Republish: Strained Evolution: How Big Media Is Struggling to Adapt

*Since UCI blogs expired my post that I wrote for my journalism class, I decided to republish it here. *

Original Publish Date: 10 December 2009

It was a cold October morning when my alarm went off.  I instinctively pressed the button to silence the racket.  The clock read 7:00am.  Going through my normal routine, I began checking my email on my iPod Touch that I kept under the pillow (I listen to podcasts to lull me to sleep).  I saw several emails in my inbox.  There were some ads from Amazon and Newegg but one subject line immediately jumped out at me.  It read: “HBO Copyright Infringement Claims.” It had come from The Office of the Dean of Students at UC Irvine.

“Oh no…how did they catch me?” I asked myself.  “How did they track my laptop from home….?  Unless…”

My eyes widened as I realized how HBO had tracked me.  I had absentmindedly left my torrent client, a type of peer-to-peer software, running on campus.  I had forgotten to turn it off when waking my MacBook from sleep.  My mind wandered with various possibilities of retribution from HBO.

“I can barely afford to pay for tuition.  How am I going to pay for this fine?  What if they take me to court?  How am I going to tell Mom?”

I had a Spanish quiz that day but could only think of the email from HBO.  I hastily finished my quiz and prepared myself to meet with the Dean of Students, Edgar Dormitorio.  The receptionist behind the desk told me to have a seat in the waiting room.  The walls were white and bare with nothing to distract me from my nervousness.  Dormitorio, a heavy-set man with a baldhead but a kind smile, greeted me with a handshake in the waiting room.  He led me to his office where he offered me a seat and pulled out a small manila colored file.  In it contained a letter from HBO to UC Irvine.  It listed the exact file names that I was sharing, including my IP and MAC addresses, which are a sequence of numbers that help indentify an individual’s computer.

There was no way out.  I had to tell the truth and so I did.

Dormitorio, unfazed and seemingly oblivious about my nervousness said, “Since it’s your first offense, I’m going to let you off with a warning.  Don’t let me catch you downloading anything illegal again.”

I had dodged the bullet. Some are not so lucky.  Students caught torrenting (an Internet protocol and allows users to upload and download parts of a file simultaneously) on college networks are usually caught by one of the big media companies such as the Recording Industry Association of America (RIAA) or the Motion Picture Association of America.  Many students are forced to settle for a minimum of $3,000 with the RIAA for copyright infringement.  Almost all students settle out of court to avoid an even harsher punishment.  Some lawsuits have reached over a million dollars.  These lawsuits are justified by the RIAA who claims, “Music piracy causes $12.5 billion of economic losses every year, 71,060 U.S. jobs lost, a loss of $2.7 billion in workers’ earnings, and a loss of $422 million in tax revenues, $291 million in personal income tax and $131 million in lost corporate income and production taxes.”

But why is illegal downloading so prevalent on college campuses?  How and why do people decide that they are going to steal digital media?  And most importantly, do the punishments forged by the big media companies fit the crimes?

II

Faber Lee has a bad habit of cooking too much food.  Tonight was no different.  He made a whole casserole dish of baked macaroni covered with cheese and hot link sausages.  He calls his roommates over, all seven of them, to help him eat.  They all sit down around the TV to watch YouTube videos playing from one of his roommates’ computer.  His roommate’s dog, a half boxer half pit bull, sits on his feet, begging for a belly rub.  Faber happily obliges. By the end of the night the casserole dish was still half full.

Faber, a twenty-year-old UC Irvine student studying psychology is the target demographic that the RIAA believes pirate music in which they claim causes “$12.5 billion of economic losses every year.”  Though this figure seems to exaggerate the gravity of the impact of illegal downloading, it is true that Faber and all seven of his roommates all download illegally copied music, movies, and games.  They are all well versed with their computers and rely on them everyday for work and entertainment.  There are more computers than there are people in Faber’s house.

Most of Faber’s music library is filled with stolen music that he has acquired since he first started downloading music in the seventh grade.  His music library contains 2,432 songs.

“I can fit every CD I actually own in one hand,” he says as he lifts up a diminutive stack of CDs.

