How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy

by Stephen Witt

  The next day a room full of fair-haired, clear-eared Scandinavian virgins spent the morning listening to “Fast Car” ripped 14 different ways. The listeners scored the results for sound quality on a five-point scale. After tabulating the answers, MPEG announced the results—it was a tie! At the top was Fraunhofer, locked in a statistical dead heat with a rival group called MUSICAM. No one else was close.

  Fraunhofer’s strong showing in the contest was unexpected. They were a dark horse candidate from a research institution, a bunch of graduate students competing against established corporate players. MUSICAM was more representative of the typical MPEG contest winner—a well-funded consortium of inventors from four different European universities, with deep ties to the Dutch corporation Philips, which held the patents on the compact disc. MUSICAM also had several German researchers on staff, and Brandenburg suspected this was not a coincidence. They’d had access to Zwicker’s untranslated research, too.

  MPEG had not anticipated a tie, and had not made provisions to break one. Fraunhofer’s approach provided better audio quality with less data, but MUSICAM’s required less processing power. Brandenburg felt this disparity worked in his favor, as computer processing speed improved with each new chip cycle, and doubled every 24 months or so. Improving bandwidth was more difficult, as it required digging up city streets and replacing thousands of miles of cable. Thus, Brandenburg felt, MPEG should look to conserve bandwidth rather than processing cycles, and he repeatedly made this argument to the audio committee. But he felt he was being ignored.

  After Stockholm the team waited for months for a ruling from MPEG. In October 1990, Germany was reunified, and Grill kept himself busy by applying Brandenburg’s algorithm to his new favorite song: the Scorpions’ “Wind of Change.” In November, Eberhard Zwicker, hearing researcher and table tennis enthusiast, passed away at the age of 66. In January 1991, the Fraunhofer team rolled out its first commercial product, a 25-pound hardware rack for broadcast transmission. It made an early sale to the bus shelters of a reunified Berlin.

  Finally, MPEG approached Fraunhofer with a compromise. The committee would make multiple endorsements. Fraunhofer would be included, but only if they agreed to play by certain rules, dictated by MUSICAM. In particular, they would have to adopt a gangrenous piece of proprietary technology called a “polyphase quadrature filter bank.” Four uglier words did not exist. Some kind of filter bank was necessary—this was the technology that split sound into component frequencies, the same way a prism did to light. But the Fraunhofer team already had its own filter bank, which worked fine. Adding another would double the complexity of the algorithm, with no increase in sound quality. Worse, Philips had a patent on the code, which meant giving an economic stake in Fraunhofer’s project to its primary competitor. After a long and heated internal debate, Brandenburg finally agreed to this compromise, as he didn’t see a way forward without MPEG’s endorsement. But to others on the project, it looked like Fraunhofer had been fleeced.

  In April 1991, MPEG made its endorsements public. Of the 14 original contenders, three methods would survive. The first was termed Moving Picture Experts Group, Audio Layer I, a compression method optimized for digital cassette tape that was obsolete practically the moment the press release was distributed. Then, with a naming scheme that could only have come from a committee of engineers, MPEG announced the other two methods: MUSICAM’s method, which would henceforth be known as the Moving Picture Experts Group, Audio Layer II—better known today as the mp2—and Brandenburg’s method, which would henceforth be known as the Moving Picture Experts Group, Audio Layer III—better known today as the mp3.

  Seeking to create a unified framework for collaboration, MPEG had instead sparked a format war. The mp3 had the technical edge, but the mp2 had name recognition and deeper corporate backing. The MUSICAM group was really just a proxy for Philips, and Philips was visionary. The company was making a fortune in licensing from the compact disc, but already, in 1990, with CD sales just starting to outpace vinyl, it was looking to control the market for its eventual replacement.

