How Music Got Free

1. The mp3 revolution began with Brandenburg's psychoacoustic research

Brandenburg struck me as preposterous—it was like trying to build a car on a budget of two hundred dollars.

Psychoacoustic breakthrough: Karlheinz Brandenburg, a German researcher, developed the mp3 format based on psychoacoustic principles. His work aimed to compress audio files without noticeable loss in quality to human ears.

Key innovations:

• Exploited limitations of human hearing
• Used "analysis by synthesis" to assign bits efficiently
• Combined with Huffman coding for further compression

Brandenburg's team faced numerous challenges, including skepticism from the industry and competition from other formats. Despite setbacks, they persevered, eventually creating a technology that would revolutionize music distribution and consumption.

2. Piracy drove mp3 adoption, outpacing industry efforts

I am a member of the pirate generation. When I arrived at college in 1997, I had never heard of an mp3. By the end of my first term I had filled my 2-gigabyte hard drive with hundreds of bootlegged songs.

Unintended consequences: The mp3 format, initially designed for legitimate use, became the preferred medium for music piracy. This rapid adoption outpaced the music industry's ability to adapt and control distribution.

Factors driving piracy:

• Ease of file sharing through platforms like Napster
• Reduced file sizes enabling quick downloads
• Growing internet connectivity and computer ownership

The music industry's slow response to changing technology and consumer behavior allowed piracy to flourish. This period marked a significant shift in how people accessed and consumed music, challenging traditional business models.

3. The Scene: A secretive subculture of digital piracy emerges

RNS was the most pervasive and infamous Internet piracy group in history.

Underground network: The Scene was a highly organized, secretive network of groups dedicated to obtaining and distributing pirated content, including music, movies, and software.

Key aspects of The Scene:

• Hierarchical structure with specific roles
• Competitive nature between groups
• Use of topsites for file storage and distribution
• Strict rules and standards for releases

The Scene operated largely out of public view, with members priding themselves on obtaining and releasing content before official release dates. This subculture played a crucial role in the widespread distribution of pirated media, often serving as the source for content that later spread to public file-sharing networks.

4. Dell Glover: The unlikely kingpin of music piracy

Glover had pleaded guilty and was now offering to testify against his coconspirators, but the RIAA would never seek financial damages.

Insider access: Dell Glover, a factory worker at a CD manufacturing plant, became one of the most prolific sources of leaked music in history. His position gave him unprecedented access to unreleased albums.

Glover's impact:

• Leaked nearly 2,000 albums over eight years
• Provided material to the Rabid Neurosis (RNS) group
• Significantly contributed to pre-release piracy

Glover's story highlights the vulnerability of the music industry's supply chain and the unexpected ways in which piracy could originate. His activities underscore the challenges faced by the industry in securing their product from internal threats.

5. Doug Morris navigates the music industry's digital disruption

Morris was now more powerful than Junior, and his market share at Universal was larger than it ever had been at Warner. Universal was selling one out of three albums in the United States, and one out of four in the world.

Adapting to change: Doug Morris, a veteran music executive, led Universal Music Group through the tumultuous period of digital disruption. His tenure saw both successes and struggles as the industry grappled with new technologies and changing consumer behavior.

Morris's strategies:

• Focused on hit-making and star power
• Initially resistant to digital distribution
• Later embraced new models like Vevo for music videos

Morris's career exemplifies the broader industry's journey from resistance to adaptation in the face of digital transformation. His experiences highlight the challenges of maintaining profitability and relevance in a rapidly evolving market.

6. The rise of peer-to-peer networks and torrent sites

Napster was a natural monopoly whose selection and speed only improved as more people joined. By early 2000 there were almost twenty million users, and by summer over 14,000 songs were being downloaded every minute.

Democratized distribution: Peer-to-peer (P2P) networks and torrent sites revolutionized file sharing, making it easier than ever for users to access and distribute copyrighted content.

Key platforms:

• Napster (pioneering P2P network)
• BitTorrent (efficient file-sharing protocol)
• The Pirate Bay (infamous torrent site)

These technologies decentralized file sharing, making it difficult for authorities to control. They represented a paradigm shift in how digital content could be distributed, challenging traditional notions of copyright and intellectual property.

7. Legal battles and the industry's struggle to adapt

Project Hubcap was not popular. The lawsuits asked a few people singled out at random to pay for the collective actions of millions.

Controversial tactics: The music industry, led by the RIAA, pursued aggressive legal strategies to combat piracy, including lawsuits against individual file-sharers and attempts to shut down P2P networks.

Key legal actions:

• Lawsuits against Napster and other P2P services
• "John Doe" lawsuits against individual file-sharers
• Attempts to establish legal precedents against file-sharing

These legal battles were often seen as heavy-handed and out of touch, damaging the industry's public image. While some lawsuits were successful, they failed to stem the tide of piracy and alienated many consumers.

8. Streaming services emerge as a new business model

Vevo took over thirty years of creative output from more than 10,000 artists that had been written off as promotional cost and transformed it into a high-growth profit center.

Shift to access: Streaming services emerged as a potential solution to piracy, offering consumers legal access to vast music libraries for a monthly fee or ad-supported free listening.

Key developments:

• Launch of Spotify, Apple Music, and other streaming platforms
• Integration of music videos through services like Vevo
• Shift from ownership to access model of music consumption

Streaming services represented a significant shift in how the industry monetized music, moving away from per-unit sales to subscription and advertising-based models. This transition helped stabilize industry revenues but also sparked debates about artist compensation and the value of music.

9. The lasting impact of piracy on the music industry

In 2013, amid an upbeat economic picture, the recording industry's total revenues once again declined, to their lowest level in three decades.

Permanent changes: The era of widespread digital piracy fundamentally altered the music industry, leading to lasting changes in business models, consumer behavior, and the perceived value of music.

Long-term effects:

• Decline in album sales and shift towards singles
• Increased focus on touring and merchandise for artist revenue
• Rise of 360-degree deals between labels and artists
• Greater emphasis on data analytics and targeted marketing

The industry that emerged from the piracy era was markedly different from its pre-digital incarnation. While new revenue streams and business models developed, the overall value of recorded music decreased, forcing artists and labels to adapt to a new economic reality.

Last updated: November 9, 2024