WEBVTT - The MP3 Revolution

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<v Speaker 1>Welcome to tech Stuff, a production of I Heart Radios,

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<v Speaker 1>How Stuff Works. Hey there, and welcome to tech Stuff.

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<v Speaker 1>I'm your host, Jonathan Strickland. I'm an executive producer with

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<v Speaker 1>How Stuff Works and I heart Radio and I love

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<v Speaker 1>all things tech. And we have done it. We have

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<v Speaker 1>reached the ultimate episode of our relationship with media and

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<v Speaker 1>its evolution over the years. Episode seven of that arc.

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<v Speaker 1>And uh. When I started down this path, I was

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<v Speaker 1>thinking it might be a three or four part series

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<v Speaker 1>and here we are at episode seven, so let's get

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<v Speaker 1>right into it now. In the last episode, I talked

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<v Speaker 1>about the development of the MP three compression format, which

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<v Speaker 1>would have an enormous impact on both technology and culture,

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<v Speaker 1>as well as business. As it turns out, the MP

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<v Speaker 1>three format is a lossy format that means you lose

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<v Speaker 1>a bit of the information in the original file as

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<v Speaker 1>you compress it down, and that means when you decompress it,

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<v Speaker 1>when you expand it back to its regular size later on,

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<v Speaker 1>you actually don't have the full file. Some of that

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<v Speaker 1>information is just gone now. The goal of the MP

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<v Speaker 1>three compression format is to only cut information that doesn't

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<v Speaker 1>affect the quality of the ultimate sound, but that depends

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<v Speaker 1>not just on the compression algorithm, but also the sample

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<v Speaker 1>rate and the bit depth that you select as you

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<v Speaker 1>compress stuff. As you use the the encoders, typically you

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<v Speaker 1>can set these features and you can use you know,

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<v Speaker 1>more compression, which means you're going to have UH files

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<v Speaker 1>that are of a smaller size. They're easier to handle,

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<v Speaker 1>but they also have more likelihood to have some artifacts

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<v Speaker 1>and distortion in them, or clipping or other elements that

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<v Speaker 1>indicate that, yeah, you really compress that file. Now, a

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<v Speaker 1>few things helped make the MP three and other compressed

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<v Speaker 1>audio file formats and enormous success. They weren't huge successes

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<v Speaker 1>right out of the gate, but it took a little

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<v Speaker 1>time and then once it got to a certain level,

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<v Speaker 1>they really took off. The first thing that helped was

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<v Speaker 1>that Internet download throughput was slowly on the rise, meaning

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<v Speaker 1>it wouldn't take a full day to download a song

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<v Speaker 1>or anything like back in the old days when we

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<v Speaker 1>were all using dial up and we had very slow modems,

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<v Speaker 1>it took ages just to download a small file. You

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<v Speaker 1>wouldn't even dream of trying to tackle something like a

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<v Speaker 1>raw audio file, even the compressed one would have taken

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<v Speaker 1>quite some time. The second element that really helped was

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<v Speaker 1>that hard drive storage space was also climbing, so you

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<v Speaker 1>could fit more files onto your hard drive because the

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<v Speaker 1>hard drives were getting higher in capacity. Some MP three

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<v Speaker 1>players that came along later on after the MP three

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<v Speaker 1>format had been settled, actually had physical hard drives in them.

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<v Speaker 1>They had tiny hard drive platters that actually moved inside

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<v Speaker 1>the portable player. Actually had a creative zen player that

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<v Speaker 1>was like that is a bit of a brick. It

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<v Speaker 1>was heavy and it was a little bulky, largely because

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<v Speaker 1>it was housing a physical hard drive. Later on, most

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<v Speaker 1>of these players would switch over to solid state drives.

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<v Speaker 1>Those are faster, they're lighter, and you don't have to

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<v Speaker 1>worry about physical moving components with those. The third factor

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<v Speaker 1>that made a big impact on the MP three success

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<v Speaker 1>was that the compressed files worked well with both both

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<v Speaker 1>of those first two factors. The first two things uh

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<v Speaker 1>complimented the MP three the file sizes. The MP three's

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<v Speaker 1>were smaller than the raw audio files, so they didn't

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<v Speaker 1>take as much time to transfer over the Internet, and

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<v Speaker 1>they took up less hard drive space, which meant that

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<v Speaker 1>consumers had a chance to carry around an entire music

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<v Speaker 1>library on a portable device. You might be able to

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<v Speaker 1>have a few CDs in your car and thus have

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<v Speaker 1>a selection of maybe a dozen different albums, but on

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<v Speaker 1>a portable MP three player of a sufficient hard drive size,

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<v Speaker 1>you could have hundreds of songs on there, So it

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<v Speaker 1>really changed the game that way. Then there were the

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<v Speaker 1>sharing services like Napster and Khaza and lime wire and

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<v Speaker 1>numerous others. These were the bane of the recording industry,

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<v Speaker 1>and they led to some pretty high profile draconian lawsuits

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<v Speaker 1>that I'll talk about a bit later in this episode.

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<v Speaker 1>The services enabled users to share copies of files with

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<v Speaker 1>each other, and they very quickly became the trading grounds

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<v Speaker 1>for copyrighted material, sometimes unreleased copyrighted material, So stuff was

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<v Speaker 1>leaking on the Internet before it could get officially published

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<v Speaker 1>as c ds. So instead of going out and buying

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<v Speaker 1>a CD and ripping it on a computer to put

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<v Speaker 1>songs on an MP three player, or buying a song

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<v Speaker 1>off an online store like iTunes, which came a little

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<v Speaker 1>bit later, people were instead downloading client software to connect

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<v Speaker 1>to peer to peer networks and to grab that stuff

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<v Speaker 1>for free. And along the way they risked pulling down

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<v Speaker 1>some nasty computer viruses and other malware, because not everything

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<v Speaker 1>was what it claimed to be on those services. You

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<v Speaker 1>might think, oh, there's the new Bruce Springsteen album. I'm

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<v Speaker 1>just going to download it, and it turns out that

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<v Speaker 1>it's a trojan horse for some sort of malware that

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<v Speaker 1>you're completely unaware of. It was not unusual in those

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<v Speaker 1>days to download a file and then try to play

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<v Speaker 1>it so you can listen to the music and nothing

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<v Speaker 1>seems to happen, and you might think, oh, it's a

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<v Speaker 1>corrupted file. The download didn't happen properly. It could also

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<v Speaker 1>be that it was actually malware, So that was a

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<v Speaker 1>risk you had to take um and hopefully you were

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<v Speaker 1>at least aware of that risk if you were engaged

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<v Speaker 1>in that behavior. Now, some people became obsessed with collecting

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<v Speaker 1>music files. They established enormous digital music libraries of their own.

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<v Speaker 1>Sometimes they'd even download stuff they never really planned to

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<v Speaker 1>listen to, just so that they could have it. And

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<v Speaker 1>people were purchasing fewer CDs, and that was a huge

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<v Speaker 1>blow to the recording industry. There were multiple reasons for that,

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<v Speaker 1>and again I'll talk about that a little bit more

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<v Speaker 1>in depth later on, but this was this was a

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<v Speaker 1>scary thing for record labels because the profit margin for

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<v Speaker 1>CDs was really good. You know, the CDs were cheap

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<v Speaker 1>to manufacture, you could sell them for a really good profit,

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<v Speaker 1>and companies obviously did not want that cash cow to

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<v Speaker 1>go away. So when they started seeing that trend on

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<v Speaker 1>the decline, companies really freaked out. And there were a

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<v Speaker 1>lot of different reasons that contributed to that decline, but

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<v Speaker 1>the company seemed to really focus on piracy as being

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<v Speaker 1>the one main reason for that happening. Worse than that,

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<v Speaker 1>companies started seeing those albums get leaked, like I said,

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<v Speaker 1>before they could even publish them, and they were wondering,

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<v Speaker 1>how is this happening? How can these songs that haven't

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<v Speaker 1>even published, they haven't played on the radio, they shouldn't

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<v Speaker 1>really be outside the control of the company. How are

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<v Speaker 1>they getting out to get leaked onto these services? Because

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<v Speaker 1>people were downloading the late songs from artists days or

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<v Speaker 1>sometimes even weeks before the album would actually drop. The

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<v Speaker 1>New Yorker did a profile on someone responsible for thousands

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<v Speaker 1>of leaks. He was not the only one, but this

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<v Speaker 1>is a representation of what was going on. It was

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<v Speaker 1>a guy named Dell Glover. He was working at a

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<v Speaker 1>PolyGram c D manufacturing facility in the Carolinas, and Glover

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<v Speaker 1>claimed he never personally smuggled any of those production CDs

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<v Speaker 1>out of the facility, but he had a network of

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<v Speaker 1>employees who would do that for them for him, So

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<v Speaker 1>he would, you know, rely on these people to smuggle

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<v Speaker 1>up brand new CDs that were being produced but not

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<v Speaker 1>yet being sold. One of the ways they would do

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<v Speaker 1>this is they would commonly produce more CDs than they

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<v Speaker 1>actually needed for an order, because sometimes you know, you

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<v Speaker 1>have irregular CDs that are pressed something there might be

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<v Speaker 1>some manufacturing error, something is affecting the quality, uh, And

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<v Speaker 1>sometimes he would just end up with extras anyway. And

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<v Speaker 1>those extras were always meant to go through a shredder

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<v Speaker 1>so that the material could be destroyed and then recycled.

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<v Speaker 1>But you could just secretly, you know, hide one of

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<v Speaker 1>those CDs on your person while you're taking all the

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<v Speaker 1>rest of the shutter because no one was keeping track

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<v Speaker 1>of the shredded disks. So if you did it and

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<v Speaker 1>you were careful and you didn't get caught, you could

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<v Speaker 1>stand to gain from that. So Glover would take the

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<v Speaker 1>smuggled disks home and then he would rip the music

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<v Speaker 1>off of them using his computer and upload the files

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<v Speaker 1>to a ringleader of a piracy ring, who then made

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<v Speaker 1>them available on various peer to peer networks, well first

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<v Speaker 1>on centralized networks and later peer to peer networks. This

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<v Speaker 1>also helped start the idea that the content on the

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<v Speaker 1>Internet is free. It's a It's an idea that's got

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<v Speaker 1>a pretty strong hold on the average Internet users. Psyche

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<v Speaker 1>this these days, this concept that if I, if I

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<v Speaker 1>go online, I should be able to get stuff for free.

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<v Speaker 1>People got used to that idea. They didn't have to

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<v Speaker 1>walk into a store and lay down cash for a purchase. Now,

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<v Speaker 1>in some cases, artists or companies might allow people to

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<v Speaker 1>listen to or even download some content for free. It

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<v Speaker 1>actually becomes something they're welcoming. They might think of it

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<v Speaker 1>as a type of marketing. But in other cases, people

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<v Speaker 1>were just pirating the heck out of stuff. They were

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<v Speaker 1>just copying it because they could not because it was

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<v Speaker 1>allowed and the thought of paying for content was on

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<v Speaker 1>the decline. The revenue model for the web was largely

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<v Speaker 1>ad based. Right if you went to a website, chances

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<v Speaker 1>are that website was making money by using web advertising.

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<v Speaker 1>They were selling space on the web page that advertisers

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<v Speaker 1>would pay money to occupy for a certain amount of time.

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<v Speaker 1>And uh, this was not ideal for content creators necessarily

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<v Speaker 1>because and and for website operators too, because people were

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<v Speaker 1>starting to develop what we largely would refer to as

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<v Speaker 1>as a ad blindness. People would stop pay attention to

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<v Speaker 1>the fact that there even were ads. They're just paying

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<v Speaker 1>attention to the content. That led to some pretty irritating

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<v Speaker 1>trends and advertising things like pop ups and pop unders

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<v Speaker 1>and ads with full sound that just start playing as

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<v Speaker 1>soon as they load on your screen. Irritating stuff like

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<v Speaker 1>that that would uh decrease your enjoyment of the web experience.

