File sharing was supposed to stick it to The Man. Instead music investment withers while tech companies get fat, artists don't get paid... and some people think that pirated music is their human right. Eamonn Forde meets the fundamentalist "freetards" and finds out why - for your favourite band - Free could mean slavery. This is Part 2 of the full piece that appeared in Q311.
On 20 January, two helicopters landed in the grounds of a 20-hectare estate in Coatesville on the northern tip of New Zealand. Seventy armed officers stormed the building looking for one man - Kim Dotcom, about to turn 38 the next day and founder of Megaupload, a file-hosting service that had netted him an estimated $175m since it launched in 2005.
In a panic, Dotcom (born Kim Schmitz in 1974 in Germany) pulled the switch on electronic locks that the police had to cut through. He was eventually found, like a digital Bin Laden, cowering in a safe room with a firearm. He and three senior members of his staff now face extradition to the US accused of facilitating mass piracy of music, games, films and TV shows as well as racketeering, wire fraud and money laundering. New Zealand media reported that the grounds of his Bond villain-like compound - rented, not owned, because he had failed a "good character" test for immigrants - were littered with luxury vehicles with plates that read "HACKER", "MAFIA" and "GOD". He had already been convicted for insider trading, computer hacking and embezzlement. Bizarrely, he also paid for 2011's New Year's Eve fireworks display in Auckland.
Kim Dotcom is the web's most divisive character today - the latest in a long line dating back to Shawn Fanning in 1999 with Napster. "Cyber-lockers" like his Megaupload service let users store and share any material online, no questions asked - and Dotcom pocketed the ad and subscription revenue. He could either be the greatest thief in record music's history, profiteering from other people's copyrights while living a gaudy lifestyle; or else he's the poster boy for an open web and the latest casualty in the Big Corporations' war on our online and civil freedoms.
At the turn of the millennium - in an age before mass broadband, iPods, YouTube and Spotify - only geeks and early adopters used emerging technologies like peer-to-peer networks. These computer-to-computer sharing networks loosened the entertainment companies' grip on distribution, sales and the copyrights they had invested in. We were, we were promised, coming into a glorious new age of DIY where musicians could go it alone without record companies. In 2005, it was all about MySpace. Now the story is the self-release platform Bandcamp. The names may have changed, but the rhythm of the revolution remains the same.
What turned this new technology from esoteric geekery into a cause was the new philosophy of "Free" - held up as an ideal that only Luddites could oppose. Wired magazine editor-in-chief Chris Anderson's book of the same name described a new reality where core products like MP3s are given away and bands make their money elsewhere, from touring or T-shirts or ads. Music would become a loss leader - a 100 per cent loss leader. But at the same time something else happened. The Free brigade imagined that new technology would get music out from under the thumb of record labels. And sure enough, the music companies suffered under Free's onslaught. But, as former New York Times writer Robert Levine details in his fascinating book Free Ride, a new generation of corporate giants took the place of the music companies. Tech, telecom and internet firms got fat on the hard- and software that played pirated music and movies, and the bandwidth that spread it. Someone, somewhere was making a fortune out of Free. And unlike the unloved record labels, they didn't invest in content at all.
So what does "free" mean anyway? Are its advocates just freeloaders, or principled defenders of a free internet? The debate becomes impossibly heated almost instantly, with phrases like "tyrant" and "freetard" only inciting anger and obfuscating the issues. There's no denying that Free - willing or unwilling - has had a huge impact on music. Record companies point to a huge slump in their sales: global record revenues were $36.9bn in 2000 but stood at $15.9bn in 2010 according to IFPI figures. They've seen downsizing and layoffs, consolidation and a somewhat desperate attempt to move out of recorded music alone and sign acts to "360 deals" where labels share in everything an artist generates: live, merchandise, ads, songwriting and so on. Critics of labels (who always mean major labels) jeeringly point out that the record companies need to adapt their "business model" while hooting that they are too arrogant and stupid to change. It's payback for all those overpriced CDs in the '80s and '90s, they say, as well as the terrible contracts they made artists sign. Labels are dying and artists no longer need them when they can put music out themselves. If they no longer have huge advances and marketing budgets, they have snared the greatest "free" of all - creative freedom, where they are finally the masters of their own destiny.
