Abandons Ship
Raid on Phil Morle’s home and office: Author interview with Morle.
60 million, including 22 million in the United States: From Woody, Todd, “The Race to Kill Kazaa: The Servers Are in Denmark. The Software Is in Estonia. The Domain Is Registered Down Under, the Corporation on a Tiny Island in the South Pacific,”
Wired, February 2003, p. 104. Downloaded some 370 million times: From Rosenbush, Steve, “Skype: On the Block: The Web Phone Service Has Discussed a $3 Billion Deal with News Corp., but an IPO May Be the Most Likely Scenario,” businessweek.com, August 10, 2005. [S]hadowed owner Bermeister, backpack cameras, and an $8 million mansion: From Montgomery, Garth, “When the Music Stops,” The Age, March 23, 2005, page number unknown. “It was a tough time”: Author interview with
Bermeister.
Kazaa background and “I hired actors to come here”: From Woody, Wired, February 2003, p. 104.
“21st-century piratical bazaar” and “the sheer magnitude of this haven for piracy is overwhelming and unknowable”: From Metro-Goldwyn-Mayer Studios Inc. et al. vs.
Grokster Ltd. et al., US District Court, Central District of California, October 2, 2001.
Niklas Zennstrửm and Janus Friis background: From Woody, Wired, February 2003, p. 104, and “How Skype and Kazaa Changed the Net,” BBC News, June 17, 2005 (how they met at a British telecom).
Nikki Hemming background, including Segaworld and $60 million loss: From
Montgomery, The Age, March 23, 2005, page number unknown. “She has done things
the hard way”: Author interview with Phil Morle.
“We are a utility”: Nikki Hemming quoted in Johnston, Chris, “Pirate Queen: Cyber- boss Nikki Hemming Is Defiant. Her Landmark Case Against Hollywood and the Music Industry Will Be a Bloody Battle. But She Says She’ll Win,” The Age, March 5, 2003, page number unknown. “I knew the powers of peer-to-peer”: Author interview with Mick Liubinskas.
Jeff Ayeroff and melting users’ iPods: Author interview with Eric Garland. Confirmed by Ayeroff, although his recollection of the exchange is slightly different, per the
footnote in the chapter.
“Shawn Fanning was genuinely a kid with a great idea”: Author interview with Cary Sherman. “These were pornographers and bad guys”: Confidential source.
543 peer-to-peer file titles having to do with child pornography: From US General Accounting Office, GAO-03-351, report to the Chairman and Ranking Minority
Member, Committee on Government Reform, House of Representatives, “File-Sharing Programs: Peer-to-Peer Networks Provide Ready Access to Child Pornography,”
February 2003, p. 1.
“As a guy in the record industry and as a parent”: Andrew Lack quoted in Hansell, Saul, “Aiming at Pornography to Hit Music Piracy,” New York Times, September 7, 2003, p. 1. “It was one of the big propaganda positions”: Author interview with Phil Morle.
“Being an old press guy”: Author interview with Wayne Rosso. “[T]he best music file- sharing service”: From Chamy, Michael, “I Want My MP3s: Audiogalaxy, Austin’s Onetime File-Sharing Supernova,” Austin Chronicle, January 31, 2003, p. 50.
Merhej’s next project, based on the same peer-to-peer platform and software, was FolderShare, which he sold to Microsoft in 2005. He works for Microsoft to this day.
“on a gigantic scale” and other background on Grokster case: From US Supreme Court, Metro-Goldwyn-Mayer Studios Inc. et al. vs. Grokster Ltd. et al., June 27, 2005.
“I’ve been cautioning people in the industry”: Author interview with Hilary Rosen, 2005.
File-sharing numbers from BigChampagne.com.
“Kazaa lost”: Author interview with Eric Garland.
MediaDefender charged major labels $4,000 to protect an album and $2,000 for a track: From leaked MediaDefender emails and Paul, Ryan, “Leaked Media Defender E-mails Reveal Secret Government Project,” arstechnica.com, September 16, 2007.
“[T]he online guard dog of the entertainment world” and MediaDefender revenues:
From Roth, Daniel, “The Pirates Can’t Be Stopped,” Condé Nast Portfolio, February 2008, p. 98. “The hope is, you make the experience so poor”: Author interview with
Cory Llewellyn.