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<v Speaker 1>But it also meant that a lot of people would

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<v Speaker 1>install ad blockers so that they could not have that

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<v Speaker 1>experience and still get the content they wanted. The content

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<v Speaker 1>wasn't technically free because it was being paid for by advertising,

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<v Speaker 1>but the end user was not directly paying for the experience, right.

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<v Speaker 1>It wasn't like it was behind a paywall, So for

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<v Speaker 1>the user it felt like everything is free. And when

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<v Speaker 1>everything feels like it's free, it then feels like a

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<v Speaker 1>huge imposition to be told, Hey, if you want access

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<v Speaker 1>to this, you've got to pay for it, and so

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<v Speaker 1>it kind of conditioned people to an expectation that intent

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<v Speaker 1>needs to be free. Um, that's a huge problem, not

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<v Speaker 1>just for music, it's for web content in general, and

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<v Speaker 1>I'll talk about that a little bit later too. But

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<v Speaker 1>this was also a shift away from owning a physical

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<v Speaker 1>copy of a song or a movie or television show,

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<v Speaker 1>as those would follow the same path. If you could

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<v Speaker 1>get a digital version and it was a good enough

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<v Speaker 1>digital version of whatever it was you wanted, there wasn't

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<v Speaker 1>much call for buying something that would take up physical space.

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<v Speaker 1>There are still people who preferred having a physical copy,

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<v Speaker 1>and there still are today. There are people who would

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<v Speaker 1>much prefer to go out and get physical copies of movies,

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<v Speaker 1>largely because it's a good way to guarantee you're getting

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<v Speaker 1>the best uh experience for your money, and that things

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<v Speaker 1>like a Blu ray disk. Like let's say you're going

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<v Speaker 1>to get a four K Ultra high definition disk and uh,

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<v Speaker 1>you want to watch it on a four K television,

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<v Speaker 1>You're probably going to have a better experience than watching

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<v Speaker 1>a digital version that's gone through compression. In the decompression

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<v Speaker 1>that still might be really good, it might be better

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<v Speaker 1>than high definition, but it's probably not going to measure

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<v Speaker 1>up to the physical copy. So there's some people who

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<v Speaker 1>still demand that. They also might want things like the

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<v Speaker 1>cover art or liner notes or special features, or they

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<v Speaker 1>may just want something physical to relate to with the

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<v Speaker 1>music or movies or television that they enjoyed. They might

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<v Speaker 1>have a sort of a psychological attachment to that. And

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<v Speaker 1>then there's the audio file community. They were largely against

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<v Speaker 1>digital files in general, compression in particular, and really lossy formats.

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<v Speaker 1>They hated that idea because they were very passionate and

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<v Speaker 1>arguing that that approach was decreasing the actual quality of

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<v Speaker 1>the music itself. Now, generally speaking, you could tell the

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<v Speaker 1>difference between a good analog recording played on a decent

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<v Speaker 1>stereo system and a digital file of the same piece

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<v Speaker 1>of music played on a comparable sound system, specifically a

0:13:04.360 --> 0:13:08.440
<v Speaker 1>compressed digital file. The more extreme the compression, the easier

0:13:08.480 --> 0:13:10.800
<v Speaker 1>it was to tell the difference between the two. And

0:13:10.880 --> 0:13:13.439
<v Speaker 1>so there was a community of audio files who protested

0:13:13.480 --> 0:13:17.080
<v Speaker 1>how the compressed format was ruining the beauty of the

0:13:17.120 --> 0:13:21.040
<v Speaker 1>experience of listening to music. But for many people, including myself,

0:13:21.280 --> 0:13:24.960
<v Speaker 1>the convenience factor mattered way more than the quality of

0:13:25.000 --> 0:13:27.920
<v Speaker 1>the music. While the difference might be noticeable between the

0:13:27.920 --> 0:13:31.120
<v Speaker 1>perfect sound system and a portable MP three player, most

0:13:31.160 --> 0:13:32.839
<v Speaker 1>people just wanted to be able to hear the songs

0:13:32.880 --> 0:13:35.640
<v Speaker 1>they liked in an easy to carry format, and as

0:13:35.720 --> 0:13:39.200
<v Speaker 1>long as the compression wasn't really ruining the song, it

0:13:39.280 --> 0:13:42.040
<v Speaker 1>was fine. You know, it might not be the best quality.

0:13:42.080 --> 0:13:45.040
<v Speaker 1>You might not get the levels of bass or trouble

0:13:45.120 --> 0:13:47.400
<v Speaker 1>that you would get with a really good stereo system,

0:13:47.440 --> 0:13:51.040
<v Speaker 1>but if the song sounds like the song in general,

0:13:51.480 --> 0:13:55.079
<v Speaker 1>then that was good enough. Meanwhile, things would get worse

0:13:55.120 --> 0:13:57.840
<v Speaker 1>for audio files because of a trend in music that

0:13:57.920 --> 0:14:01.280
<v Speaker 1>was being affected by compression, a front type of compression.

0:14:01.920 --> 0:14:05.520
<v Speaker 1>Online music forums were starting to erupt around the same

0:14:05.559 --> 0:14:09.880
<v Speaker 1>time period, with conversations about music being louder than it

0:14:09.920 --> 0:14:13.719
<v Speaker 1>had been before that the actual recordings being pressed to

0:14:13.880 --> 0:14:18.440
<v Speaker 1>c D we're at a volume greater than previous generations

0:14:18.440 --> 0:14:21.680
<v Speaker 1>of music. So if you put a CD in and

0:14:21.800 --> 0:14:24.560
<v Speaker 1>you set the volume on your CD player, let's say

0:14:24.680 --> 0:14:28.600
<v Speaker 1>five out of ten, and you're playing a CD of

0:14:28.720 --> 0:14:32.400
<v Speaker 1>older music, then it might be a comfortable listening experience.

0:14:32.560 --> 0:14:36.640
<v Speaker 1>But then you put in a more recent album and

0:14:36.680 --> 0:14:38.480
<v Speaker 1>it would suddenly be too loud to listen to you

0:14:38.520 --> 0:14:44.280
<v Speaker 1>would have to adjust the volume. Well, compression was having

0:14:44.280 --> 0:14:46.920
<v Speaker 1>a big effect on the quality of music. See, the

0:14:47.000 --> 0:14:50.840
<v Speaker 1>conversation was really about the dynamic nature of sound and music,

0:14:51.640 --> 0:14:55.360
<v Speaker 1>and most people refer to dynamic as a range of

0:14:56.240 --> 0:14:59.040
<v Speaker 1>sounds and their loudness. It's really kind of a range

0:14:59.040 --> 0:15:04.160
<v Speaker 1>of volume. A dynamic song, therefore, would have quiet components

0:15:04.160 --> 0:15:07.280
<v Speaker 1>and loud components, and there should be a pretty decent

0:15:07.400 --> 0:15:10.160
<v Speaker 1>range between the two, and ideally you should be able

0:15:10.160 --> 0:15:11.760
<v Speaker 1>to hear all of it based on the way the

0:15:11.840 --> 0:15:17.240
<v Speaker 1>music is constructed and recorded. Now, Emmanuel Derrity actually did

0:15:17.280 --> 0:15:20.200
<v Speaker 1>an analysis of music from the nineteen seventies up through

0:15:20.440 --> 0:15:23.360
<v Speaker 1>two thousand ten to see whether or not music as

0:15:23.360 --> 0:15:27.800
<v Speaker 1>a whole really did get louder and less dynamic. He

0:15:27.840 --> 0:15:31.760
<v Speaker 1>published the findings on the website sound on sound dot

0:15:31.800 --> 0:15:35.400
<v Speaker 1>com and found that, yeah, music did get louder. The

0:15:35.520 --> 0:15:39.200
<v Speaker 1>dynamic question is actually a little more complicated. But he

0:15:39.240 --> 0:15:42.640
<v Speaker 1>traced the trends in music, finding that as time went on,

0:15:43.280 --> 0:15:48.280
<v Speaker 1>music recordings were getting louder, and that at the same time,

0:15:48.320 --> 0:15:52.520
<v Speaker 1>the range between the peak loudness and the median loudness

0:15:52.600 --> 0:15:55.280
<v Speaker 1>of the songs was decreasing. So in other words, in

0:15:55.360 --> 0:15:58.600
<v Speaker 1>earlier music, you might get a few moments of loudness,

0:15:58.800 --> 0:16:03.280
<v Speaker 1>but most of the time the the median volume was lower,

0:16:03.680 --> 0:16:06.880
<v Speaker 1>so you had a range there. In later songs, the

0:16:06.960 --> 0:16:11.520
<v Speaker 1>peak wasn't necessarily much higher than the median, so the

0:16:11.560 --> 0:16:15.280
<v Speaker 1>loudest sound was not that different from the median sound,

0:16:15.840 --> 0:16:18.440
<v Speaker 1>and that meant there was less dynamic range, at least

0:16:18.440 --> 0:16:22.760
<v Speaker 1>according to this volume approach, and and some people argued

0:16:22.800 --> 0:16:26.680
<v Speaker 1>it led to a homogeneous, noisy, less interesting sound overall,

0:16:27.280 --> 0:16:30.200
<v Speaker 1>Drudy actually found there was more loudness range than people

0:16:30.240 --> 0:16:33.360
<v Speaker 1>typically imagined in that more recent music. But it gets

0:16:33.400 --> 0:16:38.480
<v Speaker 1>super technical now. The reason for that wasn't just that

0:16:38.560 --> 0:16:41.160
<v Speaker 1>it was a change in taste for music, but that

0:16:41.240 --> 0:16:43.520
<v Speaker 1>was part of it. It was also in the nature

0:16:43.560 --> 0:16:46.880
<v Speaker 1>of compression and what people referred to as digital brick

0:16:46.880 --> 0:16:51.280
<v Speaker 1>walls now. Essentially, to get music that loud, you had

0:16:51.320 --> 0:16:54.400
<v Speaker 1>to put a hard upper limit on the loudest noise

0:16:54.920 --> 0:16:59.240
<v Speaker 1>because the CD could only replicate so loud of a

0:16:59.280 --> 0:17:03.000
<v Speaker 1>noise before you'd start getting a distortion like clipping or

0:17:03.040 --> 0:17:06.080
<v Speaker 1>other artifacts. But that compression would also mean that it

0:17:06.119 --> 0:17:09.880
<v Speaker 1>would square off the peaks in sound. It would create

0:17:10.080 --> 0:17:14.000
<v Speaker 1>a digital version of distortion that would only appear in

0:17:14.040 --> 0:17:15.960
<v Speaker 1>the recorded version. If you were able to listen to

0:17:16.040 --> 0:17:20.879
<v Speaker 1>the original decompressed version, it would sound very, very different.

0:17:20.920 --> 0:17:23.520
<v Speaker 1>So you could do that to create an effect on purpose,

0:17:23.800 --> 0:17:26.119
<v Speaker 1>but a lot of people just found that it was

0:17:27.040 --> 0:17:31.199
<v Speaker 1>having a negative impact on the quality of sound overall. This,

0:17:31.320 --> 0:17:32.560
<v Speaker 1>by the way, it's not the same thing as m

0:17:32.600 --> 0:17:36.080
<v Speaker 1>P three compression. With this recording compression, we're talking about

0:17:36.480 --> 0:17:39.720
<v Speaker 1>compressing the upper and lower limits of a sound's loudness.

0:17:39.920 --> 0:17:43.199
<v Speaker 1>We're not talking about compressing a digital file size. Now.

0:17:43.240 --> 0:17:46.120
<v Speaker 1>I mentioned this because you'll often hear music fans talk

0:17:46.160 --> 0:17:49.159
<v Speaker 1>about how compression has had a negative impact on music,

0:17:49.720 --> 0:17:52.480
<v Speaker 1>but they are frequently talking more about the production side

0:17:52.480 --> 0:17:56.480
<v Speaker 1>of music and not necessarily on the end digital file format.