It's an image to fire the blood, but it ignores a few important facts. Labels have their faults, but at least they still invest money back in new music. You may not like all the music they back, but they still make those bets when Kim Dotcom most certainly doesn't. Lady Gaga may sell millions and SBTRKT only a few thousand, but they both benefit from a system that few others will invest in. Ah, say the labels' critics, but what about Bandcamp? The direct-to-fan retail system is surely a shining example of what can be done without label meddling. But though it's easy to attack the labels for their bland, safe signings, the reality is that Bandcamp is bloated with hobbyist musicians. The freedom to do what you want can also mean the freedom to be unlistenable without someone to guide you. Some acts on Bandcamp are great. But many are very far from great. The bad outnumber the good because there is no quality filter - no one to tell them where they're going wrong.
Meanwhile the advocates of Free and the defenders of copyright have all but ceased to talk to one another. Labels say that online piracy costs jobs, kills investment and robs artists of their just income. "What we object to is people running businesses ripping off artists, musicians and labels," says Geoff Taylor, chief executive of the BPI. On the other hand are the zealots of Free - or "freetards" as their enemies call them - who say that anti-piracy laws will geld a free and open internet, destroy civil liberties and reward the lobbying of a failing music business. Loz Kaye, part-time composer and leader of Pirate Party UK, says that anti-piracy laws are a smokescreen distracting from the real issue - copyright reform.
"We want to see a major reform of copyright," he says. "It's no longer fit for purpose as we see it - particularly in the digital age." Kaye argues that legislation like the UK's new Digital Economy Act (DEA) are "a pathway to censorship" and that "we hand government the tool of censorship at our peril." Opponents of the law, which was passed in 2010 and could come into force this year after appeals from ISPs failed, argued that slowing down or terminating a customer's broadband, even if they were guilty of file sharing, was an attack on basic human rights. ISPs and others like Google claimed that blocking sites which facilitate file sharing was against the ethos of an open web. Every solution, every measure to make people pay for the stuff they use was somehow morally wrong. There's a word for this: fundamentalism.
"What we stand for is not to do with free stuff," counters Kaye. "It's about free speech and freedom. That's the core of what we believe in." Megaupload, he says, had legitimate uses. "What the Kim Dotcom case shows is the extraordinary point that the US now thinks the entire world is its jurisdiction." Others in the Free movement use even more emotive language. "Copyright is itself a form of restriction on speech and expression," says Mike Masnick, founder of influential blog TechDirt and a boundless critic of music industry thinking. Well, yes - but only to the extent that laws against theft restrict your "right" to enjoy other people's stuff.
It's become a dialogue of the deaf. "The debate is often not about whether people at labels deserve to get paid," says Cliff Fluet of UK legal firm Lewis Silkin. "It's: Those guys messed it up and they tried to sue us or lock us down. The Free guys see what they're doing as an act of rebellion against that."
Without dialogue there's slow progress towards "three strikes and you're out" laws such as the anti-piracy measures in South Korea, France, Sweden and New Zealand. But in the USA it hit the buffers. Earlier this year the Stop Online Piracy Act and Protect Intellectual Property Act - known as SOPA/PIPA - were derailed after a day of protest online. It looked very much like popular outrage: Wikipedia blacked out its page for 24 hours to show the potential consequences of the legislation, and many Twitter and Facebook users changed their profile pictures to black. But behind the protest was fierce politicking from digital giants like Google, which spends more heavily on lobbying than the record labels and makes a fortune from search advertising and traffic around illegal file sharing.
Even Rupert Murdoch weighed in, tweeting that Google was the "piracy leader" which "streams movies free and sells adverts around them." It was, "no wonder [Google was] pouring millions into lobbying." Murdoch may have had a point. But when copyright's loudest advocate is a beleaguered media mogul with ethical problems in his own back yard it is - as they say - not a good look.
The flag-wavers for Free have certainly wounded one of their enemies, the major record companies. But have they just exchanged The Man for another, bigger, richer, less scrupulous version? In the digital era Google tracks your every keystroke to target you with ads; broadband and mobile companies lock you into expensive contracts; Facebook chops up your social media life to sell to marketing companies... and none of these million-to-billion dollar businesses will finance anyone's creativity unless it's occurring at a happening tech start-up.
In the new Free economy, huge sums of money are being made. Google has revenues of $10.6bn in the final quarter of 2011. Facebook could make $5bn this year. Apple, which arguably benefitted most from the hardware boom that accompanied the explosion in Free, became the world's most valuable company in March this year when its stock value topped $500bn. And then there are the multiple Kim Dotcoms out there - Lil' Kims? - investing only in technology and seizing other people's music, movies, games to feed traffic and make their money.
