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

by Stephen Witt

  like a detour around a car crash See, for example, Karlheinz Brandenburg, “MP3 and AAC Explained,” paper presented at the AES 17th International Conference on High Quality Audio Coding, Signa, Italy, September 2–5, 1999.

  voted to abandon the mp3 forever The final official decision of the European Digital Audio Broadcasting standard was filed May 1995.

  CHAPTER 2

  PolyGram compact disc manufacturing plant in Kings Mountain, North Carolina The property lot of the plant is technically in Grover, North Carolina. However, all of the former plant employees I spoke with referred to it only as the Kings Mountain plant.

  first ever automobile factory outside of Germany BMW had manufactured parts outside of Germany before, but the Spartanburg plant was the first complete production line.

  property values plummeted, following a predictable pattern of racial segregation Author’s impressions, confirmed by real estate website Zillow.

  CHAPTER 3

  company car, a personal chauffeur … ten million dollars Mark Landler, “The Perks of a Music Man,” New York Times, July 10, 1995.

  more Bobby Darin than Bob Dylan Chuck Philips, “Universal Music Chief’s Winding Comeback Trail,” Los Angeles Times, May 12, 1999. Morris’ quote reads: “Yeah. I was like a cross between Neil Sedaka and Bobby Darin. It sounds pretty wimpish now, but that’s what was happening in 1962.”

  Ertegun was a legend For the classic treatment of Ertegun, see George W. S. Trow, “Eclectic, Reminiscent, Amused, Fickle, Perverse,” New Yorker, May 29 and June 5, 1978.

  a bonus of a million dollars Robert Greenfield, The Last Sultan: The Life and Times of Ahmet Ertegun (New York: Simon & Schuster, 2011), 313.

  long-standing ties to organized crime For more on this, see Fredric Dannen, Hit Men: Power Brokers and Fast Money Inside the Music Business (New York: Vintage, 1990).

  “We’re going to make more hits.” Morris interview. He has been telling this anecdote for years. See also Greenfield, Last Sultan, 313.

  his appointment was regarded with skepticism See, for example, James Bates, “Music Maven: Doug Morris Has Set the Tone for the Dinosaur-to-Diva Rise of Atlantic,” Los Angeles Times, April 8, 1994. Morris is described as “someone who cooled his heels for years before finally getting his chance.”

  a daring corporate insurrection inside Time Warner For the full story, see Fredric Dannen, “Showdown at the Hit Factory,” New Yorker, November 21, 1994.

  “Morris was like an old country lawyer.” Larry Kenswil, author interview.

  all of Warner’s A&R men had passed on them From Marc Nathan, interviewed by Michael Laskow on the website of Taxi, an independent A&R company: “A&R had essentially passed on Hootie and the Blowfish, dismissing them really as just a bar band. But a research assistant … kept coming up with this band named Hootie and the Blowfish that was selling 50 to 100 pieces in virtually every store in the Carolinas. When the retail sheets were brought to Doug Morris, and Doug said, ‘What is this band Hootie and the Blowfish?’ A&R said, ‘Oh, it’s a bar band, and we passed on them.’ Doug essentially said, ‘Well, get someone to un-pass right away because this is the real deal.’”

  “Yeah, but to us, you’re the Michael Jordan of baseball.” Fred Goodman, Fortune’s Fool: Edgar Bronfman Jr., Warner Music, and an Industry in Crisis (New York: Simon & Schuster, 2010), 79. Goodman has Danny Goldberg originally making the crack as a quiet aside, then Iovine repeating it aloud. He cites Iovine as a source.

  Henry Luce III … was seen applauding Steve Knopper, Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age (New York: Free Press, 2009), 61.

  “I would ask the executives of Time Warner a question …” Bob Dole, “Dole Campaign Speech,” C-SPAN video, May 31, 1995.

  a black-and-white party shot of himself, dwarfed by Suge and Snoop Morris still has this picture. It now rests on his coffee table at Sony.

  CHAPTER 4

  a guy named Steve Church Church passed away after a battle with brain cancer in 2012. He was 56 years old. In a tribute page on Telos’ website, he was warmly remembered by friends, family, and colleagues.