0:17:56.880 --> 0:17:59.520
<v Speaker 1>But for the record, both processes can have a negative

0:17:59.520 --> 0:18:02.040
<v Speaker 1>impact on the final quality of a sound. And the

0:18:02.160 --> 0:18:05.720
<v Speaker 1>loudness wars were largely brought about because the CD form

0:18:05.800 --> 0:18:08.639
<v Speaker 1>factor and the trend to push the limits of the

0:18:08.760 --> 0:18:11.840
<v Speaker 1>levels of loudness that CD s and CD players could handle.

0:18:12.119 --> 0:18:15.119
<v Speaker 1>It wasn't on the digital file side at all. But

0:18:15.280 --> 0:18:17.679
<v Speaker 1>let's get back to those digital files. That's really what

0:18:17.760 --> 0:18:20.680
<v Speaker 1>I was talking about in this episode. Anyway, the recording

0:18:20.720 --> 0:18:24.159
<v Speaker 1>industry tried lots of different tactics to try and stop

0:18:24.200 --> 0:18:27.280
<v Speaker 1>the flood of leaks and downloads. As album sales began

0:18:27.320 --> 0:18:30.560
<v Speaker 1>to decline, and the industry had been on a trend,

0:18:30.720 --> 0:18:34.919
<v Speaker 1>enjoying a decade of incredibly robust sales. As soon as

0:18:34.960 --> 0:18:40.240
<v Speaker 1>the CD had premiered, it was starting to already gain momentum.

0:18:40.320 --> 0:18:44.399
<v Speaker 1>It would overtake cassettes, and then it would eclipse previous

0:18:44.440 --> 0:18:49.120
<v Speaker 1>sales figures of cassettes and vinyl, doing gang buster business

0:18:49.320 --> 0:18:53.359
<v Speaker 1>for the recording industry. It was and and a great

0:18:53.440 --> 0:18:56.280
<v Speaker 1>time to be the head of a recording label. But

0:18:57.480 --> 0:19:03.120
<v Speaker 1>after that, once those hayed a years had passed, the

0:19:03.200 --> 0:19:05.600
<v Speaker 1>industry started looking at these declines and it was a

0:19:05.640 --> 0:19:08.159
<v Speaker 1>really harsh wake up call to see those numbers go

0:19:08.240 --> 0:19:10.880
<v Speaker 1>the other way. And the companies were not just gonna

0:19:10.920 --> 0:19:14.480
<v Speaker 1>take this lying down. Many tried various digital rights management

0:19:14.520 --> 0:19:17.320
<v Speaker 1>strategies to protect the music under their labels. They tried

0:19:17.359 --> 0:19:20.960
<v Speaker 1>to protect c d s, the famous one being Sony

0:19:21.119 --> 0:19:25.000
<v Speaker 1>when it backfired on them, uh, But there were others

0:19:25.040 --> 0:19:27.800
<v Speaker 1>that tried different methods as well in an effort to

0:19:27.960 --> 0:19:31.399
<v Speaker 1>limit how people could use digital files. But typically that

0:19:31.440 --> 0:19:34.159
<v Speaker 1>would just mean hackers would find the d r M

0:19:34.240 --> 0:19:36.880
<v Speaker 1>and strip it out of the music files and share

0:19:36.880 --> 0:19:39.840
<v Speaker 1>it anyway. The other big move that organizations like the

0:19:39.840 --> 0:19:44.080
<v Speaker 1>Recording Industry Association of America or r I double A

0:19:45.000 --> 0:19:48.919
<v Speaker 1>that they took was was legal action, and boy hawdy,

0:19:48.920 --> 0:19:52.520
<v Speaker 1>did they go all out in that realm. The targets

0:19:52.560 --> 0:19:56.200
<v Speaker 1>didn't just include services like Napster that enabled file sharing

0:19:56.240 --> 0:19:59.400
<v Speaker 1>on a grand scale. They also included regular folks who

0:19:59.400 --> 0:20:03.600
<v Speaker 1>were engaged in some illegal file sharing and some people

0:20:03.960 --> 0:20:08.680
<v Speaker 1>who probably weren't, and the stakes were really high. I'll

0:20:08.680 --> 0:20:11.600
<v Speaker 1>talk about that more in just a second, but first

0:20:12.040 --> 0:20:22.280
<v Speaker 1>let's take a quick break. The r I double A

0:20:22.440 --> 0:20:27.080
<v Speaker 1>sued Napster in December. The service had only gone live

0:20:27.200 --> 0:20:30.320
<v Speaker 1>in June of n r I double A did not

0:20:30.600 --> 0:20:34.439
<v Speaker 1>waste time about this, and like many legal processes, this

0:20:34.480 --> 0:20:37.879
<v Speaker 1>one took a long time to reconcile. And it was

0:20:37.920 --> 0:20:40.800
<v Speaker 1>tricky because the d m c A did establish that

0:20:41.080 --> 0:20:44.719
<v Speaker 1>service providers are not responsible for how their customers use

0:20:44.800 --> 0:20:48.639
<v Speaker 1>their service as long as the service itself is in

0:20:48.680 --> 0:20:52.320
<v Speaker 1>fact legal and pure to pure distribution is a perfectly

0:20:52.440 --> 0:20:57.399
<v Speaker 1>legal process. The problem wasn't with the method necessarily, but

0:20:57.520 --> 0:21:01.840
<v Speaker 1>the content that users were uploading and sharing. It's it's

0:21:01.920 --> 0:21:05.080
<v Speaker 1>legal to use peer to peer networks to distribute files,

0:21:05.080 --> 0:21:08.080
<v Speaker 1>that's their purpose. It's not legal to use peer to

0:21:08.119 --> 0:21:11.199
<v Speaker 1>peer to distribute files without the authorization of the owner

0:21:11.280 --> 0:21:15.960
<v Speaker 1>of the intellectual property. To use an analogy, it's perfectly

0:21:16.040 --> 0:21:20.320
<v Speaker 1>legal to use the road system to transport stuff from

0:21:20.320 --> 0:21:22.359
<v Speaker 1>one city to another. We do it all the time.

0:21:22.800 --> 0:21:25.199
<v Speaker 1>That's what the road system is for. But it is

0:21:25.359 --> 0:21:30.880
<v Speaker 1>illegal to smuggle contraband. However, if someone were caught smuggling,

0:21:31.160 --> 0:21:34.280
<v Speaker 1>the law wouldn't go after the Federal Highway Administration in

0:21:34.280 --> 0:21:37.200
<v Speaker 1>the United States because it's not the f h W

0:21:37.240 --> 0:21:41.199
<v Speaker 1>as fault that someone was transporting illegal goods using the

0:21:41.280 --> 0:21:45.080
<v Speaker 1>highways that the agency actually oversees. The same concept was

0:21:45.080 --> 0:21:47.760
<v Speaker 1>meant to apply to online providers, but there was a

0:21:47.840 --> 0:21:51.080
<v Speaker 1>caveat The providers had to be willing and able to

0:21:51.160 --> 0:21:55.160
<v Speaker 1>take action against people who are using the services illegally.

0:21:55.440 --> 0:21:58.320
<v Speaker 1>If a copyright holder, such as a music label were

0:21:58.359 --> 0:22:01.840
<v Speaker 1>to contact a service like Napster, that service was supposed

0:22:01.880 --> 0:22:05.120
<v Speaker 1>to help clamp down on illegal behaviors, and in return,

0:22:05.440 --> 0:22:08.520
<v Speaker 1>the service would receive the protection of safe harbor. So

0:22:08.680 --> 0:22:11.399
<v Speaker 1>part of the lawsuit was alleging that Napster was willfully

0:22:11.480 --> 0:22:15.000
<v Speaker 1>turning a blind eye to illegal behavior on the service. Now,

0:22:15.040 --> 0:22:17.639
<v Speaker 1>for the record, Napster did try to comply with this,

0:22:18.200 --> 0:22:21.800
<v Speaker 1>but they were only able to demonstrate that their their

0:22:21.960 --> 0:22:29.040
<v Speaker 1>ability to prevent illegal file sharing was point four percent effective,

0:22:29.600 --> 0:22:32.800
<v Speaker 1>and the prosecution argue that that wasn't good enough. It

0:22:32.840 --> 0:22:35.480
<v Speaker 1>had to be a hundred percent effective, which led some

0:22:35.520 --> 0:22:39.160
<v Speaker 1>people to say, this isn't actually an attack on Napster,

0:22:39.560 --> 0:22:42.160
<v Speaker 1>this is an attack on peer to peer file sharing

0:22:42.680 --> 0:22:46.520
<v Speaker 1>as a strategy in the first place. Um, And so

0:22:46.680 --> 0:22:50.280
<v Speaker 1>it led to a pretty ugly fight. The lawsuit also

0:22:50.359 --> 0:22:52.960
<v Speaker 1>led to Napster shutting down its existing service in two

0:22:52.960 --> 0:22:56.000
<v Speaker 1>thousand one. The lawsuit kept on going at that point.

0:22:56.280 --> 0:22:59.000
<v Speaker 1>The following year, a judge and an appeals court both

0:22:59.040 --> 0:23:03.040
<v Speaker 1>found that Napster was liable for numerous copyright copyright violations

0:23:03.640 --> 0:23:07.240
<v Speaker 1>in separate lawsuits with artists like Dr Dre and Metallica.

0:23:07.400 --> 0:23:11.120
<v Speaker 1>Napster would settle out of court, paying handsomely to do so,

0:23:11.600 --> 0:23:16.000
<v Speaker 1>and Napster would go bankrupt. They would eventually re emerge

0:23:16.000 --> 0:23:18.760
<v Speaker 1>in a very different format as an online music store.

0:23:19.560 --> 0:23:23.320
<v Speaker 1>It was not really the same entity as the original company,

0:23:23.440 --> 0:23:25.879
<v Speaker 1>UM that, like I said, that company had gone bankrupt.

0:23:25.960 --> 0:23:28.880
<v Speaker 1>Another company came in and bought up all the assets. Uh.

0:23:28.920 --> 0:23:30.879
<v Speaker 1>And in fact, there's actually been a couple of different

0:23:31.000 --> 0:23:34.920
<v Speaker 1>music related services called Napster since the original shut down,

0:23:35.280 --> 0:23:38.160
<v Speaker 1>and Napster wasn't the only entity the r I Double

0:23:38.200 --> 0:23:41.480
<v Speaker 1>A and music artists went after. As I mentioned earlier,

0:23:41.680 --> 0:23:45.119
<v Speaker 1>individuals who used these services were also targeted. UM And,

0:23:45.160 --> 0:23:48.840
<v Speaker 1>as my colleague Ben Bolan might say, here's where it

0:23:48.880 --> 0:23:55.639
<v Speaker 1>gets crazy, because the industry went thermonuclear against people, and

0:23:55.720 --> 0:23:58.280
<v Speaker 1>not only did it hurt a lot of people, it

0:23:58.359 --> 0:24:01.760
<v Speaker 1>didn't actually achieve the goal that the industry had set

0:24:01.760 --> 0:24:05.080
<v Speaker 1>out to do, which was essentially to scare off pirates

0:24:05.480 --> 0:24:08.080
<v Speaker 1>so that they wouldn't copy and share music files. As

0:24:08.119 --> 0:24:12.640
<v Speaker 1>it turned out, the actions didn't curtail that behavior at all.