Robert Levine, the author of Free Ride: How The Internet Is Destroying The Culture Business, argues that Free should be a choice, but the "help yourself" culture that has mushroomed because of the web means the choice is no choice at all. "I get nervous about the word 'free'," he says. "It means a lot of different things to a lot of different people. You have to make a distinction between 'free' in that you decide to give your stuff away, and 'free' in that someone else decides to give your stuff away." But that is a minor detail to people who have decided that Free is a point of principle. "They have taken this weird temporary anomaly [file sharing] and turned it into a human rights cause," says Andrew Orlowski of tech website The Register. "Either that or they have a swollen sense of entitlement and think that it will be like this forever. It's a very negative view of the world that is very selfish and self-serving."
But it allows supporters of sites like Megaupload to ignore the fact that the majority of its traffic was found without question to infringe copyright laws. They simply zoned in on the fact that some files - work documents, personal photos - were there legally. Does a microscopic minority of legitimate uses trump an overwhelmingly illegal majority? Surprisingly, Mike Masnick of Techdirt argues that the Megaupload case could actually help the music industry. "There is an argument that if he [Kim Dotcom] was so successful and able to profit off other people's copyright, that strikes me as a business opportunity for the copyright holders."
Yes, but Kim Dotcom didn't have to go through all that tiresome business of paying to make the music, movies and games he profited from, did he? "Well, he did have to invest heavily in the physical and network infrastructures in order to make that happen," says Masnick. "If this is so profitable, that's an opportunity for the business to at least learn something from it."
Indeed, artists including Swizz Beatz have argued that musicians could have made more via Megaupload than from a standard record deal. The site offered paid accounts where the more people downloaded from you, the more you were paid out of Megaupload's ad-swollen coffers. A self-releasing artist could fill their account with their own music for others to take for free, and get paid too. But you'd have to be well-known in the first place. Not much of an issue for Swizz Beatz whose albums have already benefitted from the marketing muscle of Universal, the biggest record label in the world.
Ultimately the question is: how do you compete with Free? Marketeers and common sense suggest that a premium product and a premium experience can command a premium price. But that already exists. It's called iTunes. And Spotify. And Deezer. And 7digital. And any of the other hundreds of licensed legal music services in the market. To suggest there are no legal alternatives is nonsense. The iTunes Store arrived in 2003 and users can now listen, legally, to music for free online in many different places (we7, Vevo, official YouTube channels, the lite version of Spotify and so on).
The music industry is learning from Free, but it's a painful process. The margins are tight. And the artists don't make anywhere near what they did under the old record company settlement. So why don't they all just do an In Rainbows? Radiohead's famous "tip jar" release of their seventh LP in 2007 did more than open up a new way of selling music. It handed the Free fundamentalists another argument: set the price free, and people will choose to pay. But in order to do that, you have to be as big as Radiohead in the first place.
Other artists - Prince covermounting his Planet Earth album on The Mail On Sunday, US producer Pretty Lights giving his music away on The Pirate Bay - willingly chose the free or near-free route. Where the copyright holders take issue with all this is that file sharing systems don't ask first. They just take. And it's almost impossible to get a consensus among the musicians either.
"I'm in favour of legislation against piracy," says Crispin Hunt, former singer of The Longpigs and now a board member of the Featured Artists Coalition, which gives musicians a voice in the debate. "But I know it's a touchy subject and not all the members of the FAC agree with me. But if you start devaluing that piece of work and turning it into something free, there will be no music industry." In this world it's not the artists who are making the running - or the money. Since the beginning of the Free era, a whole white-collar sector has sprung up to advise media companies on what they should do in order to compete with Free. They charge tens of thousands of pounds. By the mid-00s every major record company was awash with such consultants, getting fat on the misfortunes of an ailing business. "Some people have made a career out of talking absolute shite," says Andrew Orlowski of tech website The Register, "like certain law professors."
One of the things they talk about is copyright itself, the principle that the creator of any work ought to have an interest in its future and should reap some reward from its future use. Free fundamentalists say it's a relic of the pre-digital age. They cite the recent extension of copyright on sound recordings in Europe from 50 to 70 years, a victory for the labels which Free partisans say only proves they're unwilling to adapt. They want to lock copyright down just when it should be unhooked. "I have never heard a convincing argument that copyright is anything but good," says Orlowski. "When we have strong copyrights and markets are created, everyone is a lot happier. The best way to encourage creativity is to pay people and to reward them." And Free Ride author Robert Levine says copyright needs to be updated, not ditched entirely.
