How They Got Us To Pay For Music Again

How We Got Here with Chris Kohler

The episode explores the seismic shift in the music industry caused by the arrival of Napster in 2000. It traces the transition from a profi

Key takeaways

Shawn Fanning's Napster disrupted the industry by making music free and accessible via peer-to-peer sharing.
Metallica led a high-profile legal battle against piracy, famously involving Lars Ulrich delivering lists of users to Napster.
The MP3 format was developed by German engineers at the Fraunhofer Society using tests like 'Scatman John'.
Dr. Paul Harrison explains that users returned to paid models because streaming removed the friction and risks of piracy.
David Bowie predicted the industry's shift, noting that music would become a utility like water, forcing artists to rely on touring.

Main topics

Napster and the disruption of music value
The legal war between Metallica and piracy
Evolution of MP3 technology

Notable quotes

Music itself is going to become like running water or electricity.

Conclusion

The episode concludes that while piracy broke the old model, the indus

Transcript preview

Speaker 5 (0:00) What happens when something you really want, like good music, goes from being expensive to being free? Usually it's just stealing and most people won't do it, but what if it's online, socially acceptable? You know, that it's against some rules, but punishment is not a thing, and it's just a song, you know, or maybe a few hundred. Well, in that case, the whole music industry will change forever. And that is exactly what happened in the year 2000, thanks to Napster. And it all happened within a few months. Napster made it possible for people to share music for free. It is a chaotic story with a 19-year-old named Sean Fanning at the centre. But as always, it's about more than just him. It's about us. It's about what convenience and cost means to us and what it can take from us in the long run. This is how we got here. And in this episode, we're going to be talking about Napster and the music industry. And as always, I'm joined by our excellent producer, Rob. Rob, g'day. Hello. Good to be here. Well, is it? You've had a flu. Yeah. You're soldiering on and I appreciate that. Yeah. I'm brought to you by influenza today. We're safe. We're distancing. Yeah. But I'm glad that you're feeling a little bit better. Thank you. Thank you. A little bit, probably. Just Speaker 6 (1:20) a little bit. Enough to be here. We've moved this time slot twice now. Yeah, Speaker 5 (1:24) I know. I'm sorry about that. We're going to have to spark you up though, and I'm going to spark you up by asking you what was your first album Speaker 6 (1:30) that you bought? I'm actually really proud of this. Here we go. The first album I ever bought was Toxicity by System of Speaker 5 (1:36) a Speaker 6 (1:36) Down. It's a good book. I'm stoked about this because back in primary school, my best friend at the time, Mardo, shout out, gave me strict terms that if I did not have this, I wasn't cool. So I remember being with Dad at JB Hi-Fi and this was my Dad. My Dad was just shopping for vinyls for himself and I remember going through the sections in the rock into metal, finding that album and bringing it to my Dad and saying, Dad, if I don't have this, I'm not cool. And it's plastered with like 18 plus things all over it and he's like, are you sure? And I'm like, Dad, I'm not cool unless I have this. And I was like, grade five. And he's like, okay. And that was number one. Dads Speaker 5 (2:16) are Speaker 6 (2:16) always looking around in that situation for Speaker 5 (2:17) mum. Like, am I doing this? Should I do this? I'm doing it. I'm doing it. There Speaker 6 (2:21) you go. Speaker 5 (2:21) You want to know mine? Mine's less cool. What was it? Why Do They Rock So Hard by Real Big Fish. Nice. Which is a ska band. Yeah. Ska was big in the late 90s, early 2000s, Speaker 6 (2:35) and I was 10 or so. Yeah. I was thinking it might have been like a So Fresh compilation or something like that. No. I mean, I have older sisters, so I got their Speaker 5 (2:45) stuff when they were finished with it. But I decided at that age that I was into Scar. So it was Mighty Mighty Boss Tones, Real Big Fish. And then, you know, it developed into skater stuff like, you know, Mill and Colin and Speaker 6 (2:56) Unwritten Lore and all that sort of stuff. My second CD was the 8 Mile soundtrack to Sucker Play, Lose Yourself on Repeat. Speaker 1 (3:05) Wow. Speaker 6 (3:05) As you would want to. This is why you're so hyped up to this day. It's true. You're always ready to go. It's true. That's why I've got that heart edge about me. Speaker 5 (3:13) I'm really excited because I feel like this conversation about downloading music and buying CDs is going to bring up some good stories from you, Rob. But before we get into all that, should we do two truths and a lie? Yeah, let's do it. Righto, here we go. The way this works is I say three facts. Two of them are true, one of them is a lie. You decide which you think is the lie now and then see if you change your mind as the story goes on. All right. Fact one. The German engineers who invented MP3s tested the format over and over by using the song Scatman by Scatman John. Speaker 6 (3:48) Can we hear a bit of that? Yeah, absolutely. Why not? Speaker 6 (3:56) There it is. The