  L3Enc … consumers would create their own mp3 files L3Enc used a DOS-based command line interface. A typical command from 1995 might read:

  l3enc track_10.wav ironic.mp3 -br 128000

  This tells Brandenburg’s algorithm to compress Alanis Morissette’s “Ironic” to 128,000 bits per second.

  12 compact discs … to one It didn’t have to be a CD. Brandenburg’s algorithm could handle any audio source.

  Thomson SA Today known as Technicolor SA.

  an engineer to jerry-rig … the world’s first handheld mp3 player Robert Friedrich, a Fraunhofer hardware expert, built the device.

  in late 1995 … a spiky red starburst shouted, NEU! The earliest snapshot of this website on the Internet Archive is dated to August 1996. Grill believes that earlier pages looked similar.

  please send 85 deutsche marks From the readme.txt file accompanying early versions of L3Enc.

  CHAPTER 5

  Hughes Network Systems Today known as Hughes Communications.

  a cluttered blue-on-white color scheme This description is based on the Internet Archive’s earliest Yahoo! snapshot, from October 17, 1996.

  “AFT: Please tell us about this new concept in releasing …” These quotes are copied verbatim from Affinity #3, “Spot Light.” “NetFraCk” is interviewed by “Mr. Mister” and the interview is dated August 19, 1996. The executable file may be retrieved from Textfiles.com, but you will need a DOS emulator to view it. My thanks to Johnny Ryan at University College Dublin for the original pointer.

  CHAPTER 6

  the so-called “Rothschilds of the New World” This formulation comes from Peter C. Newman’s The Bronfman Dynasty (Toronto: McClelland & Stewart, 1978).

  Bronfman had pushed for reorganization For details, see Connie Bruck, “Bronfman’s Big Deals,” New Yorker, May 11, 1998.

  Time Warner had countersued Goodman, Fortune’s Fool, 81. Time Warner and Morris eventually agreed to a confidential settlement, and the countersuit was dropped.

  The initial credit line Junior offered … was only $100 million Ibid., 81.

  Bronfman promoted Morris to run all of MCA Morris replaced Al Teller, who resigned due to “philosophical differences.” That same day, Michael Fuchs, the man who had fired Morris at Warner, was coincidentally also let go. Including Ertegun at Atlantic and Robert Morgado at Warner, Morris had now outlasted his four previous bosses. For details, see Chuck Philips, “Company Town: Music Industry Shake-Up,” Los Angeles Times, November 17, 1995.

  a New Orleans rap conglomerate by the name of Cash Money Records Morris’ A&R team, consisting of Jocelyn Cooper, Marc Nathan, and Dino Delvaille, first brought Cash Money to his attention. For details, see Dan Charnas, The Big Payback: The History of the Business of Hip-Hop (New York: Penguin, 2011), 574.

  a trancelike state of total concentration My impressions of watching Morris preview a new artist in his offices at Sony.

  a piñata for the press The exact quote regarding Bronfman, from an anonymous entertainment executive, is, “He’s like a piñata! Hit him and money comes out.” Bruck, “Bronfman’s Big Deals,” 77.

  the term “pirate” was more than 300 years old In 1709, writing for The Tatler, the British columnist Joseph Addison complained of “a set of wretches we Authors call Pirates, who print any book, poem or sermon as soon as it appears in the world, in a smaller volume; and sell it, as all other thieves do stolen goods, at a cheaper rate.”

  CHAPTER 7

  a bundled package The simultaneous distribution of L3Enc and WinPlay3 was a boon to early adoption. By contrast, a 14-year gap separated the debut of the home CD player and the home CD burner.

  direct links to Fraunhofer’s FTP server See, for example, Digital Audio Crew’s first Scene mp3 releasing tutorial, dated August 30, 1996.

  The RIAA would later offer vario
us explanations Specifically Hilary Rosen, corroborated by Kenswil, Brandenburg, and Grill.

  transparency … achieve it in 99 percent of all cases Even today, certain cherry-picked samples can cause the mp3’s psychoacoustic encoder problems. Castanets are particularly difficult.

  Neil Young … a losing battle to preserve audio quality Young by his own admission is half deaf from decades of guitar feedback. He is on a quixotic mission here.

  twenty different patents … two dozen inventors Information on mp3 patents comes from MP3licensing.com, interviews with Brandenburg and Linde, the European Patent Office, and my own tabulations.