"If you are a creator, you should have the right to license your work to whomever you want," he says. "Definitely the laws need to be changed. People say I just support big companies, but I support commerce. If that's big companies, that's fine. If it's small companies, that's fine too." But those on the other side of the table are fervently opposed to this ring-fencing and extending of copyright. Loz Kaye, part-time composer and leader of Pirate Party UK, says his party wants to see copyright taken down to an almost worthless 10 years. "We are not anti all types of IP," he says. "We just want to see a common sense balance between consumers and producers."
And Mike Masnick of TechDirt regards copyright as inherently anti-democratic because it places commercial interests above cultural and creative ones. "Copyright may be worthwhile," he argues, "but we have to recognise that it can be used in conflict with free expression." On the subject of the freedom to be paid for the work you've created, there's only smokescreens and woolly thinking. Ultimately it's not a logical argument - it's an emotional one. A lot of people get off on the idea of the record labels finally getting a taste of their own medicine. Ripped your recording artists off? How do you like these apples? "This idea that record companies aren't nice so it's OK to rip them off is something I find really repellent," argues Robert Levine. "If you follow that to its logical conclusion, you get to this idea that your rights vary according to how nice you are - which ought to scare the living shit out of anyone."
What may seem like a way of sticking it to The Man actually ends up hurting the artists signed to record labels the most. "It's not the huge corporations they are ripping off," says Hunt. "The huge corporations just pass it directly down to the bands." The labels need to change their culture, he thinks, and try not to be seen as "evil". They could start by giving sound recording copyrights back to the bands when they've covered their recording and marketing costs. Which isn't likely in today's austere times. And that brings us back to... who needs labels anyway?
Free fundamentalists reject the argument that a label is really just a bank and a marketing agency that invests in its bands and gets their material noticed. "The biggest problem for most musicians is not piracy - it's obscurity," argues Kaye from the Pirate Party. "Getting your stuff out there has always been the problem for all of us. There are new possibilities there. Anyone with GarageBand can be their own producer. We do have the means of production. That is why things like Creative Commons [licensing] and sites like Bandcamp are really useful."Masnick from Techdirt says that getting paid for your music is "not the primary reason why people are creating."
"The idea that if people don't pay for music, less music will be created doesn't square with reality," he says. "There is the idea that as infringement goes up, creation goes down. But we are seeing the opposite of that." But are we? And does 10,000 hobby bands make up for one act storming the mainstream and changing it forever? Still, the bands can always make up the shortfall on tickets and merchandise, can't they? Surely they can monetise their tweets or something. This is the flipside of Free: punters might not pay for the album but they'll pay £30 for the T-shirt... won't they? It's become a running joke in the music business.
"You might find you have 40,000 fans on your social network but the irony is that you just can't tour to them any more," says Will Page, the chief economist at the PRS For Music, the collection society for songwriters and music publishers. "That's an example of cost disease. Touring didn't become any cheaper because of Web 2.0." He is particularly scathing of the idea that merchandise will make up for all the music that people are listening to but not paying for. Merchandise is a function of the type of band you are, and the genre you're in. A metal band will sell a lot of merchandise, an indie band or laptop techno outfit less. All music is not the same. Just as not everyone can be Radiohead and release an In Rainbows, so not everyone can be James with a line of T-shirts that became hits all on their own. Very few get to be a Ramones, whose clothes sell to people who've never even heard the music. And anyway - didn't artists get into the business to spread their music, not flog T-shirts?
Still everyone can play live, right? A gig is the ultimate pirate-proof entity, a bulwark against the encroachment of Free. We're not living through a Golden Age Of Live for nothing. It transpires that things are not so simple. Crispin Hunt of the Featured Artists Coalition points out that not every musician wants to be on the road all the time, or even have a career outside of recorded music - and they shouldn't be strong-armed into it by online piracy. He mentions one very well-known and well-loved band who would have liked to be living off their substantial back catalogue by now. Instead, in their 50s, they're forced tour the country "in great indignity" because they can't make a living out of their albums any more. People - many of whom regard themselves as the band's fans - are stealing it because they assume it should be free. They see nothing wrong in what they're doing. Meanwhile the band they love is working itself into the ground to stay still. Welcome to the long-term consequences of Free: your favourite band on a treadmill forever.
