A more accurate subject line for the post woulda be "Google argued that either a) copyright law applies to digital content, or b) it doesn't".
Capitol is securing that mp3s ARE material goods and that they are NOT material goods. Google is pointing out the obvious fact that either they are or they are not, leaning toward "are". If they are, you can legally sell your used mp3 collection just line you can sell your used.CD collection, provided you don't keep a copy for yourself.
If not, it would be illegal to give away a used ipod without wiping it first, even if you didn't keep copies for yourself.
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