sound of a decade, really. Speaker 5 (4:01) What a classic. All right, Pat. Absolute classic. I'm so glad we were able to get Scatman John happening in this show. Yeah. Okay, so keep that in your mind. That was fact one. Fact two, by 1999, the search term MP3 had overtaken the search term sex as the most searched word on this early internet. Okay. That's fact two. Okay. Fact three. The hit song My Happiness by Powderfinger probably made the band about $1.25 million in royalties alone, according to industry sources, not the band. Wow. Yeah, that's kind of ballparking what that one successful song would have been worth to that band. So they're the three facts. Have a guess. If you're listening or Speaker 6 (4:45) watching, have a guess as well. Rob, where are you going with that? Yeah, I mean. Scatman John, I don't know how big he was in Germany, so it's hard to know if these boffins were just sitting around scatting. Speaker 5 (4:57) They Speaker 6 (4:58) might have been. Yeah. Speaker 5 (4:59) I would have loved it if – that's now the image I'm going to have in my head forever as they invent. You Speaker 6 (5:05) know, it could be a fact. It could be a fact. This is the thing. It's totally unclear. Hard to know. Fact two, I mean, people are pretty perverted, particularly on the internet, so I feel like sex will always be topped up in the search engines. Fair point. And then Powderfinger. Like, that was a great Australian band, but, like, I don't know. Like, did they make that much money globally? Well, we're going to talk about Powderfinger Speaker 5 (5:28) again here, and it's going to be one of those ones where Australian listeners and viewers are going to know. But overseas people might not. So, Speaker 6 (5:35) look, they're the facts. Which one are you going to Speaker 4 (5:37) go? Speaker 6 (5:37) I'm going to say that the powder finger is a lie because I feel like that's a lot of money. All right. Yeah. You know me. I'm not going to tell you. And also I kind of hope that Scatman John's true. But you said you thought sex was wrong. Yeah. Oh, yeah. You're saying bullshit to all Speaker 5 (5:52) three. Speaker 6 (5:52) Yeah. Maybe I am saying they're all bullshit. No, no, sorry. They're all Speaker 5 (5:54) false. No. Two is the lie. Okay. Two is the lie. People are perverted. Two is the lie, according to Rob. Speaker 5 (6:02) Jot down your own thoughts. We're going to return to that a little bit later. 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TV and movies are now being used to effectively grow audiences beyond what the radio could have achieved. And now, on top of all that, the internet is pushing things along too. And while massive artists dominated the world stage, lots of local stages were being dominated by local bands too who were making pretty solid money. I remember watching a cable TV channel here in Australia called Channel V. I watched it all the time. Rob, do you remember Speaker 6 (8:32) Channel V? I do. They used to have like live and it wasn't a stream, it was TV, but they would have live coverage of a music festival and when you were young and weren't old enough to go, you could... Watch it. They had heaps of stuff. Speaker 5 (8:43) It was totally dedicated to music, played music videos, which were obviously like a massive thing when a new band or musician or pop star released a new one. Like everybody had to watch it, otherwise you weren't cool at school the next day. As you say, they did live shows, artist interviews, everything. And most of the time when I was watching it, I was watching Osher Gunzberg. He was kind of the main host on a lot of the shows, particularly the one after school. And he's done a lot of stuff since then, like The Bachelor, Bachelorette, Australian Idol, tons of stuff. But to me, he's the perfect person to ask about what the music industry was like in 1999. And basically, he says it was thriving in a way that people born more recently might struggle to imagine. Speaker 4 (9:27) The music industry was making my... At the time, like selling round pieces of plastic with music on it was a great business model. There was like 60 % margins on it, dude. And he says that the money wasn't just confined to the top end of the industry. The live music scene in Australia was absolutely pumping. Like your favourite band wouldn't just play your town, they would play your suburb. And bands would go on 40, 50, 60. date tours around Australia. Australian bands would do this and they'd play these beer barns that were 1500, 2000 capacity, okay, and all cash bars, right. There was money to be made. Okay, but what kind Speaker 5 (10:10) of money? What would a solid, well-regarded, kind of top tier Australian band have been making back then in late 90s, early 2000s Australian dollars? Speaker 4 (10:20) So let's say the Powderfinger song, My Happiness, right? That was a single off their album, Odyssey No. 5. Let's just say Powderfinger's My Happiness, the album sold around $550,000, $60,000. So it was a lot. It was 10 times, 11 times platinum. It's a lot. Let's say My Happiness gets played four times a day. because it's a big rock song on the 60 rock stations in Australia for a couple of months and then over the next three years or so, maybe twice a day or twice a week. All right, that's around 70,000. That's it, 70,000 plays. That airplay alone and those album