0:24:13.119 --> 0:24:16.600
<v Speaker 1>So to go into all the different lawsuits would take

0:24:16.640 --> 0:24:19.120
<v Speaker 1>a few episodes all by itself. So I'm just gonna

0:24:19.200 --> 0:24:21.800
<v Speaker 1>hit a few highlights, or you might want to call

0:24:21.840 --> 0:24:23.960
<v Speaker 1>them low lights. Now. I'm pulling a lot of this

0:24:24.040 --> 0:24:26.360
<v Speaker 1>information from a white paper that was published in two

0:24:26.359 --> 0:24:30.280
<v Speaker 1>thousand eight by the Electronic Frontier Foundation titled r I

0:24:30.359 --> 0:24:34.600
<v Speaker 1>Double A versus the people. Five years later, in April

0:24:34.720 --> 0:24:37.760
<v Speaker 1>two thousand three, the r I Double A sued four

0:24:37.840 --> 0:24:41.439
<v Speaker 1>college students. The students would ultimately settle out of court,

0:24:41.760 --> 0:24:45.119
<v Speaker 1>not necessarily because they felt they had done something wrong

0:24:45.160 --> 0:24:49.560
<v Speaker 1>were illegal, but because going into the court system would

0:24:49.640 --> 0:24:53.000
<v Speaker 1>be very expensive, much more expensive. Even if they won

0:24:53.040 --> 0:24:55.560
<v Speaker 1>the fight, they might end up having to spend way

0:24:55.560 --> 0:24:59.080
<v Speaker 1>more money in legal fees than if they settled off court,

0:24:59.280 --> 0:25:02.000
<v Speaker 1>and in at least one of those cases, the amount

0:25:02.119 --> 0:25:05.200
<v Speaker 1>of the settlement was exactly the same as the amount

0:25:05.240 --> 0:25:07.840
<v Speaker 1>the student happened to have in his bank account, and

0:25:07.880 --> 0:25:11.760
<v Speaker 1>it effectively wiped out his college fund. The reaction against

0:25:11.760 --> 0:25:13.840
<v Speaker 1>the r I Double A was mostly negative, with many

0:25:13.840 --> 0:25:16.359
<v Speaker 1>people saying that this was an overstep, that it was

0:25:17.320 --> 0:25:22.520
<v Speaker 1>being far too cruel in its pursuit of pirates, and

0:25:22.640 --> 0:25:27.880
<v Speaker 1>the the payments the penalties people were facing were far

0:25:28.000 --> 0:25:32.560
<v Speaker 1>greater than what was justified. On September eight, two thousand three,

0:25:32.840 --> 0:25:35.640
<v Speaker 1>the r I Double A would sue two hundred sixty

0:25:35.680 --> 0:25:39.480
<v Speaker 1>one Americans, alleging that those people were illegally sharing music

0:25:39.520 --> 0:25:42.560
<v Speaker 1>on peer to peer networks, and, as many have written

0:25:42.560 --> 0:25:45.960
<v Speaker 1>in the years since, it was a particularly aggressive and

0:25:46.080 --> 0:25:50.920
<v Speaker 1>confrontational and ultimately stupid move. After all, the industry was

0:25:50.960 --> 0:25:55.760
<v Speaker 1>attacking music fans. The very consumers that supported the industry

0:25:55.760 --> 0:25:57.600
<v Speaker 1>were the ones that the R I double A were

0:25:57.600 --> 0:26:00.800
<v Speaker 1>going after, so in hindsight it seems pretty ere. Then

0:26:00.840 --> 0:26:03.440
<v Speaker 1>this move would alienate a lot of people, even those

0:26:03.440 --> 0:26:07.480
<v Speaker 1>who had never illegally downloaded a song, and industry that

0:26:07.600 --> 0:26:10.199
<v Speaker 1>sues its own customers is not likely to see a

0:26:10.240 --> 0:26:12.639
<v Speaker 1>sales jump as a result. That's not how you build

0:26:12.640 --> 0:26:16.720
<v Speaker 1>customer loyalty. And not only was it aggressive and ineffective,

0:26:17.160 --> 0:26:19.720
<v Speaker 1>it was a faulty process. The R I double A

0:26:19.840 --> 0:26:23.679
<v Speaker 1>was collecting IP addresses by joining the same file sharing

0:26:23.720 --> 0:26:27.240
<v Speaker 1>services that pirates were using, and then searching for people

0:26:27.280 --> 0:26:31.320
<v Speaker 1>who are uploading music that was in the represented record

0:26:31.400 --> 0:26:35.239
<v Speaker 1>labels directories um in the R I double A, but

0:26:35.600 --> 0:26:39.400
<v Speaker 1>an IP address doesn't automatically tell you the physical address

0:26:39.480 --> 0:26:43.040
<v Speaker 1>of a device. To get that information, the I double

0:26:43.080 --> 0:26:46.320
<v Speaker 1>A actually had to go after Internet service providers or

0:26:46.440 --> 0:26:48.679
<v Speaker 1>I s p s. So the I s p s

0:26:48.920 --> 0:26:53.840
<v Speaker 1>have an incentive to withhold that personal information of their customers,

0:26:54.320 --> 0:26:58.480
<v Speaker 1>because the handing over customer data is a great way

0:26:58.560 --> 0:27:01.840
<v Speaker 1>to to lose your customer ors confidence. The R I

0:27:01.920 --> 0:27:03.960
<v Speaker 1>double A leverage the rules of the d m c

0:27:04.160 --> 0:27:07.600
<v Speaker 1>A to force the hands of the Internet service providers.

0:27:07.760 --> 0:27:10.400
<v Speaker 1>If the I s P s didn't comply, they wouldn't

0:27:10.400 --> 0:27:13.640
<v Speaker 1>be protected under the rules of the d m c A. Now,

0:27:13.640 --> 0:27:16.200
<v Speaker 1>at first, the r I double A tried to subpoena

0:27:16.320 --> 0:27:20.359
<v Speaker 1>I s P customers names and addresses from the I

0:27:20.560 --> 0:27:24.440
<v Speaker 1>s P s just with allegations of copyright infringement. So

0:27:24.480 --> 0:27:26.879
<v Speaker 1>in other words, this wasn't as the result of a

0:27:27.000 --> 0:27:31.359
<v Speaker 1>lawsuit or even they didn't even present evidence to support

0:27:31.480 --> 0:27:34.480
<v Speaker 1>their claims. They said, we suspect the person using this

0:27:34.560 --> 0:27:38.080
<v Speaker 1>I P address is committing piracy. We want their name

0:27:38.080 --> 0:27:41.760
<v Speaker 1>and address. So they weren't coming forward with any stronger

0:27:43.119 --> 0:27:47.320
<v Speaker 1>request than that. That tactic ultimately failed, as various public

0:27:47.359 --> 0:27:49.960
<v Speaker 1>interest groups and the e f F challenged that practice

0:27:50.000 --> 0:27:52.760
<v Speaker 1>in court, and the court agreed, saying no, you need

0:27:52.760 --> 0:27:55.240
<v Speaker 1>more than just an allegation to get the hold of

0:27:55.240 --> 0:27:58.480
<v Speaker 1>that information. There was a period, though, when the court

0:27:58.520 --> 0:28:02.959
<v Speaker 1>was still deciding this, where the practice was effectively legal,

0:28:03.119 --> 0:28:06.240
<v Speaker 1>or at least it wasn't illegal, and in that period,

0:28:06.280 --> 0:28:09.840
<v Speaker 1>the r I double A issued subpoenas to various I

0:28:10.040 --> 0:28:12.480
<v Speaker 1>s P s. Now, some of those two d sixty

0:28:12.560 --> 0:28:15.919
<v Speaker 1>one people that the I R A A sued in

0:28:15.960 --> 0:28:21.000
<v Speaker 1>September two three. We're probably fairly active in copyright infringement.

0:28:21.160 --> 0:28:23.840
<v Speaker 1>They may very well have been the appropriate people to

0:28:23.920 --> 0:28:26.760
<v Speaker 1>go after, at least from the perspective of these people

0:28:26.800 --> 0:28:31.560
<v Speaker 1>were actively committing this infringing behavior. But there was someone

0:28:31.600 --> 0:28:36.240
<v Speaker 1>that list who won a lot of sympathy from the public,

0:28:36.560 --> 0:28:41.080
<v Speaker 1>like Brianna Lahara. She was twelve years old and the

0:28:41.280 --> 0:28:43.760
<v Speaker 1>R I double A came after her like she was

0:28:43.840 --> 0:28:48.240
<v Speaker 1>some sort of evil super genius. She was living in

0:28:48.240 --> 0:28:52.760
<v Speaker 1>a public housing development in New York City, and her

0:28:52.880 --> 0:28:57.440
<v Speaker 1>mom was a single mother raising this kid, and they

0:28:57.440 --> 0:29:00.800
<v Speaker 1>were targeted by this initial blast of loss, and her

0:29:00.800 --> 0:29:03.320
<v Speaker 1>only real option was to sell the case out of

0:29:03.360 --> 0:29:06.040
<v Speaker 1>court because there's no way she could afford going to

0:29:06.120 --> 0:29:11.120
<v Speaker 1>court and defending herself. That settlement would include a two

0:29:11.240 --> 0:29:16.880
<v Speaker 1>thousand dollar fine and the requirement that she apologized publicly.

0:29:17.840 --> 0:29:23.040
<v Speaker 1>So here's the thing. Turns out, having a massive multibillion

0:29:23.200 --> 0:29:27.600
<v Speaker 1>dollar conglomerate of companies come after and force a young,

0:29:27.880 --> 0:29:32.160
<v Speaker 1>poor girl to apologize publicly isn't the best PR movement

0:29:32.200 --> 0:29:35.280
<v Speaker 1>in the world. It seemed pretty clear that Lahara wasn't

0:29:35.400 --> 0:29:38.280
<v Speaker 1>some sort of existential threat to the r I double A,

0:29:38.840 --> 0:29:41.960
<v Speaker 1>and this was a real abuse of the legal system.

0:29:42.000 --> 0:29:44.960
<v Speaker 1>And then there were all the people who were targeted

0:29:45.000 --> 0:29:48.480
<v Speaker 1>who clearly had nothing to do with illegal downloads. Sarah

0:29:48.560 --> 0:29:50.520
<v Speaker 1>Ward was one of those people. She was accused of

0:29:50.600 --> 0:29:54.640
<v Speaker 1>using Kaza to download hardcore rap music, but this grandmother

0:29:54.840 --> 0:29:57.800
<v Speaker 1>probably didn't do that, seeing as how the only computer

0:29:57.880 --> 0:30:00.520
<v Speaker 1>she owned was a Mac computer and Kaza was only

0:30:00.560 --> 0:30:04.720
<v Speaker 1>compatible with Windows machines. She wasn't apparently running a virtual

0:30:04.800 --> 0:30:07.640
<v Speaker 1>Windows machine on her computer, so chances are she was

0:30:07.640 --> 0:30:10.080
<v Speaker 1>not the right person. The r I double A did

0:30:10.120 --> 0:30:14.040
<v Speaker 1>eventually withdraw the lawsuit, but did not apologize for making

0:30:14.080 --> 0:30:16.840
<v Speaker 1>that mistake. And it wasn't the only mistake. The list

0:30:16.880 --> 0:30:18.920
<v Speaker 1>of people that was sued by the R I double

0:30:18.960 --> 0:30:22.000
<v Speaker 1>A also included a family in Georgia then not only

0:30:22.120 --> 0:30:25.040
<v Speaker 1>didn't have an Internet connection, they didn't have a computer

0:30:25.160 --> 0:30:27.720
<v Speaker 1>at all. There was no way for them to commit

0:30:28.120 --> 0:30:30.719
<v Speaker 1>the crime that r I double A accused them of.

