The Birth of Music Piracy & the Death of the Music Industry

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While it first came out a few weeks ago now, it wasn't until just yesterday that I finally read The New Yorker's outstanding piece, "The Man Who Broke the Music Business," about the very first days of online music downloads and how one guy working at a CD manufacturing plant leaked some of the biggest albums of the last two decades. 

Being the insatiable readers and savvy thinkers that you are, many of you have likely read and marinated on this piece already, but whatever, allow me a late pass. My mind is far too blown, I'm going to need to get down my thoughts here and discuss it with y'all if I'm going to have any hope of eventually re-assembling my cranium. 

So with all spoiler alerts and what nots given, here we go.... 

The Basic Story

  • 1994, North Carolina. Bennie Glover gets a job at the PolyGram CD manufacturing plant and quickly discovers how common it is for employees to smuggle out CDs before their release date. Most people use those smuggled CDs almost entirely for personal use, playing the CD for friends and at house parties. 
  • Glover is also a bit of a computer nerd who starts exploring the still newly-formed internet, quickly moving past AOL chat rooms and discovering some of the very first, underground file-sharing communities. He buys a CD-burner, starts downloading software and movies and sells them out the trunk of his car. At this time he's not really uploading or selling music, fearing he'd be fired from his job at the plant if he was ever caught selling bootlegged music. 
  • Glover eventually gets hooked up with RNS, one of the first and biggest file-sharing crews. He strikes a deal with RNS' shadowy leader, Kali (aka the Music Piracy Game Gus Fring). In exchange for getting first access to all RNS' files - including highly profitable movies - Glover starts giving Kali albums he smuggles from the plant. 
  • Over time the operation grows. With Glover's help, RNS becomes the biggest and best album-leaking crew. Glover's personally responsible for leaking Lil Wayne’s 500 Degreez, Jay Z’s The Blueprint and many more. Kali and RNS are leaking the albums entirely for internet cool points - they're not profiting in any way except gaining online notoriety - but unknown to RNS, Glover gets bolder and also starts selling bootlegged albums too. He's now a small-time, local boss, rolling around town in a fully-equipped Lincoln Navigator.  
  • 2007 - Glover comes home from work to find FBI agents searching his house. Jigs up. He actually doesn't snitch on Kali (who turns out to be a 29-year-old dude who lives with his mom), but everyone eventually gets caught anyway. RNS is over, Kali is done, Glover serves time in prison for conspiracy to commit copyright infringement, but Pandora's box has been blown wide open. Nothing was the same. 

"At work, Glover manufactured CDs for mass consumption. At home, he had spent more than two thousand dollars on burners and other hardware to produce them individually. His livelihood depended on continued demand for the product. But Glover had to wonder: if the MP3 could reproduce Tupac at one-eleventh the bandwidth, and if Tupac could then be distributed, free, on the Internet, what the hell was the point of a compact disk?"

The Big Takeaway

"The Man Who Broke the Music Industry" is a great headline, well played New Yorker, but it's also overstated. No one man, not even several men conspiring, can break an entire billion dollar industry on their own, or at least not an industry that's not already on the verge of breaking. It's more like the music industry was on life support and Glover and Kali (and others) pulled the plug. Yes, they're absolutely culpable - if anything it's astounding how one person could so easily derailed huge, million-dollar album recording and release plans simply by shoving a CD down their pants at a factory - but Glover really only sped up an already inevitable process, maybe not even by much. With or without Glover and RNS, with or without Napster, whose music all essentially originally came from RNS and other crews, the internet was still an unstoppable train and the music industry was standing on the tracks with their eyes closed.

In fact, it's almost shocking how unprepared the industry seemed to be for the arrival of digital music, pirated or otherwise. In 1998, when Glover, RNS and other underground communities were flourishing, when Shawn Fanning was on the verge of launching Napster, Universal Music Group (owned by Seagrams) expanded Glover's North Carolina CD manufacturing plant significantly. In the business proposal UMG laid out for the plant's expansion, there's not a single mention of "the MP3 [or digital music] among the anticipated threats to the business." 

It wasn't just that the music industry was under-prepared for the explosion of digital music, it wasn't just that they were slow in adapting, they were still apparently COMPLETELY IGNORING DIGITAL MUSIC AS A POSSIBILITY AT ALL as late as 1998. That's the result of ignorance, yes, but it's also the result of ignorance fueled by greed. In 1998 CDs were routinely selling for $14 while they only cost $2 to make, a staggeringly large profit margin at a time when one album could sell millions of copies. Understandably, the industry was loathe to cut into all that profit and so it continued to play the short game, focusing on enforcement and litigation instead of building the product it was so blindingly obvious their customers wanted. A $14 CD wasn't the product most people wanted, it was the product the industry wanted people to want, and as soon as a different choice emerged, those people fled in droves. And while the industry watched them flee, instead of building their customers the product they actually wanted (un-bundled, low cost, flexible music) to entice them back, they focused on shutting down the suppliers. Turns out trying to force your customers to pay for something they don't want because they have no other options isn't a particularly smart business model over the long run.   

I've long balked at using the term "piracy" to describe all people who download music without paying. It's a term the music industry has successfully pushed and popularized because it conjures up images of swords and savagery, but while this article proves those people absolutely do exist, most online "piracy" isn't done by a shadowy cabal of evil smugglers. Most online "piracy" is a 16-year-old kid clicking a download link in their Twitter timeline while waiting for the school bus, and by viewing those people as evil outlaws instead of potential customers of a better product, the industry has alienated much of its base. 

No, I take that back, most 16-year-olds no longer download music period, "pirated" or otherwise. Now it's all about streaming and history is once again repeating itself. By focusing on litigation instead of innovation, the industry was blindsided by the death of the CD, and just when they got a handle on digital downloads, the download is dying and streaming is taking over. So what is the industry doing now? Attempting to litigate streaming, cattle-prodding and regulating customers into the channels the industry prefers. If you've been paying attention at all, you know that by the time they manage to get a stranglehold on streaming, the next big thing will be taking off without them while they chase after it.

Ultimately, it wasn't a man who broke the music industry, it was the music industry that broke the music industry. 

Bonus Points [two smaller points I can't resist sharing]

  • Holy Moses, at one point Glover had both Kanye's Graduation and 50 Cent's Curtis well before they were scheduled to drop. As you probably remember, this was the "whoever sells less albums has to retire" showdown. Glover personally liked Kanye more than 50 and initially considered leaking Curtis first, thinking it would hurt 50's sales and maybe force him to retire. Ultimately though, he handed off both albums to his connects at the same time, Graduation ended up leaking first by a few days, but it turned out to not really matter. Graduation still outsold Curtis by a comfortable margin (the leak might have even increased sales) and 50 ignored his promise to retire, continuing on his path to making increasingly less relevant music to this very day. 
  • Reading this story, I now realize that DJ Drama's arrest was essentially peripheral damage, he must have gotten caught up in the string of FBI raids in 2007, primarily aimed at bringing down RNS and other crews. Drama got hit by forces way beyond his control and understanding, but play with fire...

I originally intended for this to be only a short post, but perhaps predictably for me it's exploded into a 2,000 word thesis, and I'm still just scratching the surface of The New Yorker's excellent article. If you're interested in music and the internet, and if you've read this far you obviously are, you need to go read that piece. In the meantime, I'll be sitting here preparing for my own digital demise by forces I'm too ignorant and perhaps greedy to see are coming for my job. 

[Nathan S. is the managing editor of The DJBooth and a hip-hop writer. He also occasionally talks on podcasts/radio/TV. His beard is awesome. This is his Twitter.]

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