How Digital Music Missed Its Big Chance
Jeff Patterson wanted everyone to try Zima. It was the early 1990s and he’d brought a few six-packs into the offices of the Internet Underground Music Archive (IUMA).
IUMA, co-founded by Patterson, was the first major online outlet where fans could download the music of unsigned musicians, and it needed money. Zima, the now-defunct “alcopop” beverage, had offered to install a banner advertisement on IUMA’s homepage, a groundbreaking revenue idea at the time. So Patterson called an all-hands meeting and passed out bottles to a staff of hackers hell-bent on overturning the music industry.
But IUMA had to keep it real. If they liked Zima, the banner ad would go up; if they didn’t, they’d decline the cash. After a few sips, Patterson recalls, “we said no fucking way were we going to have Zima.
“So we turned them down.”
That uncompromising attitude would be the public face of IUMA until 2006, when after a long, slow decline it finally shuttered its doors. Before Napster, MySpace, Soundcloud and Spotify were a twinkle in a programmer’s eye, IUMA’s creators were already shaking their fists at the music industry. Founded when the number of people using the ’net measured in the tens of millions, IUMA became the online repository for upstart bands, where they could upload and advertise their tunes, build their own pages, sell merchandise and, eventually, let people play tracks right from the site. Bands could choose whether to charge or give away their music, in order to build a following for live shows.
At the time Patterson and co-founder Rob Lord trumpeted the coming music industry upheaval, the “leveling” of the playing field and the end of labels. Soon we’ll be beaming bands directly to our living rooms, they promised, and every band will have a group of fans waiting to find them.
IUMA promised to shift power from agents, publicists, radio stations and record stores to the bands. No matter how big or small, the musician would come first.
As the first high-profile site to offer music downloads, IUMA inevitably encountered technical roadblocks that later music sites could overcome. Slow Internet connections, for example, made the process of uploading and downloading tracks arduous, limiting the site’s reach. Streaming music services today, such as Soundcloud, harness faster connections and mobile devices to succeed where IUMA failed—the German company, which may be the closest heir to IUMA’s mantle, now reaches over 350 million people every month. Yet technical constraints were not the only reason that IUMA would ultimately fail. Its leadership never hit on a business model that worked, which would, along with Napster’s explosion, seal the company’s fate as no more than an introductory chapter in the history of digital music.
I meet Patterson at a little cafe on South Park in San Francisco. He’s still soft-spoken, but his once long hair is peppered grey. Now a grizzled startup veteran sporting a hoodie, he still follows the music business but only as a listener. His days as a revolutionary have passed.
In the early 1990s Santa Cruz held an exalted place in the tech universe, home to numerous “Geek Houses,” where hackers cohabited and coded the new web. These geeks — described in the LA Times as “nerds with social skills”—recognized the early web as a new medium of social interaction. Yet upload and download speeds were so slow that large files were almost useless—especially audio files. As The San Jose Mercury News noted at the time, “the digital information required for a single song would consume the entire capacity of a typical hard disk drive.”
In late 1993 Patterson and Lord were audiophile computer science students fascinated by the code that shrunk huge sound files. Numerous compression algorithms had begun emerging, both in academic circles and around the web, and the two young men began blind-testing compressed songs to see if they could spot the difference in quality. (Jon Luini, IUMA’s third co-founder, would join a few months later)
After a while, they could no longer tell the difference between a compressed song and an uncompressed one. CDs, they realized, could now go online. “That we geeked out on compression algorithms led us to do IUMA,” Patterson says.
Patterson played in an experimental rock group called Ugly Mugs, which he noted at the time, had “no commercial appeal.” Today he laughs and simply says they weren’t very good. But seeing the Ugly Mugs’ songs on the Internet, available to anyone, it became clear that a record label didn’t have to be the gatekeeper. Anyone could share their music online and potentially build an audience.