  This farsighted strategic planning was complemented by a certain gift for low cunning. By this time, both Brandenburg and Grill were beginning to suspect that the suits at Philips were influencing MPEG’s decisions by lobbying behind the scenes. Johnston, the American, shared these suspicions of favoritism, and scoffed at the ridiculous three-tiered “layer” scheme, a last-minute rule change MPEG had made only when its favored team looked likely to lose. Brandenburg, Grill, and Johnston all used the same word to describe this emergent phenomenon: “politics”—a hateful state of affairs in which personal relationships and business considerations trumped raw scientific data.

  MPEG defended its decisions and denied any allegations of bias. MUSICAM researchers were indignant at the suggestion. Still, history showed that, from the AC/DC “Current Wars” of the late nineteenth century to the VHS-Betamax battle of the 1980s, victory didn’t necessarily go to the best, but to the most vicious. From Edison to Sony, the spoils were won by those who not only promoted their own standard, but who cleverly undermined the competition. There was a reason they called it a format “war.”

  The Fraunhofer team, consisting of young, naive academics, were unprepared for such a battle. Over the next few years, in five straight head-to-head competitions, they got swept. Standardization committees chose the mp2 for digital FM radio, for interactive CD-ROMs, for Video Compact Disc (the predecessor to the DVD), for Digital Audio Tape, and for the soundtrack to over-the-air HDTV broadcasting. They chose the mp3 for nothing.

  In discussions with other engineers, the team kept hearing the same criticism: that the mp3 was “too complicated.” In other words, it ate up too much computer processing power for what it spit out. The problem could be traced to Philips’ baneful filter bank. Half of the “work” the mp3 did was just getting around it. In the engineering schematics explaining mp3 technology, the flowchart showed how Brandenburg’s algorithm sidestepped the filter bank entirely, like a detour around a car crash.

  The Fraunhofer team began to see how they’d been outmaneuvered. Philips had convinced Fraunhofer to adopt its own inefficient methodology, then pointed to this exact inefficiency to sink them with the standards committees. Worse, engineers there seemed to have started a whisper campaign, to spread the word about these failures to the audio engineering community at large. It was a commendable piece of corporate sabotage. They’d tricked Fraunhofer into wearing an ugly dress to the pageant, then made fun of them behind their backs.

  But Brandenburg was not one to cry in the corner—ugly dress or not, he was determined to win. In July 1993, he was given a Fraunhofer directorship. Though he had zero business experience and was fighting from a losing position, he drove his team at all hours. Around this time a gang of thieves broke into the Erlangen campus in the middle of the night, making off with tens of thousands of dollars in computing equipment. Every division was hit, save for the floor that housed audio research. There, at some dead hour of the night, long after everyone else had gone home, two mp3 researchers were still in the listening lab, deaf to the world in their expensive Japanese headphones.

  This dedication brought results. By 1994, the mp3 offered substantial improvements in audio quality over the mp2, although it still took slightly longer to encode. Even at the aggressive 12 to 1 compression ratio, the mp3 sounded decent, if not quite stereo quality. Twelve years after a patent examiner had told Seitzer it was impossible, the ability to stream music over digital phone lines was nearly at hand. Plus, there was the growing home PC market, and the prospect of locally stored mp3 media applications.

  They just had to make it that far. In early 1995, the mp2 again beat the mp3 in a standards competition, this time for a massive market: the audio track for the home DVD player. Having watched Brandenburg’s team go zero for six, the budget directors at Fraunhofer were starting to ask hard questions. Like: why haven’t you won a standards competition yet? And: why
do you have fewer than 100 customers? And: do you think perhaps we could borrow some of your engineers for a different project? And: remind me again why the German taxpayer has sunk millions of deutsche marks into this idea?

  So in the spring of 1995, when Fraunhofer entered its final competition, for a subset of multicast frequencies on the European radio band, winning was everything. This was a small market, certainly, but one that would provide enough revenue to keep the team together. And for once there was reason for optimism: the group’s meetings rotated through its membership base, and this time Fraunhofer was scheduled to host. They’d be on home turf, and the final decision on the mp3 would be hashed out in a conference room just down the hall from the laboratory where, seven years earlier, the work on the piccolo had begun.

