How music got free

CHAPTER 19

Shortly after his arrest, Her Majesty’s Government announced its intention to prosecute Alan Ellis for conspiracy to defraud. The prosecutors contended that the bank accounts full of cash and the limited-invitation user base were all evidence that Oink was a scheme for Ellis’ personal enrichment. Ellis’ arrest came just two months after Glover’s bust in the parking lot, but there was no link between the two. They were the product of two separate investigations—Operation Fastlink in the U.S. and Operation Ark Royal in the UK.

The charges provoked a backlash. Was Ellis really a fraudster? If so, he was perhaps the most honest fraudster alive. The money laundering charges against his father were the result of investigative confusion, and had quickly been dropped. Ellis’ own paper trail showed that, although it had taken in over £200,000 in donations over three years, Oink had barely broken even, and by the end of its life had been running hosting bills of £6,000 a month. Any excess cash was stored in a “war chest,” where Ellis was budgeting it to purchase even larger dedicated servers. Although the large number of bank accounts looked suspicious, there was no evidence to show that Ellis ever spent any of the money on himself.

He was an amateur in the purest sense. He just really loved music, and technology. The users of his site matched this profile; these were fanboys, not criminals. Within 48 hours of the raid that shut down Oink, two new sites had appeared: Waffles.fm and What.cd, both run by former Oink administrators. The sites were explicitly patterned after Oink, and their Web domains resolved to the Federated States of Micronesia and the Democratic Republic of the Congo, respectively, although of course the sites weren’t actually hosted in these far-flung locations. Further Web traces led to shell corporations in Panama, and who was behind those was anyone’s guess. In the wake of raids on both Oink and the Pirate Bay, anonymity was critical, and the new operators were determined not to repeat Ellis’ mistakes.

Within a few years What.cd’s music archive grew to surpass even Oink’s at its peak. Among the torrents it hosted were more than 45 different versions of Pink Moon, as well as a 15-gigabyte torrent of the 154-hour, 103-CD set of Stephen Fry reading all 4,224 pages of the Harry Potter series in its entirety. Torrent traffic was cresting worldwide, and by some estimates represented as much as one-third of all prime-time Internet traffic. Whatever the Crown’s goals were in prosecuting Ellis, one thing was clear: the prosecution had no deterrent effect. To the contrary, it seemed to act like advertising for torrent technology, as a similar prosecution had for the Pirate Bay.

But for the copyright defenders this was a question of justice. After seizing the server in Holland, investigators had run it through the standard battery of forensic analysis techniques. This had led to the outing of a large number of Oink uploaders, with a particular focus on those who had managed to source prerelease material. The Crown presented this as a triumph, and the tabloids, taking officials at their word, incorrectly began to refer to Oink as “the leading source of prerelease music in the world.” (Meanwhile, the real leading source of prerelease music in the world was sitting at home in North Carolina, awaiting arraignment. His investigation still ongoing, Vu hadn’t alerted the reporters to the bust, and the only media attention Glover ever got was a single mention at the bottom of an overlooked FBI press release.)

In a handful of scattered interviews with the press before the trial, Ellis maintained his innocence. He continued to insist that running a torrent tracker did not break the law, as Oink had only provided links to pirated material and did not actually host the music itself. Even his own barrister, Alex Stein, a specialist in intellectual property cases, disagreed with this legal interpretation, and would have advised his client to plead guilty to a charge of copyright infringement. But Ellis was never charged with that crime. Instead, the prosecutors had seized upon the bank accounts as evidence that Oink was a racketeering operation, a crime that carried a prison sentence of up to ten years. Here Stein prepared a robust defense.

The proceedings opened on January 5, 2010. Making the case for Her Majesty’s Government was prosecutor Peter Makepeace, a blustery model of bewigged British pomposity whose primary legal tactic was to haul Ellis into the witness box and repeatedly call him a liar. Even as he did so, though, he betrayed his own limited understanding of the facts of the case, and at times seemed almost proud of his cluelessness. While discussing the material hosted on the site, he referred multiple times to “a band called 50 Cents,” and, after being informed that the site had migrated to Linux, he engaged in the following exchange:

Makepeace: Whereabouts were they based?

Ellis: I think they were in Canada. I don’t know where.

Makepeace: A place called Linux?

Ellis: I don’t know.

After ten days of this, the trial concluded. Stein, giving his closing argument, noticed the jury nodding their heads in agreement and felt confident about his client’s chances. Makepeace, giving his closing argument, said that “Oink was like the robot in Terminator 2.” His theatrics were ineffective—the Crown’s portrayal of Oink as an unstoppable cyborg run by a pathological liar determined to rip off the honest members of 50 Cents from its headquarters in the town of Linux, Canada, did not mesh very well with the existing facts. When the jury retired on January 15, 2010, it took them less than two hours to reach the “not guilty” verdict.

Standing outside the courtroom in victory, Stein advised his client that, in his professional legal opinion, Ellis was a very lucky young man. Ellis agreed with this assessment. Stein told Ellis that he now had two choices: he could go outside to meet with the waiting scrum of journalists from the British tabloid press and attempt to explain to those assembled dignitaries why he had done what he did. Or he could leave through the back entrance, duck the press entirely, and make a graceful exit from public life. Ellis chose the latter. He returned to Middlesbrough by bus, and set about deleting all traces of his identity from the Internet.

The founders of the Pirate Bay were not so lucky. Their aggressive courting of controversy made them less sympathetic figures, and the Swedish prosecutors had done their homework. In November 2010 three of the site’s founders were given prison sentences ranging from four to ten months. Svartholm Warg, the author of the love letter to DreamWorks, fled to Cambodia in an attempt to avoid extradition. (He later served a two-year sentence.) But despite the jailing and exile of its original leadership, the site thrived, and would remain the leading piracy portal on the Web for years to come.