0:30:31.120 --> 0:30:34.360
<v Speaker 1>There were even people on that list who were actually deceased,

0:30:34.880 --> 0:30:37.560
<v Speaker 1>so clearly the r I double A was using a

0:30:37.720 --> 0:30:41.400
<v Speaker 1>very wide, very inaccurate net to try and catch a

0:30:41.440 --> 0:30:45.280
<v Speaker 1>few big fish. As a message to pirates everywhere, and

0:30:45.320 --> 0:30:47.960
<v Speaker 1>the two sixty one lawsuits were just the beginning. Over

0:30:48.000 --> 0:30:52.000
<v Speaker 1>the course of several years, nearly thirty thousand Americans were

0:30:52.000 --> 0:30:54.520
<v Speaker 1>targeted by the r I double A in an effort

0:30:54.560 --> 0:30:57.880
<v Speaker 1>to create an environment that would discourage illegal file sharing.

0:30:58.280 --> 0:31:01.320
<v Speaker 1>So why did that accomplish? Mostly they made the r

0:31:01.360 --> 0:31:04.120
<v Speaker 1>I double A look like a vicious, uncarring group of

0:31:04.160 --> 0:31:07.200
<v Speaker 1>greedy corporate jerks who are willing to financially ruin the

0:31:07.280 --> 0:31:10.320
<v Speaker 1>lives of people who are already vulnerable in an effort

0:31:10.360 --> 0:31:14.040
<v Speaker 1>to secure their own bottom line. So it didn't win

0:31:14.120 --> 0:31:19.080
<v Speaker 1>them a whole lot of goodwill, and piracy continued unabated,

0:31:19.440 --> 0:31:21.640
<v Speaker 1>And there's no big shock there. We've seen time and

0:31:21.640 --> 0:31:25.840
<v Speaker 1>time again the more extreme punishments do not discourage crime,

0:31:26.120 --> 0:31:29.240
<v Speaker 1>but for some reason, we keep trying that approach. Anyway,

0:31:29.440 --> 0:31:32.800
<v Speaker 1>while the industries were able to shut down services, you know,

0:31:32.840 --> 0:31:35.440
<v Speaker 1>they were able to target the actual services and not

0:31:35.480 --> 0:31:39.360
<v Speaker 1>necessarily the users. Other services would pop up, and some

0:31:39.400 --> 0:31:42.640
<v Speaker 1>were operating in foreign countries, which made it more difficult

0:31:42.640 --> 0:31:44.280
<v Speaker 1>for the r I double A to go after them

0:31:44.280 --> 0:31:46.840
<v Speaker 1>because they were outside the jurisdiction of the United States

0:31:47.320 --> 0:31:50.360
<v Speaker 1>legal system. It would lead to the industry lobbying for

0:31:50.440 --> 0:31:52.880
<v Speaker 1>new legislation in the US to force I s p

0:31:53.040 --> 0:31:56.640
<v Speaker 1>s to block access to those services that were outside

0:31:56.880 --> 0:31:59.240
<v Speaker 1>the US. But I've covered some of those efforts in

0:31:59.240 --> 0:32:02.440
<v Speaker 1>previous episodes tech Stuff, And as I mentioned before, the

0:32:02.600 --> 0:32:05.320
<v Speaker 1>r I double A wasn't helped by claiming piracy has

0:32:05.360 --> 0:32:11.040
<v Speaker 1>a demonstrable, calculable effect on diminished sales because it's impossible

0:32:11.080 --> 0:32:15.440
<v Speaker 1>to equate every download as a lost sale. It's quite

0:32:15.480 --> 0:32:19.280
<v Speaker 1>possible that the person who illegally downloaded a file would

0:32:19.280 --> 0:32:22.680
<v Speaker 1>have never purchased an album or song. Otherwise, it's just

0:32:22.720 --> 0:32:25.440
<v Speaker 1>as possible that after they downloaded it, they would go

0:32:25.520 --> 0:32:28.440
<v Speaker 1>out and buy the song legally. There were people who

0:32:28.440 --> 0:32:31.040
<v Speaker 1>did that too. They might just download it to listen

0:32:31.080 --> 0:32:32.640
<v Speaker 1>to it to determine whether or not they wanted to

0:32:32.680 --> 0:32:35.360
<v Speaker 1>go buy the album, so it worked both ways. There

0:32:35.440 --> 0:32:39.320
<v Speaker 1>was no way to say a a any single pirated

0:32:39.600 --> 0:32:43.480
<v Speaker 1>instance would lead to a loss in revenue. So the

0:32:43.560 --> 0:32:46.320
<v Speaker 1>justification the R I double A was using when it

0:32:46.400 --> 0:32:50.280
<v Speaker 1>was deciding what damages it should be receiving from people

0:32:50.720 --> 0:32:54.960
<v Speaker 1>was completely unjustifiable. Is based on faulty logic. You can't

0:32:55.040 --> 0:32:59.400
<v Speaker 1>say you owe me X dollars because you cost me

0:32:59.720 --> 0:33:02.880
<v Speaker 1>x dollars when you can't be sure that that's the case.

0:33:03.680 --> 0:33:07.000
<v Speaker 1>So it was a huge issue. Ultimately, the music labels

0:33:07.000 --> 0:33:09.760
<v Speaker 1>that fund the r I double A began to withdraw

0:33:09.920 --> 0:33:13.160
<v Speaker 1>their funding, and this was for a lot of different reasons,

0:33:13.320 --> 0:33:15.360
<v Speaker 1>but one of them was that the country was entering

0:33:15.400 --> 0:33:19.040
<v Speaker 1>a recession and that, coupled with the already established trend

0:33:19.120 --> 0:33:22.080
<v Speaker 1>of lower record sales, was starting to put the squeeze

0:33:22.160 --> 0:33:26.480
<v Speaker 1>on record label company budgets, and there was the possibility

0:33:26.560 --> 0:33:29.400
<v Speaker 1>that our I double A would just dissolve completely due

0:33:29.440 --> 0:33:34.160
<v Speaker 1>to lack of funding. So the industry organization stopped pursuing lawsuits,

0:33:34.520 --> 0:33:37.520
<v Speaker 1>not because it suddenly had a change of heart and said, oh,

0:33:37.560 --> 0:33:40.200
<v Speaker 1>you know what, we've been real jerks about this. Instead,

0:33:40.240 --> 0:33:42.240
<v Speaker 1>they stopped it because they ran out of cash to

0:33:42.320 --> 0:33:47.240
<v Speaker 1>keep doing it. They did maintain more lawsuits against the services,

0:33:47.320 --> 0:33:50.560
<v Speaker 1>but they stopped going after people. Now, let me be clear,

0:33:50.960 --> 0:33:53.560
<v Speaker 1>I don't think theft is good. I don't think it's

0:33:53.560 --> 0:33:57.560
<v Speaker 1>a good thing to share copyrighted material without authorization. I

0:33:57.600 --> 0:34:00.600
<v Speaker 1>do think that artists should be compensated for their work,

0:34:01.040 --> 0:34:03.840
<v Speaker 1>and that if you want to access something that's behind

0:34:03.880 --> 0:34:06.680
<v Speaker 1>a paywall, you should either pay for that access or

0:34:06.760 --> 0:34:10.239
<v Speaker 1>you just do without. You don't work your way around it.

0:34:10.280 --> 0:34:12.600
<v Speaker 1>You don't try and get to the content without paying

0:34:12.640 --> 0:34:15.880
<v Speaker 1>for it. Otherwise, if you do that, then you have

0:34:15.960 --> 0:34:20.120
<v Speaker 1>removed the monetary incentive to create something. And there are

0:34:20.200 --> 0:34:23.080
<v Speaker 1>creative types who want to create no matter what, you know,

0:34:23.239 --> 0:34:25.400
<v Speaker 1>but most of them also want to make a living.

0:34:25.840 --> 0:34:28.800
<v Speaker 1>They have to pay bills, have to be able to eat,

0:34:29.360 --> 0:34:32.400
<v Speaker 1>so they need to earn money. And it's not really

0:34:32.440 --> 0:34:35.000
<v Speaker 1>fair to ask someone who is making the stuff you

0:34:35.080 --> 0:34:39.480
<v Speaker 1>love do it for free and then supplement that somehow

0:34:39.840 --> 0:34:42.520
<v Speaker 1>through numerous other jobs so that they can make a living.

0:34:42.960 --> 0:34:46.439
<v Speaker 1>So I understand where the disconnect is because it's really

0:34:46.480 --> 0:34:50.080
<v Speaker 1>easy to look at mega successful artists and say, well,

0:34:50.560 --> 0:34:52.759
<v Speaker 1>that person is rich. You know, they've got to they've

0:34:52.800 --> 0:34:56.799
<v Speaker 1>got multiple houses, they're always in the headlines for having

0:34:56.800 --> 0:35:01.200
<v Speaker 1>these extravagant parties and stuff, so stealing music doesn't hurt them.

0:35:01.200 --> 0:35:03.520
<v Speaker 1>And that's probably true for those folks, But there are

0:35:03.520 --> 0:35:05.719
<v Speaker 1>a lot of creators out there who are doing what

0:35:05.760 --> 0:35:09.040
<v Speaker 1>they love and they're either barely scraping by or they're

0:35:09.040 --> 0:35:12.160
<v Speaker 1>not even able to live off of that art. So

0:35:12.360 --> 0:35:16.839
<v Speaker 1>the attitude is ultimately really harmful. To those artists. Now

0:35:16.880 --> 0:35:19.720
<v Speaker 1>that being said, the R I double A wasn't exactly

0:35:19.760 --> 0:35:22.839
<v Speaker 1>looking out for the artists, So they're not the good

0:35:22.840 --> 0:35:26.200
<v Speaker 1>guys in this either. That really wasn't part of their equation.

0:35:26.239 --> 0:35:28.000
<v Speaker 1>The R I double A was looking out for the

0:35:28.080 --> 0:35:32.480
<v Speaker 1>record labels. And record labels make their money by exploiting artists.

0:35:32.760 --> 0:35:36.680
<v Speaker 1>Now that's a word with negative connotation. It doesn't necessarily

0:35:36.719 --> 0:35:41.080
<v Speaker 1>have to be negative. It doesn't necessarily mean an unfair exploitation.

0:35:41.760 --> 0:35:47.640
<v Speaker 1>But record companies frequently did unfairly exploit artists. So if

0:35:47.640 --> 0:35:51.400
<v Speaker 1>the artists create the music and the record labels produce it,

0:35:51.520 --> 0:35:54.960
<v Speaker 1>publish it, market it, promoted, arrange for distribution, all that

0:35:55.040 --> 0:35:57.759
<v Speaker 1>kind of stuff you see where there's this relationship there

0:35:57.800 --> 0:36:00.840
<v Speaker 1>where if the artists didn't and go through a label,

0:36:00.880 --> 0:36:02.759
<v Speaker 1>they'd have to do all of that on their own,

0:36:02.760 --> 0:36:06.720
<v Speaker 1>and that's hard there. They don't necessarily have the infrastructure

0:36:06.719 --> 0:36:09.200
<v Speaker 1>to deal with that and do it themselves, and the

0:36:09.239 --> 0:36:11.880
<v Speaker 1>record labels handle all that. So you understand why the

0:36:11.920 --> 0:36:16.120
<v Speaker 1>record labels deserve a cut. But the record labels had

0:36:16.200 --> 0:36:18.960
<v Speaker 1>most of the power in most of those situations, unless

0:36:18.960 --> 0:36:23.160
<v Speaker 1>an artist got so popular that it was a detriment

0:36:23.200 --> 0:36:26.000
<v Speaker 1>to the record label if they lost that artist, and

0:36:26.040 --> 0:36:29.759
<v Speaker 1>the artist had enough leverage to negotiate a really good

0:36:29.800 --> 0:36:33.680
<v Speaker 1>deal for themselves. Most artists weren't in that category. So

0:36:33.960 --> 0:36:36.600
<v Speaker 1>while the R I double A was going after all

0:36:36.760 --> 0:36:40.120
<v Speaker 1>these file sharing entities and the people using them in

0:36:40.160 --> 0:36:43.040
<v Speaker 1>the name of preserving copyright, the money the R I

0:36:43.120 --> 0:36:46.920
<v Speaker 1>double A was actually getting from those settlements, uh didn't

0:36:46.920 --> 0:36:49.279
<v Speaker 1>make its way to the artists whose work was being

0:36:49.360 --> 0:36:52.920
<v Speaker 1>freely exchanged. So you had artists who are like, my

0:36:53.000 --> 0:36:56.759
<v Speaker 1>music is being shared for free, and I know you're

0:36:56.800 --> 0:36:58.920
<v Speaker 1>getting money from settlements, but I'm not seeing any of

0:36:58.960 --> 0:37:02.040
<v Speaker 1>that cash. So the people downloading music were engaged in

0:37:02.120 --> 0:37:06.400
<v Speaker 1>harmful behavior, the R I double A engaged in devastatingly

0:37:06.480 --> 0:37:09.600
<v Speaker 1>harmful behavior, and artists were caught in the middle. And

0:37:09.600 --> 0:37:12.040
<v Speaker 1>we're starting to get really frustrated now. Some of them

0:37:12.080 --> 0:37:15.040
<v Speaker 1>didn't see the harm and file sharing, and they genuinely

0:37:15.120 --> 0:37:17.720
<v Speaker 1>wanted as many people as possible to hear their work,

0:37:18.160 --> 0:37:21.000
<v Speaker 1>So they were in favor of this. They thought, oh,

0:37:21.160 --> 0:37:24.360
<v Speaker 1>this is disrupting the industry. The industry is filled with corruption.