  For months in advance, the broadcasting group strung Fraunhofer along. They promised to revisit the decisions of the past and encouraged them to continue the development of the mp3. They welcomed Brandenburg’s presence in committee meetings and told him they understood the funding difficulties his team was facing. They urged him to hold on just a little bit longer. In advance of the meeting, the committee’s specialized audio subgroup even formally recommended the adoption of the mp3.

  Still, Brandenburg wanted nothing left to chance. He put together an engineering document that comprehensively debunked the complexity myth. Fifty pages long, it included a chart showing how, for the past five years, processing speed had outpaced bandwidth gains, just as he had predicted.

  The meeting began late in the morning. The conference room in Erlangen was small and the working group was large, so Grill and the other nonpresenting members of the team had to wait outside. Brandenburg was optimistic as he took his seat. He distributed bound copies of his fifty-page presentation, then worked through his talking points with quiet precision. The mp3 could encode higher-quality sound with less data, he said. When planning standards, it was important to look to the future, he said. Computer processing speed would catch up with the algorithm, he said. The complexity argument was a myth, he said. Throughout, he referred to the presentation.

  When he was done, it was MUSICAM’s turn. They handed out a presentation, too. It was two pages long. Their spiel was equally brief: a slick reminder of the elegant simplicity of the mp2. Then the committee began its discussions.

  Brandenburg quickly realized that, despite the subgroup’s official recommendation, the mp3 was guaranteed nothing. Deliberations continued for the next five hours. The talks grew acrimonious, and once again Brandenburg sensed behind-the-scenes machinations of a political nature. An increasingly agitated Grill repeatedly stopped by the conference room, then left to pace the hall with his colleagues. Finally, a representative from Philips took the floor. His argument was concise: two separate radio standards would lead to fear, uncertainty, and doubt. The whole point of standards was that you needed only one. After a subtle dig at the mp3’s processing power requirements, he concluded with a direct plea to the working group’s voting members: “Don’t destabilize the system.” Then the steering committee—in the interests of stability, presumably—voted to abandon the mp3 forever.

  This was the end. There was nothing left to hope for. MPEG had barred them from the video disc and the broadcasting committees had kicked them off the airwaves. In head-to-head competitions against the mp2, Fraunhofer was now zero for seven. The mp3 was Betamax.

  Bernhard Grill was crushed. He had been working on this technology for the better part of a decade. Standing in the crowded conference room, his back against the wall, he considered challenging the ruling. He was emotional, and he knew that, once he began speaking, he might lose control and unleash an angry harangue, fueled by the pent-up frustration he felt toward this group of know-nothing corporate big shots who’d been stringing him along for years. Instead, he remained quiet.

  Typisch Deutsch, after all. Grill’s failure to speak up at this moment would haunt him for years to come. The budget vultures were smelling blood, and he knew that the mp3’s corporate underwriters would now pull the plug. The German state was happy to sponsor a technology with a fighting chance, but now the format war was plainly lost. Grill was stubborn, and determined to go down swinging, but he foresaw tough conversations ahead: the abandonment of a dead-end project, the breakup of the team, the patronizing commiseration over years of work spent for nothing.

  Karlheinz Brandenburg, too, was devastated. He had handled the previous losses with equanimity, but this time they’d let him get his hopes up. The Philips delegate hadn’t even made a real argument. He’d just exercised his political muscle, and that was it. The whole experience seemed sadistic, a deliberate attempt to crush his spirits. For years to come, when he talked of this meeting, the nervous smile would fade, his lips would tighten, and a distant look would appear upon his face.

  Still, this was engineering, where verified results should by necessity triumph over human sentiment. After the meeting, Brandenburg gathered his team for a brief pep talk, during which—the forced smile having returned—he explained how the “standards” people had simply made a mistake. Again. The team was baffled by this upbeat attitude, but Brandenburg could point to a binder full of engineering data, full of double-blind tests, that consistently showed his technology was better. Political dickering aside, that was all that mattered. Some way, somehow, the mp3 had to win in the end. They just had to find someone to listen.

