Penny Fractions: How Do You Stop Piracy? Sue Your Fans, Obviously.

Hello! Two quick notes before I begin this week’s newsletter. Check out the podcast Art & Labor! The show covers a range of topics from histories of art protests to unionization efforts and the reading of academic texts. I hold no plans to do advertising in this newsletter but I cannot recommend this show enough and they do have a Patreon if you’d wanna support. In less exciting news: I’ll be on vacation in two weeks! Therefore, there won’t be a newsletter on September 4th but I’ll return September 11th. Excited for a little break and for some new projects in the works within this space. 

The record industry’s paranoia around piracy might not ever be matched again. The topic of piracy quietly faded into the background for much of the 2010s but from the late 90s until the accepted dominance of iTunes in the late 00s, it was the ever-present boogeyman. Many articles, books, and I’d guess radio segments, were devoted to chronicling the impact of Napster, file-sharing, and torrent sites on the record business. This is a fairly broad topic, but I wanted to drill down on a much-publicized though rather quickly forgotten part of that history: the half-decade when record labels, desperate to find a solution to piracy, targeted fans with vindictive lawsuits over downloading a few MP3s.

The Recording Industry Association of America (RIAA) never slept on the issue of piracy. Billboard reported in June 1997 that the group representing a majority of record labels was aware of sites offering songs online for free since the top of that year. That’s what sparked an RIAA lawsuit against three sites across the country including one called Fresh Kutz (an amazing name), which was ultimately settled out-of-court in 1998. Obviously, these sites weren’t equipped to take on the entire recording industry, but just to make that starkly clear, the RIAA was seeking $100,000 for each illicit recording on the site. If anyone can send me a report that assigns the lifetime value of a single recording at about $100,000, my email is pennyfractions@gmail.com!

Hillary Rosen, then president and CEO of the RIAA, at the time revealed the overriding reasoning for such an absurd case via a press statement: 

The goal wasn’t to collect money or properly assess the value of the music that might’ve been downloaded, but rather to simply instill fear in anyone who thought about repeating the actions of these websites. Bands were already using the internet to communicate with fans by 1997, but in this same issue of the publication, Billboard included a quote about efforts going on at Sony regarding the use of the internet: 

The model didn’t take off to global success for at least another decade but the idea of for-pay streaming already existed in the air. 

While Sony and the rest of the internet were attempting to figure out how to make the industry work in a digital space, the RIAA continued to launch lawsuits. The most notable one was filed against Napster in early December 1999 due to copyright infringement for a total of $20 billion, a number again calculated at $100,000 for each piece of copyright-infringing material. At that point, the website only had 50,000 users—mostly college students—but the publicity of the entire record industry putting its weight on a single website boosted its awareness. Napster peaked at around 26.4 million users in February 2001, an over 50,000% increase. All press can, indeed, be good press. 

Needless to say, the RIAA’s lawsuit against Napster broke the company along with a number of other factors typical to entrusting any amount of money in the hands of people barely out of high school, as is the norm, bizarrely, in Silicon Valley. According to the Electronic Frontier Foundation, lawsuits would continue to be filed against the likes of Aimster, AudioGalaxy, Morpheus, Grokster, iMesh, Kazaa, LimeWire, and Scour. Ultimately, none of this stopped piracy and by the mid-2000s, the CD bubble burst, the iTunes store was launched, and Myspace and YouTube were about to enter the picture… so a new target needed to be found for this litigious industry.

If suing websites into oblivion couldn’t stop music piracy, then what was the next step? Suing fans, obviously! The EFF, who would go on to represent a number of defendants against the RIAA, claims that the first wave of lawsuits began in April 2003, by explicitly going after four college students who allegedly developed search engines to be used for exploring specific college networks for downloading music. 

Not equipped to fight the entire record industry, these students ended up settling out of court for a range between $12,000 to $17,500. Just for some personal context, that amount of money would’ve crushed my bank account on top of my student loans! Record executives seeing their profits drop by millions year-over-year figured that the solution would be to threaten financial ruin on unsuspecting students and their families. This level of punitive punishment was, unfortunately, just the beginning. 

According to Steve Knopper’s Appetite for Self-Destruction, not everyone within the major label system was down for the idea of taking fans to court. The author notes that while Universal Music wanted to go down the litigious route, Warner Music threatened to leave the RIAA if such measures were taken. Ultimately, Warner did join the campaign and in the spring of 2003 the RIAA set out on a year’s drive to threaten people who might’ve used illegal downloading sites. 