“In the beginning, I had no motivation against Monkey Defenders” and background on “Ethan”: From Roth, Daniel, Condé Nast Portfolio, February 2008, p. 98. Details of Ethan’s hack into MediaDefender email accounts: Author interview with “Forrest F.,” who helped circulate the emails via the Pirate Bay.
“This is a stupid industry”: Author interview with Peter Sunde. Details about the
Pirate Bay’s role in leaking the MediaDefender emails, from Roth, Daniel, Condé Nast Portfolio, February 2008, p. 98. Sum 41 and Timbaland titles: From leaked emails, posted on mediadefender.com, as of January 2008. “This is really fucked,” Randy Saaf’s email quoted in Roth, Ibid.
ArtistDirect purchase of MediaDefender and founder salaries: Ibid.
“Whenever you brought up something like Napster”: Author interview with Cory Llewellyn.
Offspring promotion: Author interview with Jim Guerinot.
Don Ienner receptive to internet marketing and “Whatever it takes”: Confidential source. “War meetings” and “We devise a plan of attack”: Ienner quoted in Philips, Chuck, “Passion for Music Drives Columbia Chief to Make Plenty of Industry Noise,”
Los Angeles Times, January 29, 2001, p. C1.
“Certainly, that was the attitude of majors across the board”: Author interview with Mark Williams.
Robin Bechtel background: Author interview with Bechtel, and Bechtel, Robin, “The Internet Is a Fad: How the World Wide Web Changed Music,” Flaunt, May 2007, pp.
94–97.
“I basically built Creed’s online fan base one fan at a time”: Author interview with Syd Schwartz.
“Show her a brick wall”: Author interview with Ty Braswell.
“When YouTube came up”: Author interview with Robin Bechtel.
“The funny part is we don’t get paid anything for it”: Author interview with Jamie Kitman, 2006. Panic! at the Disco using YouTube: From Hancock, Noelle, “YouTube Rocks,” Rolling Stone, July 13, 2006, p. 40. Justin Timberlake using YouTube:
Author interview with Timberlake’s manager, Johnny Wright, 2006. Universal, too, would find gold: From Graham, Jefferson, “Q&A with Universal Music’s Rio
Caraeff.” USA Today, October 2, 2007, p. B2.
“We’ve had relationships with [the labels] since the beginning of MySpace”: Author interview with Chris DeWolfe.
“When we started out in 2002”: Author interview with Martin Stiksel.
“If a record wasn’t selling”: Author interview with Randy Sosin.
Jessica Simpson party and “He did spend a ton of money”: Author interview with
Barbara O’Dair.
Sony lost $132 million: From Eaton, New York, March 3, 2003, p. 42. Album sales and market share figures from Nielsen SoundScan.
Mottola’s $4 million mansion and marriage to Thalia: From Eaton, New York, March 3, 2003, p. 42.
Mottola-Stringer relationship: Ibid.
“Tommy didn’t ‘manage up’ well”: Confidential source.
“Why the fuck am I dealing with this guy?”: From Eaton, New York, March 3, 2003, p.
42.
“The Tommy-Donnie-Michelle management structure”: Author interview with Jim Guerinot.
Sony Music shrinking and employee numbers: From analysis of Securities and
Exchange Commission reports from Sony, Vivendi Universal, EMI, and Warner, 2000 to 2004, compiled by Bill Werde and Charley Rogulewski. Used with permission.
“icon of the music industry”: Press release quoted in Eaton, New York, March 3, 2003, p. 42. “It was the end of an era”: Confidential source.
“We speak the same language”: Howard Stringer quoted in Smith, Ethan, “Two Cost- Cutting TV Executives Will Run Music Monolith,” Wall Street Journal, November 7, 2003, p. B1.
AOL Time Warner-Bertelsmann merger talks: From Peers, Martin, “Bertelsmann, AOL Continue Music-Deal Talks,” Wall Street Journal, September 18, 2003, p. B8.
New York airport meeting: From Smith, Ethan, Wall Street Journal, November 7, 2003, p. B1.
30 percent combined market share: Calculations based on Nielsen SoundScan data.
“One side of the room was Clive and his people”: Author interview with Joe DiMuro.
Sony employees’ skepticism of Smellie: Confidential source.
Andrew Lack’s peer-to-peer ideas and “Andy was the key mover and shaker”: Author interview with Wayne Rosso.
Publicists…watched budgets: From author interview with Lisa Markowitz, then-Epic publicity executive.