This resiliency was no accident. The torrenters organized themselves into complex groups with well-defined hierarchies. They hid their identities behind pseudonyms and facilitated the distribution of online contraband. They understood that what they were doing was illegal, and did it anyway, with no obvious benefits to themselves. To law enforcement that made them criminals, but to a growing number of people they were starting to look like political dissidents.

In early 2006 a new political party had formed in Sweden: the Pirate Party. Not aligned along the traditional left–right axis, its platform called for a rollback of copyright laws and total amnesty for Internet file-sharers. The Pirates had seen how, when it came to the Internet, the concept of scarcity didn’t exist, and a university student like Ellis could create the world’s greatest music archive from his bedroom. The only recourse for copyright holders, therefore, was to re-create those conditions of scarcity by artificially limiting the supply. And, as Alan Greenspan had observed so many years earlier, such conditions could be secured only by pressure from the state.

This troubled the Pirates, who could see the lengths that governments and corporations would go, in concert, to survive in the digital world. The Pirates pointed to the judgments against Jammie Thomas and the raids on the Pirate Bay. They pointed to the RIAA lawsuits, and how for a time the music industry had been granted de facto subpoena power by the courts. They pointed to invasive corporate tracking software, to clandestine government mass-surveillance programs, to growing restrictions from data providers over the kind of traffic permitted over their pipes. They pointed to how the rights-holders wanted—actually needed—to turn the Internet into a police state.

In campaign literature, the Pirates made their point in stark terms: “It is impossible to enforce the ban against non-commercial file sharing without infringing on fundamental human rights.” People—especially younger people—listened. In early 2009, Sweden held its elections for the European Parliament, and the Swedish Pirate Party garnered over 200,000 votes, enough for a 7 percent share. For the next five years, two Pirates would take seats at the table of the European Union.

Of course, the EU parliament had 751 seats, so the amount of power they actually held was microscopic. Nevertheless, it represented the first serious challenge to the theoretical and moral bases of intellectual property law in centuries. Lobbying from media industries had pushed commercial copyright statutes from their original 14-year terms to protections that could last for hundreds of years. This had diminished the public domain and left the majority of cultural products in the hands of just a few multinational corporations. The two Pirate parliamentarians, lonely though they were, sought to reverse this, pushing to reduce the length of copyright to just five years and to eliminate all patents on software and biotechnology. The idea was that these changes would lead to a thriving public domain, universally accessible in the Internet era.

It wasn’t as crazy as it sounded. The trade in pirated mp3s had undeniably spurred innovation in the mobile device market, and the development of the smartphone could be traced directly back to Napster. The Pirates believed this episode was broadly applicable, and that the artificial conditions of scarcity imposed by the state were hampering innovation across a number of fields. They had noticed something else too, something even more radical: that the difficulties music executives like Doug Morris had experienced deploying capital over the past decade were shared in an increasing number of industries. In a world of digital abundance, it was getting harder to earn a profit.

This point was later made succinctly by Izabella Kaminska, a blogger for the Financial Times, who translated the Pirates’ arguments into macroeconomic terms. Discussing the inability of the world’s central bankers to engineer growth, Kaminska outlined the precise factors that had led Morris to slash his own operating budgets by more than 50 percent:

Negative rates are a function of global abundance (brought on by technological advances), and a trend that cannot be stopped even by the strongest central bank . . . For rates to stay positive we have to hoard almost everything in the world from the people that need it, if it is to have value. The artificial scarcity tactics that have been used through the ages to achieve this are getting harder to execute because of technological liberation—which is enabling the emergence of collaborative economy which bypasses rates of return.

Perhaps another world was possible. But organizing it proved difficult, and only in one other country besides Sweden did the Pirate Party gain a foothold: Germany. There, it registered 30,000 members in the course of a couple of years, polling in the high single digits, winning representation in several state-level elections in 2011, and threatening to put members in the Bundestag.

From his landed peerage at Fraunhofer, Karlheinz Brandenburg watched the rise of the German Pirate Party with disapproval. So, too, did Bernhard Grill. Though separated, the two engineers still thought along similar lines, and they both believed that the Pirate Party’s platform was economic cyanide. The Pirates’ ideas, if adopted, would radically reconfigure existing relationships of investment and profit. In this hypothetical world, companies like Microsoft and Adobe would see their revenues cut in half. Companies like Universal and Warner Music Group would go bankrupt almost immediately. Musicians, writers, and creative professionals of all kinds would be forced out of the marketplace and into relationships of patronage. And the next generation of inventors would probably become consultants.

Brandenburg and Grill were in some ways the fathers of the Pirate Party. Their decision to release the mp3 encoder for free on the Web had catalyzed a golden age of copyright infringement that had decimated the music industry even as it made them wealthy. But that decision had also catalyzed a political movement that now threatened their own livelihoods. No software revenues meant no mp3 licensing income. No mp3 licensing income meant the German state would be out hundreds of millions, and Brandenburg’s white-on-white Ilmenau campus would still be a cow pasture.

Both Brandenburg and Grill knew that, without the incentives of software patent revenue on the horizon, they never would have spent the better part of a decade conducting those listening tests. Brandenburg would likely have stayed in academia and sought a professorship. Grill might still be playing the trumpet. Listening to “Tom’s Diner” 2,000 times in a row was work, and the mp3 team would not have done that work without the incentive of future payoff. And that was their ultimate rebuke to the Pirates: without patent protection on software, the mp3 would never have existed.