Free How Music Got Free by Stephen Witt Page A

of playing back an mp3 without stalling. Plus, the new generation of hard drives was enormous: with storage capacity of nearly a gigabyte, they could store almost 200 songs. The biggest limitation was still the encoding process. Due to MPEG’s forced inclusion of the cumbersome MUSICAM filter bank, even a top-of-the-line Pentium processor would take about six hours to rip an album from a compact disc.
    No one at Fraunhofer quite knew what to do with L3Enc. It was a miraculous piece of software, the culmination of a decade of research, capable of taking12 compact discs and shrinking them to the size of one, unencumbered by any digital rights management. On the other hand, the speed limitations of encoding made it cumbersome. After some internal discussion, Brandenburg made an executive decision: to promote the mp3 standard, Fraunhofer would simply give L3Enc away. Thousands of floppy disks were made, and these weredistributed at trade shows through late 1994 and early 1995. Brandenburg encouraged his team members to distribute the disks to friends, family, colleagues, and even competitors.
    Meanwhile, Popp continued to make scattered sales of the encoding racks, mostly to curious academics and broadcasting professionals. But the door was open to anyone who called, and that summer they met with another struggling entrepreneur, a former fiber-optic cable technician turned music impresario named Ricky Adar. Like Seitzer, Adar had hit on the idea for a “digital jukebox.”
    Adar believed that in a few years you’d be able to download music directly over the Internet and dispense with the compact disc entirely. The hitch was that audio files were large, and would have to be compressed considerably for the approach to scale. Fraunhofer, of course, had spent years working on exactly this problem. Even so, when Adar arrived at their offices, he wasn’t hoping for much. Given his past experience with audio compression, he expected the mp3 to be a tinny and unusable bust.
    Instead, it reproduced CD music with near perfect fidelity at one-twelfth the size. Adar was astonished. The mp3 seemed a marvel beyond technical comprehension. An entire album at only 40 megabytes! Forget planning for the future—you could implement the digital jukebox right now!
    “Do you realize what you’ve done?” Adar asked Brandenburg after their first meeting. “You’ve killed the music industry!”
    Brandenburg didn’t think so. He thought the mp3 was a natural fit for the music business. It was just a question of getting them to understand their economic incentives. Adar, however, knew better. His digital jukebox idea was struggling, mostly because he couldn’t get the licenses. The music industry feared that Adar’s digital jukebox would cannibalize physical music sales, and he’d spent the last two years being told no. He explained to Brandenburg the mindset of the record companies: the splendid profit margins of the compact disc, the covetous attitude toward intellectual property, theindifference—indeed willful ignorance—toward both the Internet generally and the future of recording technology specifically. Adar had spent a lot of time trying to get these guys to sign on to his digital jukebox scheme. He’d gotten nowhere. The music industry wasn’t interested in streaming. It was married to the compact disc, in sickness and in health.
    The Fraunhofer team already had some notion of the industry’s resistance to change. In October 1994, shortly after being re-assigned to sales, Popp had finagled a meeting with Bertelsmann Music Group, one of the Big Six music labels. It was the first time that Fraunhofer had approached the recording industry directly. Popp made his pitch, and the BMG executives listened. Then they smiled and nodded politely, and reminded him to return his visitor credentials to building security on the way out.
    Popp was in some ways a natural choice to manage sales. Of the Fraunhofer team he was certainly the best