EMI plant closings: From Timmons, Heather, “EMI to Cut Artist Roster and Close 2 CD Plants,” New York Times, April 1, 2004, p. W1. Cinram International purchase of Warner manufacturing: From “AOL Time Warner Agrees to Sell Its DVD/CD
Manufacturing and Physical Distribution Businesses to Cinram International for $1.05 Billion,” AOL Time Warner news release, July 18, 2003. Glenayre buying Universal plants and warehouses: From “Glenayre Announces Acquisition Agreements,”
Glenayre Technologies news release, May 9, 2005. Entertainment Distribution
Company posts $11.4 million loss: From company earnings conference call transcript,
August 7, 2007.
“Darwinian evolution took hold”: Author interview with Jim Caparro. DVD sales:
From Digital Entertainment Group. Blu-ray’s possible impact on Terre Haute plant:
From “Sony May Be Expanding Terre Haute Operations,” Tribune-Star, Terre Haute, Indiana, January 7, 2008, verified by Jim Frische.
Label spending on videos and “It’s a very precarious and somewhat unfortunate development”: Author interview with Randy Sosin. 209 mathematics of indie promotion: From Boehlert, Salon, June 25, 2002.
“Costs start becoming more of a consideration”: Author interview with Jeff
McClusky. Clear Channel’s 1,225 stations and reversal on indie promotion: From Boehlert, Salon, June 25, 2002. “We were too greedy”: Author interview with Bill Scull.
Eliot Spitzer’s payola investigation, including Audioslave and J. Lo details and Epic email detail: From Knopper, Steve, “Payola Probe Rocks Biz,” Rolling Stone, August 25, 2005, p. 12.
“condoned or participated in pay-to-play” and details about Don Ienner and Charlie Walk in Los Angeles Times investigation: From Duhigg, Charles, “Hitmakers
Implicated in ‘Pay for Play’ Plans; Investigators Looking into the Corruption Charges Found Evidence Against Two Sony BMG Senior Executives, Sources Say,” Los
Angeles Times, December 4, 2005, p. A1.
Ashley Alexandra Dupré receiving more than $206,000 via MySpace song downloads:
From Lemire, Jonathan, “Hooker’s an Online Hit—to the Tune of $200G,” New York Daily News, March 15, 2008.
Radio & Records 2006 “adds” data: Courtesy of the magazine and John Fagot. “Songs aren’t just getting on the radio as quickly as they did before”: Author interview with Doug Podell, 2006. “The labels are scrambling”: Confidential source, 2006.
Tower Records bankruptcy background and “We happened to be funny-looking”:
From Knopper, Steve, “Tower Records Shuts Its Doors,” Rolling Stone, November 2, 2006, p. 16.
“I lost a lot of money in Argentina and Mexico”: Author interview with Russ
Solomon, 2006. “Russ Solomon didn’t believe in digital music”: Author interview with Lisa Amore.
Wal-Mart cutting shelf space by 20 percent, and label sources predicting another 20 percent in 2008: From Knopper, Steve, “Wal-Mart Demands CD-Price Cut,” Rolling Stone, April 3, 2008, p. 16.
“the worst business…in the most challenged sector”: EMI internal email from Guy Hands, provided by confidential source. “Bloodbath”: Confidential source.
Bronfman, Messier, and Seagram: From Smith, Ethan, and Martin Peers, “Cost
Cutting Is an Uphill Fight at Warner Music,” Wall Street Journal, May 24, 2004, p.
B1. $42 billion sale price: From “Music Tycoon Continues to Deal in Entertainment Industry,” Sunday Business, London, circulated on Knight Ridder Tribune Business News wire service, November 30, 2003. Family fortune dropping from $6.5 billion to
$3 billion: From Adler, Stephen J., “Facing the Digital Music,” Business Week, May 22, 2006, p. 64. “I remember my mother saying as I was a kid”: Author interview with Edgar Bronfman Jr.
“Technology allows more people to get more music”: Author interview with Edgar Bronfman Jr.
Warner Music laid off 400 employees: From Christman, Ed, “Taking Stock,”
Billboard, May 19, 2007, p. 11. Leigh Lust background: Confidential source. “This industry is like George W. Bush”: Author interview with Steve Gottlieb. Lyor Cohen and Edgar Bronfman Jr. salaries: From Warner Music Group Corp. Schedule 14A filing with Securities and Exchange Commission, January 25, 2008.
