The Inventor, The Mogul and The Thief

The three sides to Stephen Witt’s ‘How Music Got Free’

Last month the MP3 was officially pronounced dead by its creator, the Fraunhofer Institute. It said in a statement:

“On April 23, 2017, Technicolor’s mp3 licensing program for certain mp3 related patents and software of Technicolor and Fraunhofer IIS has been terminated. We thank all of our licensees for their great support in making mp3 the defacto audio codec in the world, during the past two decades.”

For today’s generations it’s hard to conceive that a simple digital music format caused so much uproar in the music industry and almost brought the establishment down. But for us who lived through the mp3 heydays, it serves as a memory of a DIY piracy age that everyone seemed to be in at a certain point - I still have an external hard drive with my ‘entire music collection’ somewhere, just waiting to be formatted one day. That’s why I found Stephen Witt’s book — “How Music Got Free: The Inventor, The Mogul and the Thief” — one of the most interesting reads ever.

I first heard about this book last year, because a friend of mine had just read it. It caught my eye. Aside from the overtly 2000’s cover, it had a super catchy title. He assured me that, despite reading like a thriller, it was definitely non-fiction. A historical account of how these three characters, from worlds apart, had such a big impact in one of the most important periods for the music industry: the mid 1990s to mid 2000s.

The book is the result of extensive research by Stephen Witt — NYT journalist but also a self-proclaimed pirate during the Napster years. What he goes on to talk about though is not only about Napster, but rather about the underground mp3 piracy scene that was bustling behind it and that fuelled the craze of p2p file-sharing networks like Kazaa, Soulseek, Limewire, but also torrent tracking sites like PirateBay, KickAssTorrents, Oink, etc. In fact, for anyone who was online during that period and who performed that, now almost unthinkable, act of downloading an album, this book is a trip down memory lane. Torrent file names with ripping crew acronyms on them, waiting weeks for the last 3% of that rare album with only one seeder, finding you had just downloaded a fake version of Limp Bizkit’s — Rollin’. All fond memories, for sure.

But rather than simply rehashing nostalgic references as I just did, the book gives us an often unheard of account of what happened behind the scenes. Especially, three scenes, embodied fully by these three characters (who are very much real). The most interesting thing I found out about the book was getting to know these three people. Their motivations, frustrations and ambitions. These are what really changed music industry. So I decided to take an educated guess at what these were, based on the book, and reflect on what they meant:

The Inventor

Image by: Burkhard Peter photography.

The book starts with the the ominous figure of one Karlheinz Brandenburg. A not-quite reclusive but certainly awkward engineer of brilliant talent that is described as “always having data to back up his arguments”. Brandenburg was a researcher in sound at the Fraunhofer Institute, which still up until today proudly claim to be the inventors of the mp3. All because of this man. Well, him and his team of engineers — including one brilliant engineer who got too tired of listening to Suzanne Vega - Tom’s Diner over and over in the process of creating the first mp3 encoder. But his technical feats were achieved rather easily when you compare to the objections he faced at a political level from the MPEG committee. In the end, he reigned supreme with his format, over all the others (yes, I remember having an mp2 in my computer, it was a thing), but not without some scars. For me he is the single most important character out of the three, as his work paved the way for what was to come and his attitude steamrolled through corporate intrigue and political lobbying like no other. In the end, if Brandenburg were to have been replaced by another audio engineer, the world would have been very different than it is today. So let’s break it down:

As an engineer at a research institute, leading the research on audio coding, I believe his ambitions to be obvious. Brandenburg worked on the theoretical codec concepts from his mentor, Dieter Seitzer, who thought it was possible to reduce the size of audio encoded files to 12 times less than the standard. So not only were his ambitions to prove his mentor was right, but also to succeed in practice, where his mentor had just theorized. Now here’s the glaringly obvious point: just like any leader of a research department he wanted to make sure that his R&D had positive industry applications and impacts. He wanted it to be huge. In fact, Brandenburg saw the mp3 as the natural technological evolution of audio encoding. He devised it and designed it so it would be technically superior to previous formats with a mixture between convenience and quality. Yes, Brandenburg envisioned the mp3 becoming ubiquitous, just not in the way that it ended up becoming. In fact there’s a scene in the book where Brandenburg is recounted as contemplating the mp3-player-packed shop window of an electronics store in a city he was in for a conference and realising that his creation was everywhere as he thought it would, just without the legal frameworks he thought it would have.

