Book Review of “How Music Got Free”

"CD", Image by Dean Hochman

“CD”, Image by Dean Hochman

It is nearly impossible to compete in a consumer market when a previously lucrative product is suddenly available for free. This phenomenon adds a whole new meaning to the notion of “priced to sell”.

No industry illustrates this tectonic disruption brought about by the Net more than the music business during the last 20 years. While there has been an ocean of ink and a quantum of bits expended telling this story, I have come across none more compelling, thorough and entertaining than How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy by Stephen Witt (Viking, 2015). This is a great story well told with clarity, precision, style and humor.

While the tales of Napster and the other peer-to-peer sharing networks, the lawsuit by Metallica and other litigation by the Recording Industry Association of America (RIAA) to stop them, and precipitous drop in CD sales since then have all been previously told at length elsewhere, the author takes us down some new and alternative narrative paths. Witt has accomplished this skillfully weaving together the stories of the German engineers who created the MP3 format, a prolific music pirate, and a music industry mogul. The intersection of their activities in the music downloading revolution makes for hours of absorbing and instructive reading.

The book succeeds simultaneously as a business case study and a human interest story. It deftly leverages all three main plot threads in a narrative that heightens the reader’s interest as the events steadily crisscross the real world from rural Kentucky to Germany to New York City, and then likewise online across the web. Any one of these stories would have made for engaging reading on their own. Yet they are carefully fitted together by the author in a manner that relentlessly propels the all of them forward.

He also wisely wastes none of his text on superfluous side trips. Rather, he maintains a consistent focus throughout on how the music biz got turned upside down and inside out by a series of fast-breaking developments it neither fully understood nor had any viable alternatives ready to counter it.

A roster of A-List Hollywood writers and talent agents could not have possibly done better in creating the members of the real life cast. There are many useful lessons to be learned from them about business strategy, marketing, competition, and the strength of the human character in the face of the unprecedented and massive disruption* of what had been such a highly leveraged and lucrative market.

First and foremost among them was Benny “Dell” Glover. The details of his online and offline exploits read as though they were extracted from deep inside the You Can’t Make This Stuff Up file. He worked in a rural CD manufacturing plant and that afforded him access to the latest releases by music industry’s top acts. Often a month in advance of their commercial debut, Glover would smuggle them out of the plant, encode them using the MP3 format, and upload them for free distribution online through Napster and a host of other peer-to-peer networks. He was also part of a larger band of well-organized, tech savvy and daring digital music pirates who referred to their collective activities as the “Scene”.  Glover was likely responsible for the largest volume of free music that ever got digitally disbursed.

Second was Karlheinz Brandenburg, the lead engineer and inventor of the MP3 technology. He ran the group that devised MP3 technology without any intent whatsoever of how it eventually ended up being used. It was a technological accomplishment that at first drew little attention in the audio industry. There were other competing compression formats that were gaining more traction in the marketplace. Nonetheless, through perseverance, superior technical skills and a bit of favorable circumstances, MP3 began to find success. This was first in the broadcast marketplace and later on as the tech of choice among the music pirates and their audience. Brandenburg’s transformation over time from a humble audio engineer to an experienced business executive is deftly told and threaded throughout the book.

Third was Doug Morris who, during the events portrayed in the book, was the CEO of Universal Music Group (UMG). While Glover’s and Brandenburg’s parts in this narrative make for some engrossing reading, it is Morris’s meteoric rise and determination in the music industry that pulls the entire story together so very well. Not only does he reach the pinnacle of his field as a top executive in the largest music companies, he does everything in power to try to keep UMG economically competitive while under siege from freely downloadable MP3s recorded by his deep and wide talent bench.

While he did not have a hacker’s understanding of MP3’s technical ministrations, he fully understood, reacted and resisted its profound impacts. His initial line of attack was litigation but this proved to be ineffective and produced much negative publicity. Later he successfully monetized UMG’s vast trove of music video by forming the hosting and syndication service on Vevo. He is the most resourceful and resilient player in this story.

These three protagonists are vividly brought to center stage and fully engaged in Witt’s portrayal of their roles and fates in this Digital Age drama.  Just as the superior acoustics in a musical venue can enhance the performances of musicians and actors,  analogously so too does the author’s reporting and expository skills animate and enliven the entirety of events across his every page of his book. Indeed, “How Music Got Free” completely fulfills its title’s promise and, clearly, hits all the right notes.


At the time of the events portrayed in How Music Got Free, there was widespread fear that it would become increasingly difficult for artists and entertainment companies to ever profit again as they had done in the past. As a timely follow-up exploration and analysis how this never quite came to pass, I very highly recommend reading The Creative Apocalypse That Wasn’t by Steven Johnson, which was published in the August 23, 2015 edition of The New York Times Magazine.  (Johnson’s most recent book as also reviewed in the January 2, 2015 Subway Fold post entitled Book Review of “How We Got to Now”.)


*  The classic text on the causes and effect of market disruptions, disruptors and those left behind, read The Innovator’s Dilemma by Clayton Christensen (HarperBusiness, 2011). The first edition of the book was published in 1992.

Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry

"Coachella Day 1 [2nd week] - Sahara Tent", Image by The Bull Pen, This work is licensed under a Creative Commons Attribution 4.0 International License.

“Coachella Day 1 [2nd week] – Sahara Tent”, Image by The Bull Pen

With the advent and then propulsive web-wide spread of MP3 file technology during the last twenty years*,  all of the music industry’s consumers, artists, recording companies, talent agents, business models,  distribution channels and intellectual property rights have been radically transformed. Today, the big money in the industry today is most often made by artists with established names who are able to draw audiences during their tours, sell merchandise, and continue to sell and stream music from their catalogs.

