Crucify

I’ve been looking for a savior in these dirty streets Looking for a savior beneath these dirty sheets I’ve been raising up my hands

Drive another nail in just what god needs one more victim

Why do we crucify ourselves

Every day

I crucify myself

Nothing I do is good enough for you

Crucify myself

Every day

And my heart is sick of being in chains¹²

The record companies had inadvertently crucified themselves by forcing music fans to replace their analog music with new digitally encoded music.

Technology rarely sits still. While the record companies were busy making money selling digital music, the computer industry was just as busy developing new and better ways to store and to manipulate digital information. Specifically, computer engineers realized that optical CDs could encode all sorts of information, not just music—and that they could hold significant numbers of bits. They developed the codes, encod­ing machines, and decoding machines necessary to replace diskettes with data CDs as the primary software distribution mechanism. Of course, consumers had to buy yet another bit of technology to translate the CDs back into the voltage language that their machines understood: a CD- ROM drive.

ROM is an old computer term that stands for “read only memory.” When the computer industry launched CD-ROM drives, imprinting a CD was still expensive. Only large companies could circulate CD-ROMs because encoding something on a CD required expensive capital equip­ment. But decoding a CD was much less expensive. Electronics compa­nies had spent more than a decade turning these decoders into inexpensive stereo components.

Now, electronics companies are no slouches, and they understood that network economics was likely to haunt them here, too. Most computer users had drives that read diskettes, not CDs, so software companies would have to continue circulating their software on diskettes. Why would anyone be willing to buy a CD-ROM drive simply to save the effort of loading a few diskettes into a diskette drive? The payoff didn’t seem to be worth the price—so few software companies would clamor for the more expensive imprinting equipment. But the electronics companies realized that most computer users already owned a collection of CDs— ones that happened to contain encoded music, rather than encoded data. Computers had long made sounds—which meant that they came equipped with some sort of a speaker—and a number of techies had been playing around with music on computers for years. The electronics com­panies took the next step. They built CD-ROM drives that detected whether a CD contained music or data, applied the correct decoding algo­rithm, directed data to the computer, and played music over the speak­ers. That little twist not only helped sell more CD-ROM drives, but also created a demand for enhanced soundboards and speakers. The computer and electronics industries thus worked together to turn desktop comput­ers into high-quality stereo systems. The record companies didn’t much mind. After all, the more places that people could play CDs, the more CDs they were likely to buy. Once again, everyone won.

But breakthroughs follow breakthroughs in the wonderful world of technology. The electronics companies next figured out how to make CD- encoding equipment cheap and compact and began selling computer drives that not only read CDs encoded by large software companies, but that allowed computer users to write their own CDs.

This combination of technologies did not make the record companies happy. They had circulated perfect digital copies of their music, confi­dent in two great forms of protection. The IP laws preserved many of the copyright owners’ rights to that music—everything that didn’t fall under that amorphous category of fair use. Though consumers may have thought of the CDs that they bought as “their own,” they were actually in partnership with the owners of the copyrighted content, and each partner retained distinct rights. At least, that was the law. The capital­intensive nature of creating CDs gave the record companies an even stronger form of protection grounded in technology and economics. This new combination of consumer technologies eroded the technical and economic barriers entirely. Consumers had large collections of digitally encoded music and now had the ability to make cheap, perfect copies. The record companies watched their ability to control the circulation of their IP erode slowly, steadily, and surely.

The music-information business had become a digital music­information business, a full-fledged part of the information sector. Com­panies and executives suddenly faced a problem that had been plaguing software executives at least since a young Bill Gates wrote an open letter from Micro-soft to the hobbyist community: digital products have a life of their own.

In fact, many people think that IP law doesn’t really apply to them unless they plan to turn a profit. Plenty of law-abiding citizens would never develop a “pirate” operation that made cheap copies of their CD collections and sold them on the street. Many of them would even avoid buying CDs on the streets because they don’t believe in patronizing pirate operations. They wouldn’t think twice, though, about making copies for their friends or their families. Where should they draw the line? Copying a CD for your best friend sounds okay, but what about for everyone in your class? What about for the entire school? Should it depend on the size of the school? While most people might recognize that these are tough questions, they would also answer them by drawing an easy line: If I give it away, it’s fine. If I sell it, it’s a problem. Jessica Litman described this attitude as the way that most people make sense of copy­right law, and she’s probably right.¹³ But she also noted that while this belief may be grounded in common sense and general practice, it’s not grounded in IP law. The copyright owners had spread the tools with which to destroy their own business models, and then expressed outrage when electronics and computer firms developed the technology that eroded their protective technical and economic barriers. Their sole recourse lay in IP law. With technology and economics against them, only the law could help them retain control of music distribution.

With that, perhaps the first true war of the information sector began. On one side, technologists reduced the transaction costs inherent in dis­tributing music. On the other, IP owners retained sole legal rights over music distribution. In the middle sat consumers, eager to avail themselves of the new technologies to enhance their own lives, but perplexed by the legal implications. For its first few years, the war took the form of an occasional skirmish, and few outside the IP community paid much atten­tion. But then the technologists struck a devastating blow by using the Internet to move music files around the world. That discovery removed the final transaction cost from the distribution chain, making music dis­tribution a cost-free transaction. The business model that had defined the music-information business for more than a century crumbled. While the record companies still added value to music by finding new acts and by producing the music, their control over distribution had vanished overnight. The record companies had become true victims of the infor­mation sector.