The book briefly touches upon two results of the mp3’s success. Brandenburg did become rich. And Brandenburg did get a big promotion to lead his own institute. That coupled with the now incredible claim to being the father of the mp3 and the fame and reputation that comes with it, are very important for a researcher. So it’s impossible for us to not mention those as big motivations behind Brandenburg’s actions. As a leader of a research department, part of his initial gambit was to convince Fraunhofer to give him the resources he needed to bring back the much needed application standards. All applications tend to rule on certain tech standards for the way they work, so all manufacturers know with which requirements to build their solutions on. You can call them the battles on which the format wars are waged, if you’d like. If a certain codec were to, for example, be ruled as the best way to encode audio for all National Baseball League audio transmissions then license fees would have to be paid out to its license owners. So the mp3 project was nothing but a buccaneers dream to bring back some royalty bounty and spread it around the crewmates. Brandenburg needed to win some application standard rulings — yet that was his biggest frustration.

For all accounts and purposes the mp3 was indeed a technically superior product to all other format alternatives out there. But the book sheds some light at the often unimagined corporate politics in the world of engineering. As consumers we tend to assume that the best product will always win and get the needed backing to succeed in the marketplace. But that’s exactly what didn’t happen to the mp3. In fact, as consumers, we barely know about the shady standards committees world, where large corporations lobby supposed impartial engineers for their formats to win certain application standard rulings. The book does a great job at covering this web-of-influence-meets-development-hell and you should buy the book to sink your teeth in what is one of the most revealing parts as to why, really, music got free. But to cut it short: the two competing formats had different corporate backers and Phillips, the company, successfully exerted enough influence for their format to be chosen as the basis for what the The Moving Picture Experts Group (MPEG) decided was the defacto way to digitally encode audio. Brandenburg and his Fraunhofer team were consistently defeated in ruling after ruling despite having the better solution because of the MPEG’s consistent refusal to back away from corporate lobbying, having even to accept to the inclusion of inefficient technologies in its mp3 algorithm due to MPEG’s ruling. This frustration led to that Tom’s Dinner encoder that I mentioned earlier to be released online for anyone to create their own mp3s. Thus came about the release of a little tool called l3enc. It’s source code was soon after being used by thousands of people. And thousands of leakers.

The Thief

Image by: The New Yorker

Bennie Lydell Glover is by far the most central character of the book. He is at the core of everything that happened during those early days of CD-ripping and his actions can be traced back to millions of lost dollars by labels, artists and songwriters. As an employer and then manager of a Universal Music controlled CD-packing plant, he was the secretive main source to what was arguably the ‘best’ mp3 warez music crew out there— Rabid Neurosis, or RNS for short. With Glover, RNS and its ultra-paranoid leader Kali were able to beat some of the most iconic releases of the decade by weeks. But for all of his wrongdoing, my view is that Glover is probably the most replaceable character of this saga. Sure, his leaks were unparalleled in time and quality. But demand from consumers was so high and the bar so low back then, that his work could have been replaced by another ripper at a lower bitrate and at a shorter window before the release. And while our other two character’s ambitions, motivations and frustrations are public and extensively recorded, only Stephen Witt has really been able to get to know Bennie Glover like that. Here’s what I got from the book:

If perhaps Glover’s motivations and frustrations are a bit more clean, one is left to wonder what did he hope to achieve with it all. Where did he see himself after his fast and dangerous adventure in the underbelly of the mp3 scene? The book tells us of how starting as just a packaging plant employee, he rose to middle management at the Kings Mountain plant. Perhaps he saw himself as a potential senior management figure. We also know of how he quickly became ‘computer-savvy’ on account of his technical curiosity, a skill which was rare to come by in Shelby, North Carolina in the late 1990s. Maybe he saw himself as a future tech entrepreneur? And finally, the book mentions how he used the privileges he gained from Kali, his crew’s leader, for personal gain. This is the key element of his story. The warez scene relied on a reputation-based access system: this means that if you input enough pirated material onto private servers, you’d get access to other private servers with other pirated material on them. This could be anything from movies, to computer games, to software, etc. And if the rules were explicit about how to use this material—not to be used for profit — Glover at a certain point ran a medium-sized piracy business network in his hometown. He became known as the movie man: you just told him a name and he’d get that movie for you. He even started using barbershops as his local DVD dealers, allowing them to take orders of what their customers wanted and retain a small commission. Perhaps he saw himself as a first-generation cybercriminal kingpin. .