Though he pirates music he makes sure to support the bands that really matter to him.  His favorite artist is Plushgun, an indie rock/new wave/synth-pop band from Brooklyn, New York.  He owns every one of their CDs and even in multiple formats including vinyl.  Faber doesn’t own a record player.

Faber he genuinely loves music.  He owns a pair of $500 Grado RS-2i headphones and a miniature amplifier to make his music sound minutely better.

“Plushgun was the first band that I discovered by myself,” he says.  “I first heard them in this web series I liked.  Discovering a band you like by yourself is a very personal connection.  Faber also likes the fact that Plushgun is what he describes as, “pro fan.”

“They gave away their music for free.  They generate most of their revenue from concerts and merchandise.  Now they’re touring the country.”

Though the Internet has given consumers a more convenient way to consume media, it has done it to the chagrin the RIAA. Today the RIAA faces such bad press that it has become part of youth culture to snub them.  Even mentioning the RIAA on a forum will elicit a flamewar.  The lawsuits and the culture of fear that the RIAA has created for illegally downloading music and has made it “hip” to hate big media companies.  Though Faber steals a majority of his music, he pays for music and movies from time to time using Apple’s iTunes Store because it is even more convenient than searching the Internet for a specific album.

“I pirate stuff from bands with big labels so I feel less bad about it.  It’s the small bands that need my support.  It also depends on my mood if I want to pay for something or not.”

It seems then that pirating is not only an issue of price for Faber but also for its convenience and because it is socially acceptable and “cool” to steal music.

To steal music, Faber looks no further than his favorite torrent tracker, Demonoid.  A torrent tracker is a site that aggregates files that link torrent clients to information about how to find other people who are sharing the same files.  Demonoid is an invite only exclusive torrent tracker that houses many of the most popular torrents on the Internet.  If someone torrents music, they will most likely find a small 1KB .txt file that reads, “Torrent downloaded from http://demonoid.com.” Bittorrent has become the most popular method of sharing large amount of files over the Internet because it allows users to download from multiple sources instead of one centralized server.

“Bittorent has changed the way I download music. Instead of downloading singles like in the old days of KaZaa and WinMX, I have to download the whole album now.  I have to commit to pirating something now.”

Another reason Faber steals music, he says, is because of his dissatisfaction with how digital music is distributed.

“Tiered pricing is bullshit.  They say that some songs will be $0.69 and the more popular songs will go up to $1.29 but when have you ever seen a song for $0.69?  It’s bullshit.”

Apple introduced tiered pricing with iTunes when the music studios finally gave up on Digital Rights Management (DRM), a technology that forces users to connect to the Internet to verify that they have the rights to that song before the song actually plays.  Apple compromised with the music studios and introduced tiered pricing.  The iTunes storefront is now over populated with songs costing $1.29.

Faber is on his black MacBook, looking up different sites to see if he can find music for $0.69.  His left leg shakes impatiently as he is waiting for pages to load on different websites.  He is unable to find music for $0.69, fueling his dissatisfaction with the pricing of music.

“It’s like paying lip service to consumers.  It really pisses me off.”

One of Faber’s roommates shouts from the other room.

“I’ll stop downloading music when it’s not so damn expensive!”

The living room fills with laughter and agreement from the rest of his roommates.  Faber laughs in agreement.  To justify his argument, Faber muses of a time when big companies did not control the distribution of music.

“Think about back then.  Back in Medieval times and wandering minstrels.  They performed their music because they enjoyed it.  Back then there was a great connection between the artist and the audience.  It was more private and personal.  Now artists and their audience are blocked by the labels that want to control everything.”

Some music artist have begun to believe the same argument that Faber believes, which is that labels control too much of the music instead of putting the power into the artist’s hands.  Some artists such as Radiohead, Nine Inch Nails, and Family of the Year have gone so far as to ditch signing with labels altogether and instead distribute their music on their own terms.  For example, Radiohead released their Grammy winning album, In Rainbows, on their website and giving their fans a choice of how much they want to pay.  Selecting $0 would still allow someone to download the album.  Radiohead then released special vinyl and CD versions of the album for sale at retail stores, giving their fans multiple opportunities to purchase their album.  Family of the Year, an indie-rock band is mimicking Radiohead’s business model by giving their fans a choice of how much to pay but with tiers, which gain them special items from the band.  Paying $15 gives you a digital download in MP3 or high quality, lossless (uncompressed) formats along with a physical CD sent to your house.  $30 or more will get you a t-shirt or a tote bag along with a copy of the physical CD and access to the digital download.