Of course, nowadays every well-known, moderately known and unknown act has an online presence to engage and inform their fan bases through an array of social media platforms and dedicated websites. Still, the music biz today is an even tougher business to earn a dollar than it ever was before. (See also the December 10, 2014 Subway Fold post entitled Is Big Data Calling and Calculating the Tune in Today’s Global Music Market?.)

In an effort to adapt dramatically new technology to energize, innovate and democratize the music industry, two recent startups, both still in their development stages, are using blockchain technology in previously unseen and imaginative ways. The blockchain is, in its simplest terms, a distributed, decentralized, transparent and encrypted database that acts as an online ledger to record transactions, documents and other information. It is most often used to memorialize transactions involving bitcoin. (See the May 8, 2015 Subway Fold post entitled Book Review of “The Age of Cryptocurrency” concerning a comprehensive new book on this subject.)

These early stage startups were the subject of a truly fascinating article posted on Billboard.com on August 5, 2015 entitled How ‘the Blockchain’ Could Actually Change the Music Industry by Gideon Gottfried. I will summarize, annotate and ask some unencrypted questions of my own.

I.  PeerTracks

The first startup is called PeerTracks. Their plan is to establish a music streaming and retail platform that includes “fan engagement and peer-to-peer talent discovery”, according to its president, Cedric Cobban.  They will use the blockchain for its transactions and paying artists directly for any revenue generated when their music is streamed “on a per-user-share basis”. Their launch is currently planned in about two months.

The core of their approach is to generate marketing revenue through the use of “artist tokens”. This is a system whereby each musical artist can create their own tokens with their name and image, and then set the permanently fixed amount of them to be made available. These tokens are intended to take on the characteristics of a “sub-cryptocurrency” (similar to some of Bitcoin’s characteristics), whereby the value that emerges for them is a direct indicator, based upon supply and demand, of the artist’s appeal. Site users can also speculate on the future value of the music and merchandise of currently unknown musicians.

The artists on PeerTracks will have the capabilities to affect the relative value of their own tokens. They will be enabled to buy back their tokens with any income they generate from “streams, sales, merch, tickets”. They can also permanently eliminate some tokens to decrease their supply and, in turn, increase their value.

Conversely, artists can affect demand by the types of items they offer to their token holders. Among other things, they can offer “discounts, free tickets, giveaways”. By providing incentives for fans to acquire their token, artists can raise the tokens’ relative values. As well, there are potential benefits to advertisers on PeerTracks interested in implementing paid sponsorships for more recognized music acts with product giveaways.

All songs uploaded on the site will be accompanied by a “smart contract“. According to the immediately preceding link to Wikipedia, smart contracts are “computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause”.  The smart contracts on PeerTracks divide up the funds generated accordingly among the parties involved in the song’s composition and performance. This is considered to be an important advance in using the blockchain and, it is hoped by developers currently working on this, will become a platform upon which new business models will emerge.

II.  Ujo

The second startup in this space is called Ujo. Their plan to use the blockchain to improve both the distribution of royalties to artists and music licensing. They intend to accomplish this by establishing a “rights and payment infrastructure”. It will be free to use and open for third parties to create their own apps for new services including, among others, curation, streaming and negotiation.  Similar to PeerTracks, they are working on an alternative means to distributing revenues to “artists and rights holders”. Furthermore, they are trying to build a blockchain-based means to determine ownership of creative works.

The prospective adoption of this by the music industry of this entirely new system is expected to take time because of its tendencies to keep data private as well its outdated and often incompatible systems. Phil Barry, who is involved Ujo along with about 20 other developers, hopes their new system will unify and replace the legacy systems. He believes the platform will provide economic advantages to artists and recording companies receiving their royalties through it. As well, this will provide “new revenue and business models”, new ways for consumers to enjoy music, and simplification to the manner in which “music is managed and licensed”.

When an artist creates a new song in the future, using Ujo it will be permanently stored on the blockchain and assigned a unique ID. If another artists or performers changes anything about the song, their subsequent versions will receive a new ID and be “instantly recognizable”. Any resulting revenue from the song will then be distributed immediately and “proportionately to each rights holder”.

My own questions are as follows:

  • What other marketplaces, technologies and professions would benefit from using comparable types of blockchain adaptations?
  • Could traditional legal documents such as contracts, leases and wills, among many others, be written to the blockchain to make certain that all parties to them met their obligations?
  • Could artists’ tokens likewise be created for actors, writers, painters, graphics artists and other creative types?
  • What would be the results of a book or any other publication being written to the blockchain in terms of royalties, rights, subscriptions and recognition?

March 4. 2016 Update: For a related follow-up on this post please see the new Subway Fold post entitled The Mediachain Project: Developing a Global Creative Rights Database Using Blockchain Technology

June 5, 2017 Update:  An new article posted today, June 5, 2017, on the Harvard Business Review blog entitled Blockchain Could Help Musicians Make Money Again, by Imogen Heap, looks at the potential of blockchain technology from a musician’s point of view. A highly recommended read if you have an opportunity to click through. 


*  For an outstandingly written and highly engaging account of the total transformation of the music industry, I very highly recommend a recently published book entitled How Music Got Free: The End of an Industry, the Turn of the Century, and the Patient Zero of Piracy, by Stephen Witt (Viking, 2015). I just finished reading this and to say the least, it rocked.