The Big Chill

EZT shuts down, courts lag behind, WMG gets desperate

Users of easytree.org who visited it on April 6 got a nasty surprise: a note saying it had been shut down due to legal threats. EZT, as it was known, was the file-sharing equivalent of Grateful Dead-era tape trees: a clearing-house for "torrents," which allow multiple users to exchange fragments of the same big file with each other until they've all got the whole thing. The site's focus was complete concerts in CD-quality sound by the likes of the Drive-By Truckers, moe., and Miles Davis; its administrators were fastidious about removing listings for anything that had been commercially released, and it didn't host any actual media files itself.

Didn't matter. The word that went around the EZT community was that a European division of Universal Music had complained to Easytree's Internet service provider that the site was hosting an illicit Nirvana video (which it wasn't) and threatened to sue. Whereupon the ISP got cold feet; that's why they call it a chilling effect.

File traders bounced right back. Within days, they'd migrated to the very similar dimeadozen.org, whose anonymous administrator had no comment for the Voice on the resemblance between the two sites, and were happily torrenting last year's kickass Truckers gig from the Netherlands, a Meters interview from NPR, and thousands of other shows.

As usual, the music business's legal threats are eight steps behind technology. The wheels of the law creep slowly enough that Grokster—the file-sharing service about which the Supreme Court recently heard arguments, with a decision expected in June—is now basically irrelevant. And i2hub, the high-speed peer-to-peer application that runs on universities' Internet2 networks, has finally been noticed by the Recording Industry Association of America, which just sued 405 college students who've used it.

The industry's also seemingly poking around Soulseek: Search for not yet released albums, and you'll see dozens of suspicious fake "sources" with user IDs that are biblical names with three digits appended (Jacob837, Elijah098, Luke356, and so on). The kids will probably move past Soulseek soon anyway; these days they're flocking to YouSendIt, which can easily disseminate big files, isn't a peer-to-peer deal, and allows uploaders to remain basically anonymous.

Meanwhile, the RIAA has been massaging its 2004 figures to convince regulatory agencies that they've got a big problem—and potential investors that everything's copacetic. Its March 21 press release leads with word that CD shipments to American retailers rose 5.3 percent last year, the first increase in five years. Citing the number of discs going to stores, not the number being bought from them, is the RIAA's favorite trick. As they don't mention, though, CD sales also rose in 2004, to 666.7 million discs, about 10 million more than 2003. And that's despite the fact that major labels—of which there are now four, one fewer than a year ago—are slashing the number of new albums they're releasing.

The RIAA's press release goes on to natter solemnly about "the ongoing impact of . . . illegal downloading on peer-to-peer networks," but its overall tone is sunny: "[T]he public's enthusiasm for music is stronger than ever," it says, and chairman Mitch Bainwol is quoted as saying that "the legitimate digital business has not even begun to reach its potential."

Why so perky, Mitch? It could be that Warner Music Group, one of those four majors, desperately needs to convince investors that it's got a future. WMG has just announced details of its forthcoming $782 million IPO, which will value the company at $3.43 billion. That's a hefty increase from the $2.6 billion that an equity group led by former Universal Music head Edgar Bronfman Jr. paid last year to buy Time Warner's music division. According to a Financial Times report, its top five executives scored $23.3 million in salary and bonuses last year, or more than triple the $7 million from the IPO proceeds that will actually go to WMG's general operations; Forbes notes that Bronfman and associates are also filling their pockets with a pre-IPO $141.5 million dividend. Not bad for a company that keeps getting subpoenaed by New York attorney general Eliot Spitzer over its promotional practices.

So where's the extra billion bucks in WMG's value coming from? Apparently from "streamlining": getting rid of well over 1,000 employees and dropping just under half of the artists signed to Warner's labels. And maybe from expectations of future alliances: The New York Times suggests that Warner may still want to merge with another major, EMI. All they have to do is convince regulators that kids trading Drive-By Truckers live tapes on the Internet are so dangerous that further consolidation is the music industry's only hope. It worked last time.

 
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