This pay-what-you-like business model seems idyllic and it is.  Trent Reznor of Nine Inch Nails implemented the same model with his band’s music and found out that only about 18% of people would pay for their album if they were given the option to pay what they wanted.  Reznor ditched this model and instead put his albums up on the band’s website and even on The Pirate Bay for people to download for free.  On his website, the only requirement to download the album is to provide a valid email address so that the band may send out marketing material.  Reznor has stated that his band makes enough money from live concerts and selling band merchandise that he does not feel the need to charge for his band’s albums any more.  As Reznor and Nine Inch Nails continue to experiment with their business model in the evolving digital age, he still has a pessimistic view about major record labels.

“All the labels want to do is make money off of you.  It’s common sense,” says Reznor.

Though Faber doesn’t agree with the actions of the big media industries, he also doesn’t blame them.

“I think they’re just doing what big companies do.  Well I kinda blame them but I understand why they’re doing what they’re doing.  What they were doing with the lawsuits was that they were slowing down the change so they had time to catch up.”

He also doesn’t blame UC Irvine for blocking illegal file sharing on the school’s network.

“I can’t really blame the university for it.  The university is a research institution.  The purpose of the network is to share information and data.  I can’t fault them for taking down a server that’s sucking up all the bandwidth of a housing area.  That’s fully understandable.”

Faber will give friends music when asked but never thinks about selling it for profit.  Though Faber downloads illegally copied media, he does it out of convenience and price.  A higher quality album can be stolen which is more convenient than going to the store, buying the CD and ripping it to a computer.  As of now, no online music retailers, including iTunes and Amazon, offer CD quality music.

Though Faber steals digital media for his personal enjoyment, there are others that illegally download to make a sizable profit.

III

In a quiet cul-de-sac in suburban Downey a small, one car garage, houses not a car but a table and a desk.  A six-year-old computer idles silently on the desk.  It is connected to a bulbous, yellowing Cathode Ray Tube (CRT) monitor.  On the CRT’s screen is a command prompt with a blinking underscore, waiting for an input.  This garage, with its single computer, is what Sadiq Singh, known as “Stabby” by his friends online, uses to run the business that makes him $5,000 a month.  He modifies peoples Xbox 360s for $40 each and sells illegally copied games for $10 a pop.  Stabby is twenty-five years old and lives with his parents.  They think his business is legal.

Stabby, who is lightening quick on the keyboard, has been modifying gaming consoles since the age of thirteen.  He walks over to the computer to show me how he hacks Xboxes.  The modification process is fairly quick.  It only takes a minute or two replace the stock software on the Xbox DVD drive with a custom one designed to play unauthorized copies of games.

“I’ve been modding consoles since I was thirteen and started copying games and modding every video game system after that.  My friends knew this so when my friend got an Xbox 360, he asked me if I could mod it for him.  I spent a couple of days reading up about it [on the Internet] and I told him, ‘I’ll do it.’”

Stabby has had no formal training in computer programming and is self-taught by reading online forums and tutorials.  Conveniently, most of the work is already done for him.

“All the firmware (another word for software) for all the Xboxes is written by some guy in Belgium and he does all the work, figures it out and everyone uses it to mod consoles.  There are other people who write the tools to flash (replacing the old software with the new one) the firmware but he’s the only one who wrote the software.”

Stabby is not the only one who has turned modifying Xboxes into a profitable business.  He faces cutthroat competition from other “modders” in the area, all vying for each other’s customers.

“I have an ad up on Craigslist and customers tell their friends by word of mouth. There are 4 or 5 other guys in the LA area that do it.  I’ve never met them but I’ve seen their ads and stuff.  There’s a guy in Long Beach, a guy in Compton, another guy in Downey, and one in Palmdale and Lancaster.”

