How the record industry killed legal P2P, created a generation of pirates, and laughed all the way to the graveyard

TorrentFreak's Enigmax does a great job of summarizing Copyright and Innovation: The Untold Story, a remarkable scholarly paper written by Rutgers law's Michael A. Carrier, forthcoming in Wisconsin Law Review. Carrier interviewed the 31 subjects for the paper: "CEOs, company founders, and vice-presidents from technology companies, the recording industry, and venture capital firms," and asked them to tell the story of the P2P wars and the music industry. The result is a very good, zippy, 61 pages that'll angry up your blood, with phrases like "Lawyers at the labels historically drove the digital agenda. There was no one there with a truly entrepreneurial spirit. Zero, zilch, zingo, nada. No one there whose entire initiative was not to hang on to the past." and "Even more dramatically, each of the companies 'had a VP level person called the ‘digital person’' who was 'the person who had a decent office and no operational responsibility whatsoever.'"

Here's some of Enigmax's highlights:

It started with a drain on cash. Interviewees reported that venture capital funding for digital music “became a wasteland”, a “scorched earth kind of place” housing a “graveyard of music companies.” With the big labels choosing where and when to sue, funding was hard to come by.

Nevertheless, some innovators didn’t give up, although when the labels were through with them many probably wished they had. The report details instances where innovators tried to get label approval but found themselves in extremely difficult situations.

One recalled that the labels “don’t license you if you don’t have traffic” but once enough footfall is achieved then “they want to get paid for ‘infringement’ and the longer it takes to license you, the larger the ‘infringement’ number they can justify charging you.”

Another described a litigation “Ponzi scheme” whereby settlements and other fees extracted from startups were used to fund the labels’ ongoing litigation strategy. However, like all Ponzi schemes there was a problem – maintaining momentum. “Once you stop suing new people there are no new settlements to pay for the ongoing litigation,” one interviewee reported.

How Big Music Threatened Startups and Killed Innovation


  1. Cory last month:

    He has some weird conspiracy theory that the “free culture” movement is funded by large tech companies as a stalking horse for their issues. Speaking as someone who’s raised a fair bit of money for that movement, I’m here to tell you that he’s just wrong.

    From the paper Cory approvingly cites today:

    This project received funding from Google pursuant to its Research Award program.

    It’s not a conspiracy. It’s big business (who’s bigger than Google?) spending money to promote its own interests. What’s so hard to believe about that?

    (Edited to fix linebreaks.)

    1. (Edited to fix linebreaks.)

      You don’t really need to note it since I do it at least a hundred times a day.

    2. Maybe because the people saying it are the same ones who claim that 1 downloaded song kills 5 puppies, makes 50 people unemployed, sexually abuses 500 grandmothers, etc…

      These are also the people who claimed that Google killed SOPA/PIPA by lying about what it said, when we could read it for ourselves.

      These are the same people who still complain about the lack of CD sales, while hoping everyone will ignore their digital sales.

      These are the same people who setup a PR front for spying on the users of several major ISPs so they could streamline their “education” system that involves extracting $35 to challenge their notice and limiting you to a handful of pre-approved answers that don’t accept reality.

      But your right Google wants to destroy the world music markets so they can corner them with lyrics written by their search algorithm so they will appeal to people better.  *blink*  Or maybe they are tired of the millions of takedown requests that are costing them time and money that are completely bogus because the cartels only use keyword matching with no verification, because while the law threatens punishment for abusing the system… they never follow up on that.

      1.  I think Google is pleased for the music markets to exist. It doesn’t want to corner them, just wield enough market weight of its own to collect rent on them. Google has a business model and you are free to accept it. And “remember that all it wants is its fair advantage”.

        1. Google left to its own devices would rather people find music through Google than via P2P, don’t you think?

          Seems like this report was funded mainly to put another brick in the wall, so to speak. I don’t really doubt the truth of it. Do you?

    3. I’ve never heard anyone talk about a “free culture movement” except shills and luddites. All I see are millions of people who use the Internet to exchange information with each other and want to keep doing so. There is no such thing as “free talking” or “free letter-writing,” so how could there be “free culture” and why would we need a movement to establish it?

      Obviously, Google funded this study to promote its interests. Why else would it fund a study? Google’s agenda is to report the biases and bad decisions of its occasional opponents, and those decisions were all on the record before this.

      What specific part of this report are you saying is inaccurate?

  2. What a weird stage in human history we are at. A computer requires the ability to copy and move information just to function, even to show you something on the screen, like maybe to read something!

    To make copyright work in the digital age you have to grant the computer a privilege that they say a human can’t also have.

    That wasn’t as true for a physical book, a book still can fulfill its purpose without having to copy anything – it didn’t require a right not granted to the human operator!

    This is so messed up. I don’t think copyright and computers can ever be combined without an ever more totalitarian system to enforce it. Oh dear.. and then 3D printing no so long just to make control freaks go even more batshit..

    Copyright requires a fetishistic religiosity now to maintain it.