Meanwhile, on the internet, the legal game continues. Sobered by the Megaupload case, some file sharing sites such as BTjunkie, FileSonic and FileServe have either shut down or stopped inter-user sharing. Other P2P and torrent sites are increasingly wise to legal threats, staying several steps ahead of the law. The infamous Pirate Bay dropped torrent links at the end of February, replacing them with magnet (ie, "trackerless") links that claim to be harder to trace. They've even floated the idea of (literally) flying "drone servers" - file sharing nodes you'd have to shoot down to stop. Looming all over this is a program that could make trafficking in pirate material almost impossible to trace. Tribler, developed by the Delft University Of Technology in the Netherlands, does away with intermediate servers and connect any computers running the Tribler client direct to one another. Dr Johan Pouwelse, one of its developers, told tech blog TorrentFreak in ominous terms that, "The only way to take it down is to take the internet down." The irresponsibility is staggering.
On top of this is the friend-based RetroShare, which TorrentFreak describes as allowing users, "to create a private, encrypted file sharing network." Traffic on RetroShare shot up immediately after Megaupload was targeted by the authorities. Again and again web traffic figures show that P2P and torrent users simply move to other sites where their service of choice is closed. But this is more than a game of Whack-A-Mole. It's like the Gremlins coupled with the broomsticks in Fantasia: smash one and more will spring back in their place, bigger and tougher and more sophisticated. Soon they could become invisible and the music industry will be firing shots in the dark.
So what would happen if the freetards won? Would culture blossom as they predict, finally free of the greedy hands of the record labels? Or, in an accelerated version of the old morality tale of being careful about what you wish for, would mainstream music and culture themselves collapse? Some would see that as a true revolution, wiping the slate clean to allow a new generation of musicians to come forward and create great music without those dreadful record executives meddling with it (and making it palatable for millions of people)?
The Pirate Party's Loz Kaye, inevitably, sees the end of the record company's grip on popular culture as a good thing. "There is a cultural change going on," he says. "Adele and Lady Gaga are the big figures but for my own personal taste I don't think this is interesting musically. It feels like a dead end. If there is a hole in the mainstream, it is the failure of imagination. It shouldn't be about trying to create one grand flagship product." Which translates as: things I don't like shouldn't be popular. Taken to its logical conclusion this argument casts most people as passive, stupid and happy to lap up the results of this "failure of imagination". If only they could see the challenging artists on the periphery of the mainstream, they would have their Damascene moment.
It seems a pretty joyless, anti-fun stance to take on an art form that is usually about trying to connect with as many people as possible. Maybe most of us actually like the music we hear on the radio and buy on iTunes or in the supermarket. The unspoken elitism in the Free fundamentalists' arguments gives the lie to their inclusive, democratic, civil liberties rhetoric. "Listen to our favourite underground, self-funded music," they roar, "not that mainstream pap" - unaware that what they're saying is itself anti-democratic. But it doesn't stop the argument, and with the arrival of new software like Tribler (don't you just hate that cutesy name?) it feels like the freetards are winning. "The freedom of the internet is all very well," says Crispin Hunt, "but if it devalues a whole other section of the creative industries, like the record business, then the creative industries may no longer exist. We'll be back in the Victorian age where we'll have to play pianos in the corner of a room."
But maybe the freetards aren't winning. When Sweden introduced an anti-piracy law in early 2009, music sales in the country went up by 18 per-cent in the first nine months of that year - a huge shot in the arm for the third biggest exporter of music in the world after the US and UK. South Korea experienced similar trends after it adopted tough online piracy laws. Sweden had the benefit of Spotify, the homegrown company that explicitly set out to make P2P and torrent sites redundant by creating a service that was better and one that consumers would pay for.
Now live in 13 markets, Spotify has 10 million users and three million of them are paying a subscription every month. And this in the country that gave the world The Pirate Bay, whose founders were convicted of facilitating mass piracy in 2009. Good digital services and a crackdown on piracy have been hailed as the magic combination behind Sweden's market renaissance. Perhaps if you give people a way to pay, they will. To date, Spotify has paid out over $250m in royalties to copyright holders. At the last count, the Pirate Bay has paid out nothing. Eamonn Forde @Eamonn_Forde Illustrations Tilly