Competition has become so fierce that many of Stabby’s competitors often flag his ad on Craigslist as spam, causing his listing to be taken down from time to time.  It is an annoyance to Stabby but he has not yet found it detrimental to his profit.

“On average I get about thirty people a week coming to me to hack their console.”

Stabby’s phone is constantly ringing.  Every few minutes he gets a text from another prospective customer.  He picks up the phone and quickly provides hasty tech support for one of his customers.  He doesn’t even know the customer’s name.

Before he got into the business of modifying Xbox consoles, he graduated from UCLA with a bachelors in general psychology.  He attributes his knowledge about psychology to the success of his ad.

“My ad on Craigslist makes me seem like I really know my stuff.  I was really into advertising while studying psychology so I know how to make people think I’m the best around.”

Stabby also used to work tutoring kids but his business modifying Xboxes was so much more profitable and relaxing that he never went back.

On a typical day, Stabby wakes up at 9:30 in the morning and checks on his games that he left copying over night.  Soon, his phone starts ringing with customers that found his ad on Craigslist.

“I’m watching TV and whenever someone’s here, I mod their Xbox, they leave, I give them games.  Just have people coming and going.  If they want this, this and this game, I tell them to stop by tomorrow and I’ll add it to my “to-do” list.  I tell people to stop coming at seven o’clock but they stop coming at eight because people are always late.  I stay up until two in the morning so that I have enough time to make sure I can burn all my games for the next day.  My computer is pretty much burning [games] all the time.”

Stabby does not discriminate when it comes to downloading pirated digital content.  He admits to downloading movies and music too.

“I download movies and music but I don’t sell those.  It’s just for my personal use.  I know the RIAA and the MPAA really go after people and sue them.  I just download because it’s easy access.  I think people pirate because they don’t want to go out and get it, but also because it’s free.”

Stabby’s fear or the RIAA is not unfounded.

“The RIAA charges $150,000 for every song that you share.  It’s a little ridiculous.”

Though most people settle out of court with the RIAA, one unlucky person so far has been charged close to the maximum fine of $150,000.  Jammie Thomas, a mother of four, was sued by the RIAA for sharing twenty-four songs with a popular piece of file peer-to-peer software called KaZaa.  Thomas was originally sent an offer for a settlement with the RIAA back in 2005 but she refused and fought them in court. On October 4, 2007, a jury of Thomas’s peers found her guilty of copyright infringement and sentenced her to pay $9,250 for each song, totaling $222,000.  Thomas applied for a retrial in 2009 on the basis that making the songs available was not equal to infringement of copyright.  Thomas was found guilty yet again by a jury of her peers and the RIAA was awarded a fine of $80,000 per song, totaling a mind-boggling $1.92 million for the 24 songs.

Though the RIAA and the MPAA scares Stabby, he is not deterred from modifying Xboxes.

“Technically it’s not illegal to modify Xboxes.  It’s just a violation of the terms of service for Microsoft’s online service, Xbox Live,” he says.  “Some of my customers have been banned from the service but they knew what they were getting into.”

Stabby has been fortunate enough to have never been caught or sent a cease and desist letter from Microsoft.  His ad does not mention that he sells copied games but his service heavily implies the presence of illegally burned games.  Modifying the software technically is not considered copyright infringement because one could argue that the software allows a user to play games that he or she has “backed up” for personal purposes is fair use.

“I’ve been modding consoles for a while and nothing has happened yet,” says Stabby shrugging his shoulders.  Though Stabby has a stable income from his current business, he realizes that it will not last forever.

“I’m just worried that the next console they have will be un-moddable.  I would like a full time, stable job that won’t get me arrested.  I’ve been trying to get into probation with LA County, working at juvenile hall.  Basically [I want to be] a probation officer for kids.  In the past I’ve done tutoring and stuff and I’ve worked with a lot of kids.”

As the sun sets, there is a calm peace in the cul-de-sac.  Stabby’s day of modifying consoles is coming to an end.  As Stabby is walking out of his garage, an African-American teen approaches Stabby’s half opened front door, eyes darting left and right as if expecting a police sting operation at any moment.  Stabby invites the teen into the garage.

“Alright, man.  Let me see that box,” says Stabby.  Another day, another dollar.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.


