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

A guest post from regular contributor Seth Simmons.
How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy by Stephen Richard WittHow Music Got Free is a totally fascinating account of the mp3 and how it almost destroyed the music industry.

The story begins with a history of the invention of the mp3 by a handful of German scientists. Through trial and error and years of research, they pursued and eventually perfected an algorithm for compressing music into a file 1/12 the size of standard digital audio. In an unexpected twist, the inventors’ original conception was to support streaming of music across the web–30 years before Spotify–but that idea was too far ahead of its time.

After the mp3 lost music technology’s first “format war” to a similar but inferior encoding method (the mp2)–it was designed by a competing group that outmaneuvered them politically–the nascent format staged a comeback through a number of steps (and mis-steps) that would both solidify its dominance and drastically reduce its money-making potential. The inventors licensed the technology to the NHL for use in broadcasting compressed audio of game commentary; they released encoding software to the web for free; they declined to register for a patent on the first mp3 player, thinking of it as simply a hard drive; they convinced Microsoft to license the mp3 for their media player, and thus got a small cut every time somebody bought a copy of Windows.
What these audio engineer scientists didn’t anticipate was the decentralized, large-scale piracy operation their technology would trigger. The rest of the book covers a handful of characters in this vein. There was the successful music label executive who almost single-handedly oversaw the burgeoning rap industry in the 90s, but who also became infamous for continuing to rake in millions as the music industry at large started to hemorrhage in the early 2000s. There were the file sharing communities that pirated and distributed mp3s globally to millions of users, and the mostly ineffectual attempts by law enforcement to have any impact whatsoever on this phenomenon.

By far the most fascinating character of all is Dell Glover, a working class single man employed at a CD manufacturing plant in rural North Carolina. Security got increasingly tight over the years—guards with wands, video surveillance everywhere, limited access points to the facility—but Glover smuggled pre-release discs out of the factory for over 11 years, mostly by hiding them under his belt buckle. The guards’ wands would alert on the metal and they would wave him through. At first Glover just made copies and sold them locally. He also did this with movies downloaded off the web—pulling in almost $200,000 per year in 2004 and 2005. But eventually he went global, becoming the primary source for an online (and thus worldwide) distribution network for pirated pre-release music. These weren’t for sale; they were posted purely for prestige—a thumb in the eye of the labels, but also to compete with other online groups. In 11 years Glover’s group leaked over 20,000 albums!

Most interestingly, and despite these mind-blowing numbers about album leaks, the author argues that piracy is NOT the most significant contributor to the decline of the music industry. Rather, the labels’ own greed and failure to adapt to changing realities in the consumer market were their downfall. In the 90s, a consumer had to purchase an entire CD ($18 retail) to get a couple good tracks and a bunch of crappy, B-side fillers. But then came the digitalization of music, the ability to rip and compress songs to individual files small enough that they wouldn’t fill a hard drive, and the iTunes model of buying a single track for 99 cents. The album as a self-contained entity vanished as the sole way to purchase music, and the industry’s failure to recognize that—and adapt to it—is what hurt them the most.

If you’re interested in music, the music industry, or technology in general, I highly recommend this fascinating and compelling narrative.

How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy by Stephen Richard Witt Purchase Links: Hardcover, Kindle Edition, Audible.com Audiobook

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