  Frankel did not bother to license the technology Nullsoft would eventually become a Fraunhofer licensee, but not until after the popularity of the Winamp player was well established, and only under threat of litigation.

  in the Constitution, no less The exact text grants Congress the power “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries” (Article I, Section 8, Clause 8).

  CHAPTER 8

  A new manager was brought in from Denmark Henning Jorgensen. He still lives in North Carolina.

  something called the “crime triangle” Known in scholarly sources as “routine activity theory.” Academic criminologists skip the triangle for a Venn diagram, with crime in the middle.

  They were almost all guys Of more than 100 Scene prosecutions I have researched, only two have involved female defendants. However, there was for a brief period in the 1990s a releasing group known as GLOW: “Gorgeous Ladies of Warez.”

  “Could you, like, FXP me the file, dogg?” In the mid to late ’90s File eXchange Protocol was favored by IRC pirates over the more common File Transfer Protocol.

  CHAPTER 9

  a key driver for successful artists and businesspeople alike From Iovine’s 2013 commencement speech at USC: “But what I have learned is some of these powerful insecurities can be harnessed into life’s greatest motivator, the strongest five-hour energy drink ever. It’s called a little old-fashioned fear.”

  Iovine went after Sisqo; Cohen went after Limp Bizkit Goodman, Fortune’s Fool, 141.

  “Big Pimpin’” … Carter would himself disown it See John Jurgensen, “Just Asking: Decoding Jay-Z,” Wall Street Journal, October 21, 2010. He still performs the song, though.

  confronted him on the floor of a nightclub and stabbed him The producer was Lance “Un” Rivera. Carter pleaded guilty to the stabbing in 2001 and was sentenced to three years’ probation.

  The estimated cost from 1995 to 2000 was half a billion dollars A coalition of state attorneys general, led by Eliot Spitzer, later recouped $143 million in cash and trade product from the recording industry. As ever, the record labels admitted no wrongdoing.

  Staffers downloaded the software … Joseph Menn, All the Rave: The Rise and Fall of Shawn Fanning’s Napster (New York: Crown Business, 2003), 164.

  “Fuck the record industry.” As recalled by Eileen Richardson, Napster’s former CEO. When a big-name recording artist later tried to strike a deal with Napster, Richardson said that John Fanning doubled down: “Fuck her, and fuck her million bucks.” Author interview.

  Pressplay … listicles of the “Top All-Time Tech Busts” See, for example, Dan Tynan, “The 25 Worst Tech Products of All Time,” PC World, May 26, 2006.

  18 record companies, including Universal A&M Records was listed first because the plaintiffs were ordered alphabetically.

  Morris was the best-paid man in music Sony’s Tommy Mottola was also very well compensated, but stepped down in 2003.

  the average American spending over $70 a year on CDs alone RIAA figures and my calculations. Inspired by Michael Degusta’s excellent analysis of the recording industry’s historical earnings mix. See “These Charts Explain the REAL Death of the Music Industry,” Business Insider, February 18, 2011.

  CHAPTER 10

  Inside the company a civil war had broken out Frank Rose, “The Civil War Inside Sony,” Wired, November 2002.

  “led the development of a standard means … called MP3” Charles C. Mann, “The Heavenly Jukebox,” Atlantic, September 2000.

  “the father of the mp3” Mark Boal, “Leonardo’s Art,” Brill’s Content, August 2000.

  59 million dollars SEC filings show Frankel owned 522,661 shares of AOL stock, then trading at $112.

  “widespread adoption of the standard on the Internet” 2001 Fraunhofer Annual Report.

  “Do not steal music” See, for example, Brandenburg’s keynote lecture, Techfest 2012, IIT Bombay, India.

  Fraunhofer made their feelings known to the device manufacturers Chris “Monty” Montgomery, who led the development of the Ogg standard, later called these kinds of actions a “protection racket.” Open-source advocate Eben Moglen observed that “an accusation of infringement has no legal weight, so there is no real downside to making such a claim.” For more, see Jake Edge, “Xiph.org’s ‘Monty’ on Codecs and Patents,” Lwn.net, November 9, 2011.

