for investigation.
The Big Downside
I'm guessing that the effect of this kind of a market would be to put the used CD/DVD dealers out of business--not because they wouldn't be able to sell their inventory (if anything, it would make it easier to sell inventory), but because it would drive prices for used movies and music down to the point where the dealers would have a hard time making a profit.
There's probably a lot of old movies and music sitting on people's bookshelves today, and if there was an easy way to sell it, the market would quickly get flooded. It would be a good thing for consumers (both buyers and sellers), since buyers would get much better prices, and sellers would have a better way to turn their collections into cash. But the dealers would find that carrying the inventory (which is a big cost of business today) is simply too expensive.
As an aside, I would expect that most movies and music would depreciate over time, as people got tired of them and tried to purge their collections. After some years, the price for a given title would stabilize (probably around a buck or two, essentially the nuisance value of selling it). Then, for certain titles which remained popular, the older copies would begin to become rare, and appreciate as they gain some collectable value.