17 Sep 2015

Music Pirates Set Sail While The White Guys Got Fat

The CD revolutionized profits at the big labels in the 1980’s. Suddenly the A&R guys were less important, signing and recording new acts was eclipsed by the simpler profits that sloughed into the bank from re- releasing existing material.

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As CD tracks required a lot of storage for each minute played, the white guys who ran the big music labels believed no one could pirate their music. After all, it wasn’t like cassette duplication, was it? No one could realistically ‘copy’ a CD when do-it-yourself burners were not yet invented. And file sharing huge files? The technology didn’t exist!

How dumb were these white guys? Stephen Witt explains this and much else in his excellent debut novel, ‘How Music Got Free’. He starts with Doug Morris, the North American head of Warner Music Group who was earning US$10 million in 1995 along with all the other good stuff.

Guys like Morris had inherited blazing arrogance from their precursor’s at the record labels. Those guys had decades earlier appropriated the Hollywood Studio model which signed the actor to the one studio for five years or five movies. The ‘Star System’ drew actors in and if they resonated, they did multiple movies for one studio – at the studio’s option. An actor needed to sell themselves to get into a film, along with all that could entail, and relied on the benevolence of the studio boss. Favors were done, deals were made. Fall out of favor, and you were ‘remaindered’ on the sidelines, unable to work. The movie agents got rid of the multi movie deal in the 1960’s but the music labels hung on tight.

At the big record labels they locked in the act. They still try to do it today by offering a 5 year deal. You sign and they release – or not. Plenty of artists sit in purgatory when the label simply ‘does nothing’. They have a contract, they are ‘signed’. Turns out they are signed to nothing.

As Robert Rosen wrote on Cracked, “The labels do a great job of making you feel like the centre of the universe when you’re recording. Every studio I’ve worked in had runners. Usually we’d go till 3 a.m. The runners were there to keep us from needing to ever leave. We’d say, ‘We need Heineken, Seagram’s Seven, ice cubes, a Venti iced coffee with whole milk only, a quarter ounce of weed, Backwoods cigars, and we’re also going to need sushi.’ A half hour later, the runner would come back with a bag full of all that stuff, courtesy of Universal. That means Universal has a designated weed guy.”

Of course the artist is charged for all this, later on. Usually with margin added on. Label accounting became one of the great opaque art forms of our time. Many courts have tried to understand what is known as RIAA accounting, and many a musician has come to rue the day they ‘just signed’ a deal innocently.

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The White Guys ignored the advent of MP3 because without portable players, the punters could not readily play a digital file without a desk bound beige computer and messy codecs.

The conversion from vinyl to CD was raging away through the 1990’s. Every vinyl release ever was recut on CD. Punters like you and I paid around A$20 in then money ($45 now) per album. The labels were on a stockholder funded cocaine orgy.

Back then touring supported the CD sales, production costs were sky high. The book takes us to the Polygram CD plant at Kings Mountain in North Carolina.

But MP3 had now technically obsolesced the CD, except hardly anyone knew. In 1995 the German MP3 development team had a stand at the Paris AES show, with a floppy disk for creating the files; a home computer for playback, and a primitive handheld player for portable listening. The interest wasn’t there, the music industry were more interested in Philips mp2.

In 1996 the first Philips consumer CD burner hit the market, priced at US$649. The guys in the plant at Kings Mountain suddenly had a second reason to steal CD’s. Until now they took them just to be first, for bragging rights, playing new releases for their buddies before the release date. Now they had a way to copy and sell them.


Witt’s book takes us into the lives of the original pirates, American back-lot boys who drink Millers and watch gridiron at the saloon bar. They were downloading stolen software on Internet Relay Chat (IRC), a constellation of private servers. One day they stumbled over an MP3 music track, and quickly realized a 700 mb CD could be compressed by a factor of 12.

By 1997 there was a growing channel of pirated music, and the CD workers simply loaded the stolen tracks on the IRC group site, and had them shared out for free.

By then the big record labels had consolidated, and the plant was the largest in the US, run by Universal. Their security was ultra tight – workers would pass their bags through an X-ray machine; one in five were searched. One guy on the packaging line watched the process. Since he was in packaging, he was searched more often.

The guards would scan him and his steel capped boots would set off the alarm. Asking him if he had steel caps, the guard then waved him through. They didn‘t ask him to take his boots off! But a CD would not fit inside a boot. He kept watching.

Gradually he came to realize that almost every guy in the plant had large fashion accessory belt buckles and these always set off the scanners. Plus the guards never asked them to take them off. So he started stuffing the stolen CD down the front of his pants.

The plant could produce one million CD’s per day.

Witt tracks the career of Doug Morris, from label hustler to head of Sony Music. He gathered over US$200 million along the way, and found himself at a loss to understand how disrupted the music industry had become.

The studio had become Pro Tools, the pressing plant was now an mp3 encoder, and the distribution network was a torrent tracker. The entire industry could be run off a laptop.

Morris got savvy, and today Sony charge YouTube a portion of the advertising revenue they get every time a Sony artist’s video is run. A thirty second pre roll advert in front of Justin Beiber’s “Baby” would earn 30 million for a billion plays. Morris was getting $30 per thousand plays.

The book is thorough and travels a lot of miles. We learn Morris was squired by Steve Jobs but declined as he realized Jobs was dying.

Eventually Morris retired wealthy, as a White Guy who got Fat while his industry burned.

Now recording artists need to tour and sell merchandise to survive.

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