Compliments from listeners in Wisconsin, Russia and elsewhere started pouring in, and soon bands around town were uploading their tracks. Patterson says punk-ska band Sublime used those comments to prove to MCA, their eventual label, that they had a following outside southern California (perhaps marking the first time that Internet comments were useful). These sorts of tales kept coming, turbo-charging the IUMA offices. The team’s visions of re-architecting the music industry seemed to be coming true. Coders starting volunteering their services.
“Initially people just showed up. We weren’t paying them. They just wanted to be a part of it,” Patterson says.
One of the many bands to use IUMA in the mid-90s was a Bay Area group called The Himalayans. The band already had momentum, but guitarist Dan Jewett still remembers when he and his bandmates started putting tracks online. “There was this hope that you could suddenly reach this much larger audience,” he recalls. “It’s hard for people to imagine.”
It didn’t take long for the sleeping giants to notice. Geffen Records called a meeting. Warner Brothers flew the founders to LA and wined and dined them. The executives curried favor with the IUMA crew, letting them raid their CD vaults and offering to take someone’s demo tape to “see what they can do.”
But the co-founders were walking around the lion’s den, and Patterson says they knew it. “We were worried what they’d try to do to us,” he says. IUMA targeted unsigned artists, so it was largely free of copyright concerns. Even so, digital replays of songs were becoming more common, and the labels had already begun flexing their legal muscles and lobbying lawmakers for more favorable royalty conditions. They recognized that the free flow of music could undercut their business. “If we don’t get this, our future is seriously threatened,” David Liebowitz, then executive vice president of the Recording Industry Association of America, said at the time.
Through the mid-90s IUMA’s popularity grew, but as a company it was hobbled by the fact that downloading music and doing business on the Internet was still slow and difficult. IUMA managed to land some flashy partnerships—the House of Blues brought it on to stream shows—but by the late ’90s it was running on fumes.
Clashes over business strategy splintered the founders. Patterson says Lord had wanted to focus on music sales while he wanted to bank on ads. In 1996 Lord (who didn’t return interview requests) left the company. Two years later eMusic, an online music store, began the process of acquiring IUMA for $7.6 million. It began lavishing money on the site, funding such gimmicks as a battle of the bands at The Fillmore in San Francisco that included Primus. At one point IUMA even offered to pay parents for naming a baby after the site. (Hope you saw some of that $5,000, Iuma Dylan-Lucas!)
But in 1999 the music industry changed forever. Napster showed the world — not just geeks — how easily one could pirate music. Copyrighted content spilled all over the Internet, and for a time it seemed like it would never be cleaned up. Consumers began to believe that music should be free.
If listeners weren’t going to pay for Metallica, they certainly wouldn’t pay for a tiny band from Venice Beach or Five Points. After all, music is information — why pay for something that costs nothing to replicate?
So models like IUMA, with easy upload and download of content, were suddenly shunned by the boardroom in favor of models that either had compelling revenue streams or were less likely to run afoul of copyright law (and a record label’s legal team). Eventually eMusic tightened the pursestrings on IUMA, saying investing in unsigned artists wasn’t promising. When Universal Music offered to buy eMusic in 2001, Patterson says IUMA wanted no part of the giant. That year Vitaminic, a European music platform, bought IUMA for $900,000 in cash and stock.
But even in the face of failure IUMA kept up the gritty facade. In a statement after the Vitaminic deal in April 2001, Patterson declared, “IUMA cannot be stopped. We were here first and we are going to be here forever. When we ran out of cash the staff volunteered — when the staff became overwhelmed, the artists volunteered. We’re supported by a community of 25,000 artists with a voice that grows stronger every day, and we are simply too passionate to let this community die.”
Patterson left IUMA the following year. Vitaminic continued to provide a lifeline for the company, but soon it began its final death walk and closed in 2006, taking the collections of tens of thousands of artists with it.
Musician Thomas Dolby once mused that a label is nothing more than a “bank stupid enough to loan money to musicians,” a punchy quote that isn’t quite fair. Labels provide rolodexes, publicists and lawyers. Yet digitization has eroded the power of the first two on that list, and left the labels swinging the third like a samurai sword.