Ultimately money could have been his biggest motivation. I mean, he was making a lot of it from that piracy racket. There’s a reason why investors love digital businesses and that’s because the margins are exponentially high once you scale up. Glover was selling movies like crazy, through his underlings and though he never dealt with music, I wonder how he was able to keep his reputation at his workplace intact until the last moment — he was suspended after the FBI raided his place, not surprisingly. The book takes us through different periods of his life where he had different motivations, from the early days of conspicuous consumption — spending money on dogs for breeding, a flashy car and racing bikes — to the later days as a family man — concerned to provide something for them. It also tells us that the more he provided for the family, the more he provided for RNS, without any apparent financial gain. As time passed, the more entrenched he got in the warez scene. But that didn’t mean knowing more of the scene. No, that rather meant being more in this sick dependency relationship with Kali. Glover was Kali’s magical secret weapon, the reason why RNS was the most reputed mp3 warez crew out there. The reason for all the press. The reason why they were able to beat releases with such big leak windows. Glover knew that and he took pride in that.

But Kali also knew he was dependant on Glover. And he often let that show. Kali would often burst into fits of rage when Glover didn’t get a release he wanted. Kali knew there was no one in the entire scene who had the same level of access to such early leaks as Glover. You had radio DJs leaking promotional copies. At most you had distribution companies letting something slide from time to time. But never had Kali seen albums being leaked with so much time in advance before their release. Glover was so up the supply chain that if he chose to leak an album to a rival crew, there was no way Kali would beat it. And this parasitic relationship only became more traumatic as time passed. If before, Glover didn’t really have contact with anyone in the crew but with Kali’s lieutenant and a factory co-worker who had started out with him leaking CDs from the plant, the situation became worst after MTV mentioned RNS by name in one of its pieces. The extremely paranoid Kali further drove Glover underground while continuously demanding more from him. Glover grew tired of this and at times would go radio-silence on Kali. Even holding out on a album he had stolen from the plant just to piss Kali off. Ultimately, Glover was frustrated that he was the one and only source of all of Kali’s and RNS’s reputation in the scene yet getting zero recognition for it. In fact, he was getting the opposite: just slack. When he walked out of the house, no one knew he was the reason for countless grey hairs on the heads of music execs around the world.

The Mogul

Image by: Sony Music Entertainment

And speaking about music execs, who else could our Mogul be but none other than current Sony Music chairman Doug Morris. Morris is a career record man, having started a label that got acquired by Atlantic Records and rising to become the protegé of its legendary president Ahmet Ertegun. He’s been credited with creating Vevo and being a kingmaker, befriending many of the stars you still know and love today. The book focuses on his time as CEO of Universal Music Group. During the turn of the century UMG was home to some of the most sought-out releases in the market, especially those from the burgeoning hip hop scene with Interscope’s Dr. Dre and Eminem leading the charge. Unlike other music execs, he had always supported the genre through thick-and-thin, in part, due to his friendship with Jimmy Iovine. So, Morris was the head of the largest and coolest major label during the music industry demise and he was at the centre, not to say THE driving force, behind some of the most controversial decisions that the labels and the RIAA took. History paints Morris as an out-of-touch record man who was just looking for his own profitable gain, yet his story is that of a man with a keen eye for predicting the future and made business decisions with that in mind.

We’re talking about a guy here who started out in the old music industry. And by old music industry we’re not talking about the 70’s industry of excesses, but rather in the 60’s era of pop and chart hits. He began his career as a songwriter at Laurie Records before founding his own label, Big Tree Records. The key to his success was the rather mathematical ability to spot local or regional hits. He used to be the first to take a look at last week’s order sheets, looking for records which had unusual high levels of orders in just one location, say for example a college town. His theory, many times proven right, was that if a record was a local hit then it was probably good enough to become a regional hit. And then a national hit. So he’d push them until they did. His success at this was such that he caught the eye of Ahmet Ertegun, the cofounder and president of Atlantic records who mentored him to the top, eventually even up to the point of replacing at Atlantic, which was owned by Warner Music. A company which then saw fitting to make him his chairman, given that he had completely rebuilt Atlantic from dormancy. So all in all we’re talking about someone whose main ambition is to be at the top. Wherever he his, he want’s to be the boss. And if you think that now that he was at the top at Warner that it was smooth sailing from now on to retirement, then you can think again.