  CHAPTER 2

  On a Saturday morning later that same year, 1995, two men commuted to work at the PolyGram compact disc manufacturing plant in Kings Mountain, North Carolina. They traveled in a black Jeep Grand Cherokee four-by-four with heavily tinted windows. The men were both part-timers at the plant, and their weekend gigs supplemented the income they earned from other jobs moving furniture and serving fast food. The passenger’s name was James Anthony Dockery, but everyone called him “Tony.” The driver’s name was Bennie Lydell Glover, but everyone called him “Dell.”

  The men had met a few months earlier on the factory floor, where Dockery, a talker, had convinced Glover, a listener, to provide him with a standing ride to work. They both lived in Shelby, a small town of 15,000 people located about twenty minutes to the northwest. Glover was 21 years old. Dockery was 25. Neither man had graduated from college. Both were practicing Baptists. Neither had lived more than a few miles away from the place where he’d been born.

  Glover was black, wore a chinstrap beard and a well-manicured fade, and dressed in T-shirts and blue jeans. His physique was wiry and muscular, and the corners of his mouth turned down into a grimace. His heavy eyelids gave his face a look of perpetual indifference, his body language was slow and deliberate, and there was a stillness to his presence that approached torpor. When he spoke, which wasn’t often, he would first take several moments to collect his thoughts. Then his voice emerged, extremely deep and drenched in the syrupy tones of the small-town South, the medium of delivery for a pithy sentence, maybe less.

  Dockery was white, with close-cropped sandy blond hair and bulbous, glassy eyes. He was shorter than Glover, and his weight vacillated between merely girthy and positively obese. He was a fast-talking jokester, emotional and volatile, and although he could be quick to anger, he tended to laugh as he cursed you out. He made his opinions available to anyone who would listen, and even to many who would not.

  Arriving at the facility, Glover and Dockery turned down the service entrance. The plant itself could not quite be seen from the road—it was tucked away in a “holler,” the regional term for a narrow crinkle in the earth. They crested a ridge in the Cherokee and came down the hill to a sprawling, surprising vista: a factory facility the size of a small airport. The PolyGram plant had 300,000 square feet of floor space, and its parking lot could hold 300 cars. Long-haul trucks were directed around back, where they were loaded with freshly pressed discs for distribution across the Eastern Seaboard. At night the parking lots were floodlit, and at all hours the main building buzzed with the promise of
electric machinery. Even so, the plant retained something of the bucolic nature of the surrounding countryside. Its perimeter was abutted by forest, and the parking lots were occasionally invaded by rafters of wild turkeys.

  The men found a parking spot, negotiating through hundreds of other cars in the midst of a shift change, and entered the factory by way of the cafeteria. Once inside, they made their way to a checkpoint, where employees were required to show their IDs and check their bags. Only a fixed number of workers could participate in a shift, so each man had to wait for another employee to clock out before he could clock in. As a security precaution, entering and exiting employees were not permitted to make physical contact. Once Glover and Dockery were officially on the books, they entered the factory proper. There, nine production lines, arranged in parallel, stretched hundreds of feet across the floor. Each line employed a dozen workers in a choreographed sequence of high-efficiency manufacturing.

  The compact disc manufacturing process started with a digital master tape, transported from the studio under heavy security. This tape was cloned in a clean room using a glass production mold, then locked away in a secure room. Next, the replication process began, as virgin discs were stamped with the production mold into bit-perfect copies. After replication, the discs were lacquered and sent to packaging, where they were “married” to the jewel cases, then combined with liner notes, inlays, booklets, and any other promotional materials. Certain discs contained explicit lyrics, and required a “Parental Advisory” warning sticker, and this was often applied by hand. Once finished, the packaged discs were fed into a shrink-wrapper, stacked into a cardboard box, and taken to inventory to await distribution to the music-purchasing public. New albums were released in record stores every Tuesday, but they needed to be finished—pressed, packaged, and shrink-wrapped—at the PolyGram plant weeks in advance.