In 1999, the recorded music business was swimming, drowning in cash. CDs had been on an upward trajectory for greater than 15 years, reaching gross sales of two.4 billion globally and one billion models within the U.S. alone in 2000.
Despite the huge scale of the CD business and vegetation working flat out around the globe, the promised decline in costs by no means got here. In truth, the business was caught in a price-fixing scheme that inflated the price of CDs between 1995 and 2000 with a advertising plan known as “minimum advertised pricing.” It’s estimated clients have been overcharged US$500 million and as much as US$5 per album. (The case was settled with a wonderful and a promise to present US$75 million to public and non-profit teams.)
At the identical time, labels moved to get rid of the extra inexpensive CD single. “Want just that one song? Too bad! Buy the whole album for 20 bucks!” And given the perceived rise in one-hit wonders by the tip of the ’90s, music followers have been in a surly temper.
The dam started to burst on June 1, 1999, when v1.0 of Napster was launched into the wild. Within 18 months, the service had greater than 80 million customers sharing MP3s they didn’t pay for. Other unlawful file-sharing packages popped up. Audio-Galaxy, Kazaa, BearShare, Grokster and dozens extra. Other music followers turned to legal-but-often-used-illegally software program like BitTorrent and uTorrent, packages that powered networks like The Pirate Bay.
As the ’00s continued, CD gross sales have been in freefall, costing the business and artists untold billions. People have been laid off and artists have been dropped from rosters. Unable to get a deal with on new digital realities, the business was in full panic mode. The solely actual device it had at its disposal was submitting lawsuits, with the Recording Industry Association of America (RIAA) main the way in which.
The RIAA had been profitable in shutting down Napster. The group got here after the nation arduous, forcing it to stop operations in 2001. By June 2002, Napster had filed for chapter. The Grokster and Morpheus case lasted 4 years earlier than the U.S. Supreme Court dominated that file-sharing providers might be held answerable for copyright infringement. A swimsuit towards BearShare was settled out of courtroom for US$30 million in 2006. Kazaa was additionally achieved by 2006, settling for US$100 million.
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But this was small change in contrast with what the RIAA demanded from LimeWire.
A free model of this system was launched by Mark Gorton in 2000, adopted later by a professional model that value US$35 a 12 months. It was so in style that by 2007, it was estimated to be put in on one-third of all private computer systems on the planet, regardless of some variations being very buggy and opening anybody’s pc to malware and theft of non-music paperwork.
Gorton and LimeWire started to get nervous about their enterprise and authorized prospects after Grokster’s loss in courtroom, however determined to push forward. And sure, the legal professionals quickly got here after LimeWire. The losses in courtroom started to pile up; essentially the most important was a lawsuit filed by Arista Records in May 2010.
A decide within the Southern District of New York dominated that LimeWire and Gorton have been on the hook for copyright infringement, unfair competitors and inducing different folks/firms to commit copyright infringement. This dragged on for months till Oct. 26, 2010, when LimeWire was ordered to disable all options that allowed folks to illegally share music. Gorton and LimeWire have been defiant, saying they might proceed working however cease distributing the offending software program.
That, nonetheless, wasn’t adequate for the RIAA. In early 2011, it adopted up on the October ruling by claiming statutory damages. Judge Kimbra Wood, who was accountable for the case, wrote this in a 14-page ruling: “Plaintiffs are suggesting an award that is more money than the entire music recording industry has made since Edison’s invention of the phonograph in 1877…. If Plaintiffs were able to pursue a statutory damage theory based on the number of direct infringers per work, Defendants’ damages could reach into the trillions.”
She was appropriate. The RIAA needed Gorton and LimeWire to pay a mere US$72 trillion. To put that into perspective, that was greater than 3 times the GDP of the whole planet on the time and the mixed financial output of all seven billion folks. The complete wealth of Earth was in all probability not more than US$60 trillion on the time.
How did anybody give you that determine? Someone made a back-of-the-envelope calculation that checked out 11,000 songs, estimating the variety of instances every considered one of them had been downloaded illegally after which equating every obtain with the lack of a full-priced sale. Given that American regulation allowed for US$150,000 per infringement, the numbers acquired large very, in a short time.
The RIAA says it by no means particularly requested for US$72 trillion, however the determine did come up as a part of the case.
Expecting LimeWire to pay that quantity was insane, in fact, so Wood gave the RIAA a means ahead. She dominated that the RIAA was entitled to a “single statutory damage award from Defendants per work infringed.” If we think about the unique 11,000 songs at US$150,000 every, that added as much as US$1.65 billion. That was later amended to five,000 songs and infringement damages of US$750 million. In the tip, LimeWire was capable of cut back the penalty to a mere US$105 million.
So what of LimeWire right this moment? The firm is gone, however its software program lives on. Version 5.5.10 and all earlier variations nonetheless work and might’t be disabled in any means until the person makes an attempt an improve. Meanwhile, the LimeWire identify lives as a platform for folks into non-fungible tokens (NFTs). It’s additionally within the artificial intelligence area and can be utilized to share AI-generated photographs and movies. It’s out of music completely.
If you’re having a nasty day, simply keep in mind that in 2011, a software program programmer was informed he was on the hook for US$72,000,000,000,000. That would solid a pall over your morning, wouldn’t it?
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