Jimmy Iovine background and “if you bring somebody tea one hundred times”: From Trachtenberg, Jeffrey A., “Jimmy Iovine Spins More Gold at Interscope,” Wall Street Journal, February 22, 1996, p. B1. “You don’t want to make house music”:
Confidential source.
Ted Field and $15 million: From Roberts, Johnnie L., “Field Marshal: The Man Behind Gangsta Rap Is Mild-Mannered, Old-Money, and Into Politics. Is Interscope Records’ Ted Field a Menace to Society?” Newsweek, February 10, 1997, p. 44.
Marion “Suge” Knight and Death Row Records background, including Knight’s
affiliation with the Bloods: From Boucher, Geoff, “Suge’s Next Act? The Rap Mogul’s Empire Has Dwindled, but He Sees Only Possibilities,” Los Angeles Times, December 4, 2002, p. E1.
“He did a deal with the devil”: Confidential source.
“Many people say these [record] companies are a bunch of ugly ducklings”: Author interview with Doug Morris, 2005.
Revenue estimates from TV, movie, and video game licenses: From Goodman, Fred,
“Rock’s New Economy: Making Money When CDs Don’t Sell,” Rolling Stone, May 29, 2008, pp. 22–24. Guitar Hero and Rock Band sales: From Halperin, Shirley,
“Rock Game Nation,” Entertainment Weekly, September 5, 2008, pp. 38–40.
Worldwide ringtone revenues: From Juniper Research. Will.i.am hiring engineers:
From author interview with will.i.am, 2006.
Jay-Z’s $10 million salary as president of Def Jam: From Leeds, Jeff, “Jay-Z to Quit His Day Job as President of Def Jam,” New York Times, December 25, 2007, p. C3.
“Going into a major record label”: Author interview with Jamie Kitman. Labels’ 5,000 layoffs: From Eliscu, Jenny, “Labels’ Unhappy Holiday,” Rolling Stone, January 24,
2008, pp. 9–10.
Details on Simon Baeycrtz, Robert Wieger, and Barry Feldman: From Knopper, Steve,
“Rock & Roll Refugees,” rollingstone.com, July 22, 2008.
Debbie Southwood-Smith background and quotes: Author interview with Southwood-Smith.
Big Music’s Big Mistakes, Part 8: Sony BMG’s Rootkit
“software that tricks an operating system”: From Roush, Wade, “Inside the Spyware Scandal: When Sony BMG Hid a ‘Rootkit’ on Their CDs, They Spied on You and Let Hackers into Your Computer. What Were They Thinking?” Technology Review, May 2006, pp. 48–57. Sony BMG released 4.7 million CDs containing rootkits, and 52 titles: From Smith, Ethan, “Sony BMG Pulls Millions of CDs Amid Antipiracy-
Software Flap; Recall Could Dent Sales of Artists and Retailers During Key Holiday Season,” Wall Street Journal, November 17, 2005, p. D5.
“My sister and I will no longer buy any Sony products”: Quoted in Zeller, Tom Jr., Railing at Sony BMG, Disguised as a Review,” New York Times, November 21, 2005, p. C3. “Most people, I think, don’t even know what a rootkit is”: Thomas Hesse on National Public Radio broadcast, quoted in Mitchell, Dan, “The Rootkit of All Evil,”
New York Times, November 19, 2005, p. C5.
“It was the highest debut of Neil’s career”: Rick Rubin quoted in Hirschberg, Lynn,
“The Music Man,” New York Times Magazine, September 2, 2007, pp. 26–50.
“It seemed to us that the record was just tainted”: Author interview with Ethan Iverson.
“If you shed a tear for every dollar spent”: Author interview with Talal Shamoon.
“That’s why the technology was used” and “something deep”: Confidential source.
Security experts quoted in Technology Review: From Roush, Technology Review, May 2006, pp. 48–57.
SunnComm recollections and “It took our revenue stream right out from under us”:
Author interview with Bill Whitmore.
Blaming Thomas Hesse and Michael Smellie: Confidential source. “When we found out the Neil Diamond record had rootkit technology”: Author interview with Steve Greenberg.
Recall costing $2 million to $4 million: From Smith, Wall Street Journal, November 17, 2005, p. D5. Fifteen class-action suits, $50 million settlement: Estimate in Smith, Ethan, “Sony BMG Agrees to Settle 15 Suits Over CD Software,” Wall Street Journal, December 30, 2005, p. A14. “They don’t do it anymore”: Author interview with Steve Greenberg.