Downloading the Future

The efficacy of mp3 as a promotional "loss leader" seems beyond dispute. But Chuck D has a further agenda. Under the current system, artists generally take home a royalty of just 12 percent of the cash generated by sales of their own CDs, with the other 88 percent going into the coffers of the record label and various middlemen. Online distribution cuts out the middlemen and รข perhaps even the record labels themselves.

In an ideal digital world, artists could pocket all of the money they make from selling their music online. GoodNoise offers a 50-50 split to the artists or labels it distributes on its site — exactly what Chuck D is pressing for.

"I’m fighting for every artist to have 50-50 joint ventures, because the record companies have been getting away with murder for 12 years, since the advent of the CD, when they could manufacture something for 69 cents and sell it for $10.98 wholesale," says Chuck.

"The record companies have gotten away with so much for so long. What we’re looking to do is change the way certain things in the industry are," says Chuck. "What will happen is that the marketplace will be splintered. You’ll have a million artists out there and 500,000 labels in three years. They’ll have to share the marketplace."

But aren’t bands scared that fans will simply steal their music if they don’t buy into the anti-piracy schemes of the Big Five? Not according to GoodNoise marketing vice president Steve Grady. He contends that downloading a song through GoodNoise for 99 cents is simpler than searching the Internet for a pirated version.

"The 99 cents is to some extent a convenience fee," says Grady. "We want to make it easier for the consumer to buy the music than to steal it. If you do that effectively, there’s a great business there."

"For people who make large amounts of money in the music industry, the corporations, mp3 is bad news," adds Valentin, whose Poster Children left Warner-owned Reprise Records to join spinART. "The way the large corporations have controlled the music industry is by controlling distribution and the expensive process of making a record. Now, recording technology has gotten so cheap and of such good quality that people are more and more recording at home, spending very little money on the process. Now that the distribution end will be eliminated by the Web, there’s not much a large corporation can offer a band."

It would be wonderful to report that mp3 was devised by a shaggy-haired hacker locked in his dark basement furiously writing code through the night while downing case after case of Diet Coke and deriving all of his essential nutrition from Hostess Ho-Hos. But there is no Woz-Jobs story here. Actually, mp3 was developed, beginning in 1987, by the multinational German research firm Fraunhofer Gesellschaft. The project was a tiny slice of a massive ongoing effort, known as EUREKA, to bolster the European economy. Fraunhofer participated in EUREKA project EU147, devoted to digital audio broadcasting.

The "mp" in mp3 comes from "MPEG," which in turn is a kind-of-geeky acronym for "Moving Picture Experts Group." But Hollywood types need not apply. MPEG is an international cadre of computer scientists that meets several times per year to codify standards for encoding and compression of digital audio and video signals. Thanks to MPEG, the world is now blessed with DVDs and DirectTV, among other wonders. MPEG creates international standards for turning sounds and pictures into bits and bytes of digital code, which can then show up on your TV or your computer as The Wedding Singer.

Not that any of that matters to the kid who just wants to download the latest Aerosmith single. But from those not-so-humble beginnings came the standard that has turned teenagers like Abe into the bogeymen — or bogeyboys — of the music business.

When you walk into the Venice apartment where Abe has lived by himself since late last year, you see the beach out his window, you see a surfboard leaning against the wall, you see the smiling mugs of Abe’s family and friends gazing down from a bulletin-board collage. What you do not see is a collection of CDs stacked neatly in a melon-tinged IKEA CD tree. You don’t even see CDs piled frat-house-style on the floor. There are no CDs anywhere. Yet music blares out of Abe’s powerful speakers, which are plugged into his computer — with a standard 15-inch computer monitor, and the one chair in the place facing the screen.

"I’ve never spent a dime on commercial CDs," Abe says. Nonetheless, his music collection totals "50 to 100 regular CDs’ worth of pirated mp3s in various digital archives." And he can update his stash with fresh sounds whenever he feels like it.

As Abe clicks his way onto the Internet, he makes it clear that the learning curve involved in becoming a serious mp3 collector is not high.

His first stop is a chat room, where Net junkies type back and forth, gabbing in text-only format about whatever’s on their minds. But chat rooms are, believe it or not, useful for functions more intriguing than freewheeling debates over last night’s X-Files repeat. Chatters can send any kind of computer file from machine to machine through the Internet.