  CHAPTER 11

  The document that outlined the methodology for encoding and distributing Scene mp3s Historical Scene releasing standards for a variety of media can currently be found at Scenerules.irc.gs.

  he wasn’t interested in mind-numbing discussions about the relative merits of constant and variable bit rates But you are, aren’t you? Fraunhofer’s earliest mp3 encoding used the same number of bits per second throughout the entire encoding process—even during parts of the song that could be represented with very little information. This was constant bit rate encoding. In the late 1990s, researchers at an audio software company called Xing realized it would be better to use more bits for the most complex parts of a song and fewer for the least. This was called variable bit rate encoding, and Xing introduced an mp3 encoder with this capability. Most mp3s today use variable.

  “black redneck” Facebook comment left on a picture of Glover with the Quad Squad.

  charged with felony embezzlement Chaney Sims later pleaded guilty to possession of stolen property, a misdemeanor.

  CHAPTER 12

  “a bunch of drunken sailors nursing a hangover” Frank Pellegrini, “What AOL Time Warner’s $54 Billion Loss Means,” Time, April 25, 2002.

  up to 40 gigabytes of storage The third-generation iPod, released April 2003.

  “people don’t know what they want until you show it to them” Andy Reinhardt, “Steve Jobs on Apple’s Resurgence: Not a One-Man Show,” BusinessWeek, May 12, 1998.

  They were “educational” Carlos Linares, the RIAA’s designated expert witness for file-sharing prosecutions, repeatedly used this term to describe the lawsuits in conversation with me.

  CHAPTER 13

  targeting companies like Grokster, LimeWire, and Kazaa In 2011, during its lawsuit against LimeWire, the RIAA filed a brief seeking damages of up to $75 trillion—more than the GDP of the entire world.

  a deliberate, earsplitting fake Known as “spoofing,” this was a short-lived attempt by the RIAA to degrade the value of the peer-to-peer sites by filling them with bogus files.

  The Pirate Bay’s founders loved controversy For more on them, see the excellent crowdfunded documentary TPB AFK: The Pirate Bay Away from Keyboard, directed by Simon Klose (Nonami, 2013), legally available as a torrent.

  “… please go sodomize yourself with retractable batons” The response was posted to the Pirate Bay’s website in August 2004 and signed, “Polite as usual, Anakata.” Anakata is Svartholm Warg’s screen name.

  University of Teesside Today known as Teesside University.

  Ellis was becoming a quality snob To be specific, he insisted on mp3s with a minimum variable bit rate of 192 kbps or higher.

  He permitted only mp3s ripped from the original compact discs Ellis would later open this to rips from cassette tapes, vinyl records, and Web streams.

  CHAPTER 14

  the distinction of leaking the rem
ix to “Ignition” Kelly himself had leaked the first verse of the song weeks earlier, breaking off listeners with a little preview to the remix. He did not usually do this.

  Now 18 APC members were facing felony-level conspiracy charges Seventeen of them reached plea bargain deals. The lone holdout, Barry Gitarts, was found guilty at trial and sentenced to 18 months in prison.

  “… We are not here to line the pockets of bootleggers” From the NFO for EGO’s 2002 leak of the Dixie Chicks’ Home.

  CHAPTER 15

  Warner … had been taken over by Edgar Bronfman, Jr. For a book-length treatment, see Goodman’s Fortune’s Fool.

  a calcified corporate shell called the Entertainment Distribution Company EDC was eventually acquired by Glenayre Technologies, a wireless messaging firm. Glenayre would then take the EDC name.

  Morris … now publicly vented against Apple See Billboard, “Red Hot Chili Peppers, QOTSA, T.I. Rock for Zune,” November 11, 2006. His exact words were: “These devices are just repositories for stolen music, and they all know it, so it’s time to get paid for it.” The remarks came as Morris was himself trying to get into the mp3 player market. In exchange for providing licenses to sell its music, Morris negotiated for Microsoft to pay Universal a percentage for every Zune it sold. Since the Zune tanked, this amounted to almost no money, but a similar deal with Apple would have made him a fortune.

  his critics in the digital era Chief among these was Bob Lefsetz, author of the Lefsetz Letter, a widely followed industry blog. Morris referred to him as a “chirping bird.”

  “Females 18–24, all Black” Email sent July 11, 2003, requesting the campaign, submitted as evidence by the New York State Attorney General’s Office. The cost of this fakery was $1,750.