0:37:24.640 --> 0:37:28.200
<v Speaker 1>I'm cool with it. But some such as Metallica, saw

0:37:28.280 --> 0:37:31.560
<v Speaker 1>piracy as a direct threat to their livelihood. They said,

0:37:31.800 --> 0:37:34.680
<v Speaker 1>how are we supposed to sell our music online? If

0:37:34.719 --> 0:37:37.240
<v Speaker 1>the guy next to us is giving it away for free,

0:37:37.360 --> 0:37:39.919
<v Speaker 1>no one's gonna buy from us. They can just get

0:37:40.000 --> 0:37:44.440
<v Speaker 1>the songs for free right next door. From an internet perspective,

0:37:45.400 --> 0:37:48.840
<v Speaker 1>most artists fell somewhere in the middle of that spectrum.

0:37:49.120 --> 0:37:52.279
<v Speaker 1>You know. They weren't necessarily as extreme as Metallica, but

0:37:52.360 --> 0:37:56.560
<v Speaker 1>not as uh lack of daisical as those who were like,

0:37:56.680 --> 0:37:59.960
<v Speaker 1>let's disrupt the system. And they weren't getting much help

0:38:00.360 --> 0:38:03.120
<v Speaker 1>either way. But while the record labels were worried that

0:38:03.239 --> 0:38:05.080
<v Speaker 1>piracy was going to be the end of them, another

0:38:05.160 --> 0:38:07.960
<v Speaker 1>shift was coming that would change things up. It was

0:38:08.000 --> 0:38:11.560
<v Speaker 1>an approach that would dramatically shift behaviors and do away

0:38:11.600 --> 0:38:13.640
<v Speaker 1>with the idea of owning copies of music in the

0:38:13.680 --> 0:38:17.279
<v Speaker 1>first place. It would be streaming services, which I'll talk

0:38:17.280 --> 0:38:19.600
<v Speaker 1>about more in just a second, right after we take

0:38:19.680 --> 0:38:30.120
<v Speaker 1>this break. Alright, So, year after year, the music industry

0:38:30.160 --> 0:38:33.960
<v Speaker 1>was facing huge cutbacks due to flagging revenues. And it's

0:38:34.000 --> 0:38:36.880
<v Speaker 1>hard to feel much sympathy if I'm being really honest,

0:38:36.880 --> 0:38:39.600
<v Speaker 1>because the industry was also known for not just being

0:38:39.640 --> 0:38:43.200
<v Speaker 1>insanely profitable for many years, but also for a rather

0:38:43.320 --> 0:38:48.600
<v Speaker 1>hedonistic approach to business. There are legendary stories about parties

0:38:48.640 --> 0:38:52.920
<v Speaker 1>and drug use, and lavish offices for record label executives

0:38:52.920 --> 0:38:57.320
<v Speaker 1>and crazy bonuses that they enjoyed, mostly at the expense

0:38:57.480 --> 0:39:00.080
<v Speaker 1>of the musicians who are creating the stuff the record

0:39:00.200 --> 0:39:03.920
<v Speaker 1>labels were selling. And there were some artists who likewise

0:39:04.000 --> 0:39:08.239
<v Speaker 1>enjoyed comparable lifestyles. But for every Madonna, you had hundreds

0:39:08.280 --> 0:39:11.560
<v Speaker 1>of artists who were making maybe a decent living, but

0:39:11.600 --> 0:39:13.960
<v Speaker 1>they were not not getting rich, or some people who

0:39:13.960 --> 0:39:17.000
<v Speaker 1>weren't even able to get by even as being assigned

0:39:17.080 --> 0:39:19.920
<v Speaker 1>artists with a record label. So generally speaking, artists weren't

0:39:19.960 --> 0:39:23.719
<v Speaker 1>being paid anything until an album published, and then they

0:39:23.719 --> 0:39:27.040
<v Speaker 1>would get some money. And in order to make serious money,

0:39:27.080 --> 0:39:30.280
<v Speaker 1>to really make back enough money to justify the amount

0:39:30.280 --> 0:39:33.640
<v Speaker 1>of time you spent recording the album, the album's sales

0:39:33.680 --> 0:39:36.719
<v Speaker 1>had to do really, really well. Then the artists would

0:39:36.760 --> 0:39:40.520
<v Speaker 1>get royalties, which are a percentage of each sale. And

0:39:40.760 --> 0:39:42.440
<v Speaker 1>I think I need to give you a quick word

0:39:42.520 --> 0:39:46.640
<v Speaker 1>on how royalties typically work so you understand how this

0:39:46.719 --> 0:39:51.000
<v Speaker 1>model tends to to work in the entertainment business. So,

0:39:51.040 --> 0:39:55.320
<v Speaker 1>in the negotiation phase, an artists and a label or

0:39:55.360 --> 0:39:58.800
<v Speaker 1>a publisher come to an agreement, and that agreement typically

0:39:58.840 --> 0:40:03.160
<v Speaker 1>includes a guarantee payment on delivery or publication of content.

0:40:03.280 --> 0:40:06.920
<v Speaker 1>So in this case, we're talking about the an album dropping.

0:40:07.320 --> 0:40:10.040
<v Speaker 1>So the artist comes up to the record label and

0:40:10.080 --> 0:40:13.600
<v Speaker 1>they say, all right, when the album drops, the record

0:40:13.680 --> 0:40:16.960
<v Speaker 1>label is going to pay the artist fifty dollars. That's

0:40:17.000 --> 0:40:19.760
<v Speaker 1>a decent chunk of change. Fifty grand is that's nothing

0:40:19.760 --> 0:40:22.680
<v Speaker 1>to sneeze at, but it's not gonna make anyone rich, right,

0:40:22.719 --> 0:40:24.480
<v Speaker 1>it's not gonna make them shop for a brand new

0:40:24.480 --> 0:40:27.239
<v Speaker 1>house in Beverly Hills or anything. Now, along with that

0:40:27.320 --> 0:40:31.239
<v Speaker 1>negotiation is the royalty rate. So let's just say, for

0:40:31.280 --> 0:40:34.520
<v Speaker 1>the purposes of an example, that the rate is five

0:40:34.640 --> 0:40:37.719
<v Speaker 1>cents per copy sold. Now, does that mean when the

0:40:37.800 --> 0:40:40.560
<v Speaker 1>first copy of the album is purchased that the artist

0:40:40.600 --> 0:40:45.520
<v Speaker 1>gets a shiny new nickel. No, because that nickel typically

0:40:45.560 --> 0:40:49.400
<v Speaker 1>actually goes to pay off the fifty thousand dollars that

0:40:49.440 --> 0:40:52.960
<v Speaker 1>the publisher initially paid the artist. So, in other words,

0:40:53.000 --> 0:40:56.719
<v Speaker 1>you have to pay off that fifty guaranteed payment before

0:40:56.800 --> 0:41:00.560
<v Speaker 1>you start accumulating royalties after that. And there are one

0:41:00.800 --> 0:41:04.560
<v Speaker 1>million nickels in fifty thousand dollars. So the record label

0:41:04.560 --> 0:41:07.760
<v Speaker 1>would need to sell a million copies of the album

0:41:07.800 --> 0:41:10.800
<v Speaker 1>before the artist would start to see any money in royalties,

0:41:10.840 --> 0:41:13.520
<v Speaker 1>and then from that point forward they would get a

0:41:13.760 --> 0:41:17.120
<v Speaker 1>nickel off of every sale. So if an album does really,

0:41:17.200 --> 0:41:20.160
<v Speaker 1>really well and stills sells millions and millions of copies,

0:41:20.400 --> 0:41:24.040
<v Speaker 1>and artists can make some serious cash through royalties, And

0:41:24.080 --> 0:41:26.680
<v Speaker 1>as long as the album is in print, the potential

0:41:26.719 --> 0:41:29.400
<v Speaker 1>to earn those royalties continues. You know, as long as

0:41:29.400 --> 0:41:32.719
<v Speaker 1>the album is still available to purchase as new, then

0:41:33.680 --> 0:41:36.240
<v Speaker 1>you could still be making money off a classic album

0:41:36.480 --> 0:41:40.480
<v Speaker 1>or a remaster years after you first publish it, depending

0:41:40.520 --> 0:41:44.200
<v Speaker 1>upon the contract negotiations you went through before. But if

0:41:44.239 --> 0:41:47.520
<v Speaker 1>the album only receives modest sales, then the artists won't

0:41:47.520 --> 0:41:49.840
<v Speaker 1>get any royalties at all. Like if they don't sell

0:41:49.880 --> 0:41:53.000
<v Speaker 1>a million copies, they never pay off that fifty grant. However,

0:41:53.160 --> 0:41:56.520
<v Speaker 1>they also don't have to pay back the difference to

0:41:56.600 --> 0:41:59.160
<v Speaker 1>the publisher. It's not like, oh, well, we only sold

0:41:59.200 --> 0:42:02.759
<v Speaker 1>thirty thousand dollars worth of the album. If we look

0:42:02.760 --> 0:42:06.040
<v Speaker 1>at your royalty rate, you don't have to return twenty grand.

0:42:06.280 --> 0:42:10.160
<v Speaker 1>You keep the fifty. After CD sales started to decline

0:42:10.160 --> 0:42:13.399
<v Speaker 1>in two thousand, the record label companies began to face

0:42:13.440 --> 0:42:16.560
<v Speaker 1>some pretty harsh realities. Things got worse year after year.

0:42:17.000 --> 0:42:19.600
<v Speaker 1>They had to start laying off employees. It was a

0:42:19.719 --> 0:42:23.560
<v Speaker 1>very drastic change from the days where it looked like

0:42:23.840 --> 0:42:26.600
<v Speaker 1>there was no end in sight to all the parties

0:42:27.040 --> 0:42:30.719
<v Speaker 1>and all the drugs and all the bad behaviors. UM

0:42:30.920 --> 0:42:33.320
<v Speaker 1>I never occupied that world, so I don't know if

0:42:33.360 --> 0:42:37.680
<v Speaker 1>all of that behavior stopped once things started getting more

0:42:37.760 --> 0:42:39.879
<v Speaker 1>real for the record labels, or if they just kept

0:42:39.920 --> 0:42:42.520
<v Speaker 1>doing it in the hopes that maybe that would help

0:42:42.560 --> 0:42:44.759
<v Speaker 1>ease the pain. I wasn't there, so I don't know.