In December 2008, the Wall Street Journal reported that the RIAA was putting an end to its six-year campaign of targeting individual users. The industry’s explanation throughout the entire process was that the goal was simply to raise awareness and effectively put a chilling effect on discouraging piracy. However, there was little evidence that the millions of dollars did much to deter online piracy.

I don’t expect that many people reading this newsletter are unfamiliar with these stories. These lawsuits sat at the forefront of my mind throughout middle and high school because hitting the lawsuit lottery for a single album never felt was worth the risk. Executives quoted in Knopper’s book and contemporaneous reporting would’ve called this a victory because I avoided direct piracy due to a fear of an arbitrary lawsuit being thrown at my teenage feet. 

Obviously, the record label system would fare the storm of piracy and by the late 00s, while the rest of the world was entering the financial crash, the record industry had already experienced its major body blows of declining profits and massive cuts. Still, the general concern of this newsletter sides with the musicians who sat back and watched the most powerful people in the industry gleefully pluck unsuspecting people with potentially life-ruining fines because they couldn’t keep up with playing whack-a-mole with each new site that popped up. These are the same record labels that created the early streaming services that didn’t pay out artists enough money and that then built the model that Spotify and YouTube took to new heights. The industry isn’t currently desiring such drastic measures but whenever I read about decisions made for the “industry,” it’s always good to remember that the interests at play are the same as those that sought to pick the pockets of average citizens to protect their own paychecks.

Last week, Talkhouse ran a couple of interesting articles on the company Sofar Sounds, which throws intimate concerts across the country by leveraging volunteer labor and providing bands with a $100 fee. The two pieces confirmed my general thoughts that Sofar Sounds is a lazy platform built on a layer of smarmy volunteer labor. The fact that musicians are not fairly compensated is certainly a concern here, but I find Sofar Sounds’ talking point of being a “passion project” and using that excuse as a reason for why they can’t pay volunteers is disgusting. Good luck to the New York State Department of Labor, who is reportedly investigating the company.

Spotify to Test a More Expensive Version of Its Popular Music Service - Bloomberg 

Earlier this year, I wrote that the base price of $9.99 for a subscription is nearly twenty-years-old and entirely outmoded but there is plenty of market pressure keeping it this low. However, if Spotify is thinking of raising the prices, what might’ve happened with its first foray with that experiment?

What Happened When Spotify Raised Its Prices by 10% in Norway? - Music Business Worldwide 

Nothing! There was no user drop-off. There wasn’t a public outcry. The company simply made more money! If that’s the case, why won’t Spotify do the same in other, non-Scandinavian countries? I’d guess it’d have something to do with a few companies known as Apple, Amazon, and Google, who control far more of the market outside of Spotify’s home turf. Anyway, expect a push for streaming prices to slowly go up and keep an eye out for whether all streaming services follow the trend upward or whether one goes the opposite path. Truly, this is all kind of ‘for show’ because the entire industry is too locked into this model but this will make for amazing future headlines.  

Why music isn’t a top-two category on Patreon (yet) - Water & Music 

I’ve long held a great fascination with direct artist subscription services, so reading this interview by Cherie Hu with Wyatt Jenkins from Patreon was right up my alley. 

YouTube is testing a members-only videos feature - Digiday 

Well…speaking of artist subscriptions, I’m sure this will be interesting news for a number of YouTube vloggers I follow. 

TikTok Users Are Inventing Wild Theories to Explain Its Mysterious Algorithm - Vice

Who knows what surprises a TikTok feed may hide? Yummy snack-sized videos that the entire globe will like? I wonder, wonder, wonder what’s in a TikTok feed’s algorithm. 

YouTube Forbids Monetizing Short Music Clips Through Manual Content-ID Claims - Torrent Freaks  

I’ll save my controversial opinions on copyright and YouTube’s Content-ID system for another day, but it’s nice to see YouTube cracking down on predatory usage of its Content-ID system.

The Penny Fractions newsletter arrives every Wednesday morning (EST). If you’d like to support it, check out the Patreon page or follow it on Twitter. The artwork is by graphic designer Kurt Woerpel whose work can at his website. The newsletter is copy edited by Mariana Carvalho, with additional support from Taylor Curry. My personal website is davidturner.work. My current job is a Curation Analyst at SoundCloud, so all thoughts here represent me, not my employer. Any comments or concerns can be sent to pennyfractions@gmail.com.