Click to listen to a clip from my interview with “Stabby.”

IV

Faber is on his MacBook, searching the Internet for hints about how to join a mysterious private torrent tracker dedicated to sharing high fidelity recordings (he has promised not to disclose the name of the tracker).  This private torrent tracker’s main site contains a cryptic message for the curious:

“You’ve stumbled upon a door where your mind is the key. There are none who will lend you guidance; these trials are yours to conquer alone. Entering here will take more than mere logic and strategy, but the criteria are just as hidden as what they reveal. Find yourself, and you will find the very thing hidden behind this page. Beyond here is something like a utopia…This is a mirage.”

What this mysterious mantra refers to is the fact that you have to interview with the site’s creators before you are invited in.  This is even more exclusive than Demonid.com where a friend can send you an invitation.  Inside the site is a plethora of high quality and rare music recordings.  There are strict rules about what users of the tracker are allowed to share.  Recordings must be of high quality and users must upload a certain amount of data for a certain percentage of what they download.

For Faber, iTunes and other online music retailers do not provide high enough quality recordings.  Most online music stores compress their music to 256 kilobits per second to save space.  An uncompressed song can take ten times as much space as an MP3 downloaded from iTunes.  MP3s compress information from an audio file by getting rid of silence and parts of higher and lower frequencies that is considered “inaudible.”  With high-end audio equipment like Faber’s Grado headphones, the “inaudible” parts of MP3s result in distortion of the music.

It is this dissatisfaction with quality and the outdated business models that leads people like Faber to seek digital media on illegal file sharing sites.  The big media companies are aware of this but are caught in an internal struggle to adopt a contemporary business model.

Michael Fricklas, a lawyer for Viacom, admits that big media has much room to grow.

“Even as part of a big company, and as a consumer, and as a guy who loves technology and loves gadgets and all the interesting things that are happening on the Internet, I kind of agree with [the criticisms].  I actually care a lot about fair use,” says Fricklas.

The RIAA has recently declared that it would “discontinue its broad-based end user litigation program,” meaning that they have stopped taking consumers who steal their music to court.  Instead, they have started to concentrate on shutting down sites that host or link to places where they may find illegally shared digital content.  Sites such as The Pirate Bay and Mininova.org have recently been taken down or threatened into removing all infringing content.

Although Faber understands that big media companies need time to evolve, he is disheartened when he reads stories about “big media” penalizing consumers with punishments that do not fit the crime.

Such is the case with 22-year-old Samantha Tumpach who spent two nights in jail and faces three years in prison for taping three minutes of the film, The Twilight Saga: New Moon, while celebrating her friend’s birthday inside the theater.

While some big media executives believe in stricter regulation of media, others are beginning to embrace a business model for the 21st century.  Electronic Arts CEO, John Riccitiello, is optimistic about adapting a business model around illegally downloaded games by selling downloadable content (DLC).

“”They can steal the disc, but they can’t steal the DLC,” says Riccitiello.

By selling DLC, gamers will be forced to pay for add-ons to their games such as more cars and tracks for racing titles or unlocking certain parts of a game.

It is surprising that even the RIAA does not expect to completely obliterate piracy.

“We’re realistic.  We have lived with street piracy for years.  Similarly, there will always be a degree of piracy on the Internet.  It’s not realistic to wipe it out entirely but instead to bring it to a level of manageable control so a legitimate marketplace can really flourish.”

V

Faber waits impatiently in a private IRC chat room for his chance to interview with the mysterious music torrent tracker.  After two hours, he finally gets his turn.  His interview asks him a series of technical questions about how digital songs are encoded.  Every admin of the music tracker is watching the chat room, ready to accept or dismiss Faber.

Faber mentions that his favorite band is Plushgun.  An admin jumps into the chat, excited that they both share a love for the band.  The mood lightens.

The interview goes on for two hours.  At the end of the interview, Faber impatiently waits for an email of his acceptance.

The next day, Faber opens his email inbox to find a message from the site.

He’s in.

*The names of the characters in the story have been altered to protect their identities.*

2 thoughts on “Republish: Strained Evolution: How Big Media Is Struggling to Adapt”

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