    1.  I think you hit the nail on the head with the word “fetishistic”. Groups have always made efforts to horde and control information to elevate themselves from the “unwashed masses”. Whats more fetishistic than say, the Illuminati, Freemasons, Knights Templar or other “secret societies”. Many religions have organizations like these as well.

      The computer is the antithesis of this ideal. You’re right, it is a weird stage in human history, and I for one can’t wait to see what happens.

      1. I don’t want to wait. Because an ever more totalitarian system might be what happens if we wait. I don’t know how to act, though, to prevent that.

  3. >> It’s not a conspiracy. It’s big business (who’s bigger than Google?)
    spending money to
    >> promote its own interests. What’s so hard to believe
    about that?

    Nobody in their right mind thinks that tech companies like google etc are sweet little innocent lambs without their own dodgy interests to watch out for too. Some of the suggestion of copyright reform I have seen seem more like land grabs, potentially just moving things from one abuser to another.

    Sometimes reality just keeps smacking you in the face though with evidence and denying it is a waste of time. Its like Copernicus or something. The human race has never had to deal with the realities of computing and networks until recently. We haven’t got a clue how rules that may have been pragmatic applied to a physical form could ever work in a digital society. How everyone now wants interaction and sharing rather than one sided communication that was a real physical limit before.

    This is new territory and old rules probably won’t work, maybe even can’t ever. I don’t trust google as far as I could throw their headquarters though! ;)

  4. I guess it was fairly inevitable that the ones that broke past this ludicrous cartel/monopoly were Apple and Microsoft (themselves a ludicrous cartel/monopoly) – and even MS gave up fairly quickly.  Anyone smaller than a behemoth was largely doomed.  I’m still slightly staggered that Spotify made it, and look at how resented they are.(In passing, I’d still like to bemoan the fact that I can’t access Pandora in the UK other than by falsely representing myself, which I don’t want to do.)

    1. Wasn’t Spotify part of the prosecution on that corrupt Swedish case against one person partly related to The Pirate Bay?

      They may have ‘survived’ but it looks more like they fused in and became part of the cartel.

  5. Germany did pretty well without copyright for a very long time when UK had it much earlier. May well have contributed a lot to their rise and prowess as an educated and industrial nation.

    Ironically, it seemed to give authors more bargaining power as publishers had to actually compete.

    “Sigismund Hermbstädt, for example, a chemistry and pharmacy professor in Berlin, who has long since disappeared into the oblivion of history, earned more royalties for his “Principles of Leather Tanning” published in 1806 than British author Mary Shelley did for her horror novel “Frankenstein,” which is still famous today.”

  6. I read that paper a few days ago and what struck me was no law made anyone sit down until they worked out a deal that had any basis in reality. Surely, that would be a sensible purpose for the legal profession?

     Its like the Richard O’Dwyer thing, why did they not sit down and go “You boys need tosort out a cut that is realistic from what is actually coming in, its the way the world is now and people find it useful, then just shut up and go away”.

    Oh because copyright doesn’t do that. It doesn’t make people get real and it never will. Its not fit for purpose.

    I bizarrely used to think it was about the money but its not. Its about control. To make it worse, for  lawyers, crazy batshit wars make them more money, so its self fulfilling.

  7. I think that Big Content isn’t into money, they are into control. If those control freaks would want $$$, they would provide the content to everyone, and listen to the cheerful sound of the cash registers as they count the money.

    But what do they do instead of that? They release “East European Editions” at crappy quality compared to western editions, as  if we are some herd of Neanderthals who can’t tell the difference. And no, it’s not because us East Europeans aren’t willing to pay for content.

    You know what? Before 1989, people in my country photocopied banned books and passed the copies around. The “copy” spree didn’t start with the P2P networks, but with censorship. People are not against copyright, they are against abuse.

    So what the Big Media wants is control. Their complexes are so friggin’ deep that they need to reassure themselves that they are superior and that the rest of us need to ask for permission to breathe. Under these circumstances, I am beginning to believe that BDSM stands for Big Damned Sucky Media.

    1. Its more belief that control is what brings in money. They believe if they can’t control what is being sold, they don’t control the money being paid is going to them. 

  8. Setting aside the subject matter of the lawsuits, it’s not unusual that companies use the proceeds of litigation to fund more litigation.  It’s hardly a Ponzi scheme.  Rather, it’s exactly how you want to operate when you have an endless supply of potential defendants violating a law.  It’s exactly how the ACLU, NRDC, EDF, Sierra Club fun their litigation, as a matter of fact.  Not problematic at all, as long as continued litigation supports your cause as opposed to your cause supporting continued litigation.

  9. It’s just so incredibly hard to take the industry seriously. How much of an albums cost is actually reaching the artist? And intellectual property laws certainly need changing. Am I the only one that feels the work ofdead and gone artists like Hendrix for example should be fair use by now? =

  10. Through the record/film industry´s efforts, pirating content has become a truly political choice by now. Basically, if you pay for big media content, you pay the bribes for corrupt politicians.

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