0:42:45.600 --> 0:42:47.799
<v Speaker 1>But the years from two thousand to two thousand ten

0:42:48.360 --> 0:42:51.279
<v Speaker 1>we're really really rough on the industry in general. Now,

0:42:51.320 --> 0:42:54.960
<v Speaker 1>in two thousand eight, the streaming service Spotify launched and

0:42:54.960 --> 0:42:57.960
<v Speaker 1>it would become one of the most important players in

0:42:58.000 --> 0:43:01.759
<v Speaker 1>the streaming game. At the time, it wasn't seen as

0:43:01.800 --> 0:43:04.240
<v Speaker 1>the savior of the music industry, but things have changed

0:43:04.280 --> 0:43:07.719
<v Speaker 1>since then. The streaming model pays record labels a royalty

0:43:07.800 --> 0:43:11.160
<v Speaker 1>fee per stream, and it's typically a fraction of a

0:43:11.200 --> 0:43:15.760
<v Speaker 1>fraction of a penny per stream. So let's say a

0:43:15.760 --> 0:43:18.440
<v Speaker 1>a play of a recording is a stream. Now, according

0:43:18.480 --> 0:43:23.000
<v Speaker 1>to a survey by Digital Music News in eighteen, the

0:43:23.080 --> 0:43:27.680
<v Speaker 1>royalty rate range from point zero zero three nine seven

0:43:27.719 --> 0:43:31.600
<v Speaker 1>dollars that would be on Spotify to point zero zero

0:43:31.760 --> 0:43:35.360
<v Speaker 1>seven eight three dollars on Apple Music. And it's not

0:43:35.440 --> 0:43:38.560
<v Speaker 1>a one size fits all rate. Record labels could negotiate

0:43:38.600 --> 0:43:41.920
<v Speaker 1>those rates on behalf of artists and influential artists sometimes

0:43:41.960 --> 0:43:44.200
<v Speaker 1>have the clout to demand that their work remain off

0:43:44.280 --> 0:43:47.839
<v Speaker 1>the server services entirely if they think the royalty rates

0:43:47.840 --> 0:43:50.000
<v Speaker 1>are too low. Lots of artists have done this Adell

0:43:50.440 --> 0:43:54.320
<v Speaker 1>for example, um They've said, no, I'm not going to

0:43:54.440 --> 0:43:58.600
<v Speaker 1>allow my music to be on those services because the

0:43:58.680 --> 0:44:02.279
<v Speaker 1>royalty fee they're paying is are too low. A lot

0:44:02.280 --> 0:44:04.600
<v Speaker 1>of artists, however, don't have that cloud and they don't

0:44:04.640 --> 0:44:07.520
<v Speaker 1>really have any option. But what became really clear later

0:44:07.600 --> 0:44:11.280
<v Speaker 1>on was that these tiny fractions of a penny really

0:44:11.320 --> 0:44:14.400
<v Speaker 1>do add up when you start looking at them collectively.

0:44:14.920 --> 0:44:17.279
<v Speaker 1>And the big reason for that is it's not a

0:44:17.320 --> 0:44:21.360
<v Speaker 1>one time occurrence per customer. So the profit margins on

0:44:21.520 --> 0:44:24.239
<v Speaker 1>c d s were great and the royalties were more

0:44:24.280 --> 0:44:27.640
<v Speaker 1>profitable per sale at first glance, But when you go

0:44:27.680 --> 0:44:30.719
<v Speaker 1>out to buy a CD as a customer, you buy

0:44:30.760 --> 0:44:33.279
<v Speaker 1>it just the one time. You aren't going to go

0:44:33.360 --> 0:44:36.080
<v Speaker 1>buy a new copy of the same c D. Every

0:44:36.080 --> 0:44:38.160
<v Speaker 1>time you want to listen to the c D, you

0:44:38.239 --> 0:44:41.320
<v Speaker 1>just listen to the one you've got. So CD sales

0:44:41.400 --> 0:44:44.320
<v Speaker 1>had a natural curve to them. It would peak often

0:44:44.400 --> 0:44:46.640
<v Speaker 1>right around release or if a single from the album

0:44:46.719 --> 0:44:49.560
<v Speaker 1>got a lot of radio play, and then sales would

0:44:49.600 --> 0:44:53.520
<v Speaker 1>drop off gradually. But with streaming, a payment goes through

0:44:53.560 --> 0:44:57.440
<v Speaker 1>with every stream, so every time a person listens to

0:44:57.520 --> 0:45:01.080
<v Speaker 1>the same song, it triggers a payment, a royalty payment.

0:45:01.560 --> 0:45:03.640
<v Speaker 1>So if you put a song on repeat. Let's say

0:45:03.640 --> 0:45:05.560
<v Speaker 1>that you've got a song that you particularly like and

0:45:05.600 --> 0:45:07.400
<v Speaker 1>it's just stuck in your head and you gotta you

0:45:07.480 --> 0:45:09.759
<v Speaker 1>gotta listen to it, like twenty times in a row.

0:45:09.760 --> 0:45:11.960
<v Speaker 1>This happens to me all the time. Well, that's actually

0:45:12.000 --> 0:45:14.720
<v Speaker 1>twenty royalty payments. They end up going to that record

0:45:14.800 --> 0:45:17.640
<v Speaker 1>label and to that artist. A portion of it goes

0:45:17.680 --> 0:45:23.879
<v Speaker 1>to the artist, So while the initial amount is less

0:45:23.880 --> 0:45:26.799
<v Speaker 1>than what you would get with a CD sale, you

0:45:27.040 --> 0:45:29.560
<v Speaker 1>do it way more frequently because it's every time you

0:45:29.640 --> 0:45:32.000
<v Speaker 1>listen to it, not just every time you purchase it.

0:45:32.280 --> 0:45:35.080
<v Speaker 1>So record labels began to shift to support that model

0:45:35.239 --> 0:45:39.000
<v Speaker 1>once the economic realities became clear, and streaming gradually grew

0:45:39.120 --> 0:45:42.279
<v Speaker 1>to become a more prominent component in revenue. Now, it

0:45:42.320 --> 0:45:45.440
<v Speaker 1>also meant that some artists that might have trouble getting

0:45:45.480 --> 0:45:48.040
<v Speaker 1>traction in the world of c d s started finding

0:45:48.080 --> 0:45:51.759
<v Speaker 1>sustainable success through streaming. So it might be an artist that,

0:45:52.280 --> 0:45:54.920
<v Speaker 1>you know, maybe they'd only sell a couple of thousand

0:45:55.120 --> 0:45:58.800
<v Speaker 1>albums in the traditional way, that people would discover them online,

0:45:58.800 --> 0:46:02.000
<v Speaker 1>and they would get very popular that way. Now people

0:46:02.000 --> 0:46:05.959
<v Speaker 1>who usually would be struggling and be unable to live

0:46:06.080 --> 0:46:08.840
<v Speaker 1>just off of their music might even be able to

0:46:08.880 --> 0:46:11.080
<v Speaker 1>make a career out of it. They again might not

0:46:11.120 --> 0:46:13.800
<v Speaker 1>be getting rich, but they might be making a comfortable living.

0:46:14.400 --> 0:46:17.319
<v Speaker 1>Not At the same time, the streaming services themselves were

0:46:17.320 --> 0:46:21.040
<v Speaker 1>actually struggling to become profitable. They were operating, they were popular,

0:46:21.120 --> 0:46:23.560
<v Speaker 1>they just weren't making a lot of money. There was

0:46:23.600 --> 0:46:26.520
<v Speaker 1>clearly a business there, so there were a lot of

0:46:26.520 --> 0:46:30.319
<v Speaker 1>investors who were willing to support these services with the

0:46:30.360 --> 0:46:33.760
<v Speaker 1>thought that eventually they would turn a profit. People wanted

0:46:33.760 --> 0:46:36.239
<v Speaker 1>to listen to music, record labels were willing to play

0:46:36.280 --> 0:46:39.040
<v Speaker 1>ball in return for those royalties, and at least some

0:46:39.160 --> 0:46:42.600
<v Speaker 1>artists were totally on board or powerless if they didn't

0:46:42.600 --> 0:46:46.920
<v Speaker 1>have the influence, but making money as the service was

0:46:46.960 --> 0:46:49.480
<v Speaker 1>a bit of a challenge. It wasn't until very recently

0:46:49.520 --> 0:46:53.799
<v Speaker 1>that Spotify posted a profitable quarter from revenue. They did

0:46:53.840 --> 0:46:56.600
<v Speaker 1>have one profitable quarter earlier, but that was due to

0:46:56.640 --> 0:46:59.560
<v Speaker 1>attacks windfall, and you can't build a business off of that.

0:46:59.560 --> 0:47:02.120
<v Speaker 1>That's some us like a one off event. But they

0:47:02.120 --> 0:47:04.480
<v Speaker 1>did have a profitable quarter recently, so they were able

0:47:04.520 --> 0:47:08.400
<v Speaker 1>to show that maybe now it's actually a revenue model

0:47:08.440 --> 0:47:13.120
<v Speaker 1>that works. These services typically generate revenue through ad supported material.

0:47:13.239 --> 0:47:18.040
<v Speaker 1>They sell advertising time on their services, or they might

0:47:18.200 --> 0:47:21.760
<v Speaker 1>also offer subscription plans to customers. They might do both,

0:47:22.239 --> 0:47:25.080
<v Speaker 1>So a typical service could have a free tier in

0:47:25.080 --> 0:47:27.759
<v Speaker 1>which you can listen to music, but you might have

0:47:27.920 --> 0:47:31.600
<v Speaker 1>limited features and you would have commercials play between every

0:47:31.600 --> 0:47:35.520
<v Speaker 1>few songs, or you might have a selection of subscription

0:47:35.520 --> 0:47:39.120
<v Speaker 1>tiers that might be ad free. They could include other

0:47:39.200 --> 0:47:41.080
<v Speaker 1>features like being able to listen to the same song

0:47:41.160 --> 0:47:44.479
<v Speaker 1>more than once, um, that sort of thing. And many

0:47:44.600 --> 0:47:47.680
<v Speaker 1>also offer digital stores where if you want, you can

0:47:47.719 --> 0:47:51.239
<v Speaker 1>purchase songs and download them, kind of like in the

0:47:51.280 --> 0:47:53.839
<v Speaker 1>old days, or like on iTunes or something like that

0:47:54.360 --> 0:47:58.120
<v Speaker 1>um or you could have a limited cashing feature that

0:47:58.160 --> 0:48:02.080
<v Speaker 1>allows for offline listening. Now, this model caught on with

0:48:02.120 --> 0:48:04.920
<v Speaker 1>the public as well, and there are several streaming services

0:48:04.920 --> 0:48:07.759
<v Speaker 1>that you can subscribe to and the interest of full disclosure,

0:48:08.080 --> 0:48:10.759
<v Speaker 1>I Heart Media has an app that they use the

0:48:10.800 --> 0:48:13.160
<v Speaker 1>where you can listen to streaming music, and they talk

0:48:13.239 --> 0:48:18.160
<v Speaker 1>about how their approach is different from say Spotify, and

0:48:18.239 --> 0:48:23.000
<v Speaker 1>that it's all about curating a an experience and it

0:48:23.040 --> 0:48:27.800
<v Speaker 1>becomes a kind of a uh a collaborative effort between

0:48:27.960 --> 0:48:31.120
<v Speaker 1>the service and the listener. And then other services are

0:48:31.120 --> 0:48:35.279
<v Speaker 1>more about on demand listening. So they're very different approaches here,

0:48:35.520 --> 0:48:39.640
<v Speaker 1>but they're both geared towards having people be able to

0:48:39.680 --> 0:48:45.360
<v Speaker 1>access music through streaming as opposed to downloading. So Pandora

0:48:45.480 --> 0:48:47.759
<v Speaker 1>is another example. They select music for you based on

0:48:47.800 --> 0:48:50.719
<v Speaker 1>an algorithm and some guidance from the individual users. You

0:48:50.800 --> 0:48:53.239
<v Speaker 1>might give it a specific song that you like, and

0:48:53.280 --> 0:48:55.160
<v Speaker 1>it will go out and seek other songs that it

0:48:55.280 --> 0:48:57.600
<v Speaker 1>determines are similar to that one and serve them up

0:48:57.600 --> 0:49:00.200
<v Speaker 1>to you. Maybe you like it, maybe you don't. And

0:49:00.239 --> 0:49:02.800
<v Speaker 1>there are rules that these companies typically have to follow.