In the years following IUMA’s decline, online music startups have come and gone, many of them victims of legal skirmishes with the industry’s heavyweights. The struggle today is much as it was in IUMA’s day: hitting on a business model that can support the company and evade the threat of litigation. Streaming music service Soundcloud, which focuses on independent artists, has taken IUMA’s baton. The Berlin-startup has found traction with DJs and electronic musicians, and has wisely tried to stay out of record labels crosshairs (though sampled tracks have made that hard).
It boasts over 10 million users who create songs and other audio files, and 175 million listeners tune in every month. Without the painfully slow download speeds IUMA faced, Soundcloud is able to give small and unsigned artists a platform to beam their tunes anywhere. A once unknown Kiwi singer named Lorde, for example, released her debut EP on Soundcloud.
The idea is that as its artists grow, so does the platform. Yet when artists graduate from “indie” to the bigtime, as Lorde once did, they move to bigger platforms and management — and paradoxically this is the point when consumers will pay for their music. So if consumers won’t pay at the earlier stages in an artist’s career, digital music companies are forced to charge for services, either by asking musicians to pay for premium tools or advertisers to pay for placement.
To that end Soundcloud has been releasing more tools for small-time artists to monetize music on the platform. “We think it makes a lot of sense to pair up brands with bands,” says co-founder Eric Wahlforss. “We don’t think it’s great to have a paywall in front of content. We want the content to flow freely.” So you get songs such as SizzleBird’s “Leaves, PRESENTED BY JAGUAR.” Call it selling out or call it being smart — either way the band gets paid.
Those three sources—artist, advertiser and consumer—are so far the only revenue sources digital music businesses have found to keep the lights on. But a major challenge remains. When Patterson and Lord were building up IUMA, they welcomed the coming deluge of digital music that Soundcloud’s Wahlforss, and many others, today call a “democratization of content.” No gatekeepers need separate consumers and bands. Get a Tunecore account and your tracks will be on iTunes, Spotify, Rdio, Amazon and Google. Anyone can broadcast their music—and that’s the rub. Twelve hours—half a day—of new audio post to Soundcloud every minute.
For every artist like Lorde who has risen to fame from the digital ether, countless others who have tried to make a living off their music end up lost in the noise.
Artists used to hustle by stapling posters to telephone poles and bathroom doors. Now their marketing efforts include launching clever crowdfunding campaigns, getting retweeted by someone famous or making lightning strike with the mystical viral video—all while also creating good music. “The part we didn’t solve was the discovery,” Patterson says of IUMA. “Great, now your music is out there — but how are people finding it? I still don’t think that’s been cracked.”
Though IUMA shuttered its doors, its shadow remains in more ways than one. For six years the massive trove of music that had existed on the site was presumed gone. But the fact that music is simply information is what ultimately saved that collection of tracks.
In IUMA’s final days, computing celebrity John Gilmore furiously scraped the tracks — imploring others to do the same — and stowed them away. In 2012 he worked with Jason Scott of Archive.org to put the “wreckage” of IUMA, as Scott calls it — 45,000 bands and over 680,000 tracks — back on the web, where it remains today, free for anyone to access.
“It’s what it was always meant to be: a big pile of music that people enjoy listening to,” Scott says. (Though about 100 artists have asked Scott to remove their music, many having shed punk guitar riffs for collared shirts.)
Casual browsing turns up all kinds of hidden gems. Adam Duritz was the lead singer of The Himalayans and would eventually bring the band’s song “Round Here” to the Counting Crows and the top of Billboard charts. Duritz ensured The Himalayans got songwriting credits for the iconic ’90s tune, and their version remains preserved on Archive.org.
Scott says listeners sometimes come across the IUMA music and review it, as if it were new, having no idea these tracks were first uploaded in the 1990s. “The music is timeless,” he says. “It just might be more angry at the first Bush than the second.”
For Patterson’s part, he still looks back on the IUMA days with fondness, and he appreciates the occasional free beer he gets from a dedicated fan of his efforts to lead music’s digital charge.
“For ten years IUMA defined me,” he says. “Every company I’ve done since then, we look back and try to think about having as much fun as we did back then.”