You can say that Morris’ ambition was highly tied to his main motivation — the higher the rank, the higher the pay. But the episode which found him let go from Warner is one of disregard for self-enrichment. Morris had been a supporter of hip hop and particularly gangsta rap. Unsurprisingly he saw it as a market not yet covered enough by the major labels, given the unparalleled demand for it. So he often pushed the case for acts such as Tupac, Snoop Dogg, etc. But as Warner was attacked by the US Senate about the lyrical content of some of these rap songs, execs cowered. Morris was adamant in defending their acts, because he sensed they were at the cusp of a music revolution. But this was an internal battle he couldn’t win, so eventually, he was fired and escorted out of the Warner building by two security guards. This was 1995. If it looked like Morris’ life in the industry was over then here’s where his second life started. The day he got fired he got a call from Edgar Bronfman Jr. — a third generation alcohol distributor and heir to the Seagram empire. He told him to watch a movie called The Shawshank Redemption. Morris puzzled as to why he should watch a movie about a prisoner that flees to a beach town, then awaits the arrival of his co-conspirer still inside. Edgar replied: ‘Well, Doug, because I want you to know that I’m that guy waiting at the beach for you.’ The deal was simple: Morris was to come in and create his own label under Seagram’s recently acquired music division, that they had no idea how to run. And so he did. MCA Records, which had been acquired by Seagram became Morris’ new playground. He quickly renamed it Universal Records and bought the ‘toxic’ Interscope from Warner. And by 1998, one day after purchasing Polygram for $10.4bn, Seagram was again promoting Morris to lead all of their music initiatives. Just 3 years after getting fired, he was once again at the top. And this time, with a much bigger financial package.

So this is where things get fun. A mere two years after that, another deal was closed. Vivendi, the french media empire successfully negotiated a merger with Seagram for its coveted subsidiary, Universal Music. At the time, Vivendi dismissed any fears that ‘the internet’ would hurt any future revenues! The book takes a decidedly partial turn here, where it introduces what will be known as ‘the contract’. To successfully secure Doug Morris’ stay ahead of Universal, his already big financial package at Seagram became inflated with egos, mixed with ambitions and thrown an unhealthy dose of greed at. This is the moment where Morris is able to renegotiate his compensation to be the third highest in the entire Vivendi, trailing behind only that of Vivendi’s Chairman and CEO Jean-Marie Messier and Edgar Bronfman Jr. himself — now vice-chairman of the merged company. If before, Morris was already ahead of any of his peers in the industry, this is where he takes a giant leap ahead of his competition. ‘The contract’ is a beast with a large enough fixed base salary and with a very attractive variable compensation. The book tells us that this variable isn’t just a clear-cut sales performance metric, but rather more related to return on investment. So, if the total capital investment in Universal Music by Vivendi in a given year (A) is lower than the total capital return for Vivendi coming from Universal Music (B), then Doug Morris would get a chunky bonus. So enter the early 2000’s mp3 ubiquity and the Glover/Kali RNS well-oiled leaking machine targeting Morris’ heartland of hip hop and we have a problem. Morris saw his bonus threatened by the damaging leaks. Say what you will about how these affected the artists, but in the end, fewer records were being sold. So Morris alongside the other majors pushed the RIAA’s infamous lawsuits to consumers found pirating. But those as history recounts, were more counterproductive than anything. So Morris did the only thing he could: he fidgeted the only part of his bonus formula that he could control. He couldn’t stop revenue from declining (B) but he could control the incoming capital (A). So in the following years Morris tried to always make sure to ask Vivendi less and less capital. And Vivendi wasn’t going to say no. Facing what was going to be a decade of operational descaling, Vivendi was able to nevertheless post profits for Universal Music, which is really what any company wants to show their shareholders. And Morris? He was able to keep his fat cheques coming in, even in the middle of the worst recession ever in the history of the music industry.

Morris went on to then create Vevo because of a conversation with his grandson. Glover and Kali ended up hunted by the FBI in an infamous legal showdown (PDF). And Brandenburg? He’s still at Fraunhofer. Still heading up it’s Institute for Digital Media Technology.

There’s so much more to the book than what I just mentioned here so I again encourage everyone to go read it.