0:49:03.280 --> 0:49:05.520
<v Speaker 1>Uh those are rules they're set by recording labels and

0:49:05.560 --> 0:49:08.200
<v Speaker 1>broadcast companies, and it's been a challenge for many of

0:49:08.200 --> 0:49:10.719
<v Speaker 1>those companies to make the business actually earn money, and

0:49:10.840 --> 0:49:15.200
<v Speaker 1>many would exist primarily off of repeated rounds of funding campaigns.

0:49:15.640 --> 0:49:18.000
<v Speaker 1>And while I focused on the music industry in this episode,

0:49:18.480 --> 0:49:21.000
<v Speaker 1>we've seen the same thing happen with media like film

0:49:21.000 --> 0:49:23.760
<v Speaker 1>and television. Took a little longer for those to really

0:49:24.280 --> 0:49:28.640
<v Speaker 1>have that same experience, largely because the file sizes are

0:49:28.680 --> 0:49:32.800
<v Speaker 1>typically much much bigger than with music files, and so

0:49:33.000 --> 0:49:36.560
<v Speaker 1>the limitations of technology gave them a bit more breathing

0:49:36.640 --> 0:49:40.879
<v Speaker 1>space than the recording industry had. But services like Netflix,

0:49:41.000 --> 0:49:46.320
<v Speaker 1>Amazon Prime, Hulu, Disney's upcoming streaming service, and more provide

0:49:46.400 --> 0:49:49.879
<v Speaker 1>users with on demand digital streaming of films and TV

0:49:50.000 --> 0:49:54.480
<v Speaker 1>shows that belong in the libraries of those services. The

0:49:54.520 --> 0:49:58.120
<v Speaker 1>film and TV industries tried working with TV manufacturers to

0:49:58.160 --> 0:50:02.960
<v Speaker 1>push for advancements like ultra high definition, high dynamic range content,

0:50:03.160 --> 0:50:06.120
<v Speaker 1>even three D systems was an effort to help boost

0:50:06.200 --> 0:50:10.800
<v Speaker 1>sales both of hardware and of content and just increased revenues.

0:50:11.080 --> 0:50:14.439
<v Speaker 1>Much of that has had limited success. In the case

0:50:14.480 --> 0:50:16.799
<v Speaker 1>of three D it was pretty much a flop, and

0:50:16.840 --> 0:50:20.279
<v Speaker 1>we've seen cable subscriptions on the decline, streaming services have

0:50:20.360 --> 0:50:22.839
<v Speaker 1>been doing pretty well, so well in fact, that now

0:50:22.960 --> 0:50:26.520
<v Speaker 1>these distribution companies are also production companies. You know, a

0:50:26.560 --> 0:50:29.440
<v Speaker 1>decade ago, it would seem odd to suggest a company

0:50:29.480 --> 0:50:31.680
<v Speaker 1>like Netflix would be able to go toe to toe

0:50:31.800 --> 0:50:35.880
<v Speaker 1>with established, older media companies to produce award winning content,

0:50:35.960 --> 0:50:39.400
<v Speaker 1>and yet that's happened several times in the last few years. Today,

0:50:39.640 --> 0:50:42.680
<v Speaker 1>we have a culture of cord cutters who are canceling

0:50:42.719 --> 0:50:46.600
<v Speaker 1>cable subscriptions in favor of online delivery. You have cord never's.

0:50:46.719 --> 0:50:49.239
<v Speaker 1>Those are people who never had a subscription to pay

0:50:49.320 --> 0:50:52.759
<v Speaker 1>TV in the first place. They've only received things either

0:50:52.880 --> 0:50:56.160
<v Speaker 1>over the air or online. And this trend hasn't been

0:50:56.239 --> 0:50:59.560
<v Speaker 1>so large as to necessitate a complete change in the

0:50:59.680 --> 0:51:02.080
<v Speaker 1>entertain and industry, but it could be the beginning of

0:51:02.120 --> 0:51:05.920
<v Speaker 1>another very large disruption. So if the streaming model continues

0:51:05.960 --> 0:51:09.239
<v Speaker 1>to grow, or at least hold steady, while cable subscriptions

0:51:09.239 --> 0:51:12.600
<v Speaker 1>continue to fall, we might see a drastic change in

0:51:12.719 --> 0:51:16.640
<v Speaker 1>television and film production. Now we're seeing an increased emphasis

0:51:16.800 --> 0:51:20.839
<v Speaker 1>on huge, tent pole blockbusters in film, you know, like

0:51:20.880 --> 0:51:23.120
<v Speaker 1>the vast majority of them are coming from a single

0:51:23.160 --> 0:51:26.160
<v Speaker 1>movie studio that being the Walt Disney Company, which owns

0:51:26.200 --> 0:51:28.840
<v Speaker 1>not just all the Disney I p but Star Wars

0:51:28.880 --> 0:51:31.640
<v Speaker 1>and Marvel, and they just had the acquisition of Fox

0:51:31.680 --> 0:51:34.600
<v Speaker 1>as well. There's still a call for independent films, but

0:51:34.800 --> 0:51:37.879
<v Speaker 1>many of those have sought new ways to reach audiences.

0:51:37.920 --> 0:51:41.600
<v Speaker 1>Some have been released both in theaters and on online

0:51:41.680 --> 0:51:46.040
<v Speaker 1>channels UH and available for streaming, sometimes for a small fee,

0:51:46.600 --> 0:51:49.080
<v Speaker 1>but at the same time when it's out in theaters.

0:51:49.120 --> 0:51:52.840
<v Speaker 1>Others have skipped cinema distribution entirely and struck deals with

0:51:52.880 --> 0:51:56.399
<v Speaker 1>companies like Netflix to get distribution that way. And as

0:51:56.440 --> 0:52:00.239
<v Speaker 1>we head toward the future and which pay TV is

0:52:00.360 --> 0:52:03.799
<v Speaker 1>having this this existential crisis, we are left with a question.

0:52:03.800 --> 0:52:05.839
<v Speaker 1>Are we going to see a future where PayTV goes

0:52:05.880 --> 0:52:10.080
<v Speaker 1>away and movie theaters are only for showing Disney films

0:52:10.360 --> 0:52:12.960
<v Speaker 1>and everything else reaches us on one of a dozen

0:52:13.080 --> 0:52:17.720
<v Speaker 1>streaming services, or will it be possible that the proliferation

0:52:17.840 --> 0:52:20.600
<v Speaker 1>of all these different services, each of which has its

0:52:20.640 --> 0:52:25.200
<v Speaker 1>own selection of exclusive content and features, will ultimately frustrate

0:52:25.239 --> 0:52:27.480
<v Speaker 1>consumers who just want access to all the things they

0:52:27.520 --> 0:52:29.680
<v Speaker 1>like in one place. I know a lot of people

0:52:29.680 --> 0:52:32.120
<v Speaker 1>who said I quit cable because I thought it was

0:52:32.160 --> 0:52:33.960
<v Speaker 1>too expensive, and it was given me too much of

0:52:33.960 --> 0:52:36.560
<v Speaker 1>the stuff that I don't care about and not enough

0:52:36.600 --> 0:52:39.479
<v Speaker 1>of the stuff I do care about. But now there's

0:52:39.480 --> 0:52:42.799
<v Speaker 1>so many different streaming services and no one has everything

0:52:42.960 --> 0:52:44.480
<v Speaker 1>that in order for me to get all the stuff

0:52:44.520 --> 0:52:47.240
<v Speaker 1>I want, I have to subscribe to half a dozen

0:52:47.320 --> 0:52:50.479
<v Speaker 1>streaming services, which doesn't seem like it's any better than

0:52:50.560 --> 0:52:52.880
<v Speaker 1>one single cable service. So there's still a lot of

0:52:52.880 --> 0:52:56.120
<v Speaker 1>frustration out there. These are questions that we can't answer yet.

0:52:56.160 --> 0:52:57.799
<v Speaker 1>We don't know how it's all going to turn out,

0:52:58.080 --> 0:53:00.279
<v Speaker 1>so I'll likely have to do more episode in this

0:53:00.400 --> 0:53:02.799
<v Speaker 1>vein in the future, but for now it's time to

0:53:03.000 --> 0:53:05.480
<v Speaker 1>leave off and move on to other topics. We are

0:53:05.600 --> 0:53:10.200
<v Speaker 1>done talking about the evolution of entertainment media and how

0:53:10.320 --> 0:53:13.520
<v Speaker 1>that has changed our consumption. We have gotten to the

0:53:13.520 --> 0:53:17.200
<v Speaker 1>point now where a lot of people don't bother owning

0:53:17.440 --> 0:53:21.480
<v Speaker 1>music anymore. Instead, they will pay for a subscription to

0:53:21.960 --> 0:53:25.320
<v Speaker 1>or listen to ads in return for access to a

0:53:26.360 --> 0:53:31.520
<v Speaker 1>service that serves up music on demand in streaming format,

0:53:32.200 --> 0:53:34.239
<v Speaker 1>and not purchase it at all. I mean, I know

0:53:34.280 --> 0:53:36.080
<v Speaker 1>a lot of people who the way they listen to

0:53:36.160 --> 0:53:39.520
<v Speaker 1>music is they just start a YouTube playlist and they

0:53:39.560 --> 0:53:42.680
<v Speaker 1>listen to it that way, So it's it's a very

0:53:42.719 --> 0:53:46.239
<v Speaker 1>different world from the world of vinyl and and c

0:53:46.440 --> 0:53:48.960
<v Speaker 1>D s or even older if we want to go

0:53:49.000 --> 0:53:55.400
<v Speaker 1>with like you know, wax cylinders. So yeah, interesting, interesting story,

0:53:55.520 --> 0:53:58.240
<v Speaker 1>But we're going to now move on to other topics.

0:53:58.239 --> 0:54:00.360
<v Speaker 1>So look forward to something totally to friend in the

0:54:00.360 --> 0:54:02.480
<v Speaker 1>next episode. And if you guys want to reach out

0:54:02.520 --> 0:54:05.400
<v Speaker 1>with your own suggestions, you can email me the addresses

0:54:05.440 --> 0:54:08.000
<v Speaker 1>tech stuff at how stuff works dot com. Pop on

0:54:08.080 --> 0:54:10.960
<v Speaker 1>over to tech stuff podcast dot com. That's our website

0:54:10.960 --> 0:54:13.760
<v Speaker 1>where we have an archive of all of our previous episodes,

0:54:14.080 --> 0:54:17.360
<v Speaker 1>plus access to our social media accounts over on Facebook

0:54:17.360 --> 0:54:20.080
<v Speaker 1>and Twitter. There's also a link there to our online store.

0:54:20.120 --> 0:54:22.600
<v Speaker 1>Remember every purchase you make there goes to help the show,

0:54:22.600 --> 0:54:24.960
<v Speaker 1>and we greatly appreciate it, and I'll talk to you

0:54:25.040 --> 0:54:32.680
<v Speaker 1>again really soon. Text Stuff is a production of I

0:54:32.760 --> 0:54:35.719
<v Speaker 1>Heart Radio's How Stuff Works. For more podcasts from my

0:54:35.880 --> 0:54:39.480
<v Speaker 1>heart Radio, visit the i heart Radio app, Apple Podcasts,

0:54:39.600 --> 0:54:41.600
<v Speaker 1>or wherever you listen to your favorite shows.