Monday, November 29, 2010

The Men Who Stole the World -TimeFrames - TIME

Wednesday, Nov. 24, 2010

The Men Who Stole the World

By Lev Grossman

A decade ago, four young men changed the way the world works. They did this not with laws or guns or money but with software: they had radical, disruptive ideas, which they turned into code, which they released on the Internet for free. These four men, not one of whom finished college, laid the foundations for much of the digital-media environment we currently inhabit. Then, for all intents and purposes, they vanished.

In 1999 a Northeastern University freshman named Shawn Fanning wrote Napster, thereby pioneering peer-to-peer file sharing and a new paradigm for consuming media without the intermediary of a big studio or retailer. TIME put him on its cover, as did FORTUNE. He was 19 years old. (See the 50 Best Inventions of 2010.)

That same year, a Norwegian teenager named Jon Lech Johansen, working with two other programmers whose identities are still unknown, wrote a program that could decrypt commercial DVDs, and he became internationally infamous as "DVD Jon." He was 15.

In 1997, Justin Frankel, an 18-year-old hacker in Sedona, Ariz., wrote a free MP3 player called WinAmp, which became a fixture on Windows machines and helped mainstream the digital-music revolution. During its first 18 months in release, 15 million people downloaded it. Three years later, Frankel wrote Gnutella, a peer-to-peer file-sharing protocol so decentralized that, unlike Napster, it could not be shut down. Millions of people still use it.

In 2001, Bram Cohen, then 26, wrote a peer-to-peer file-sharing protocol called BitTorrent that featured an elegant new architecture optimized for handling large files. BitTorrent has become the standard for distributing big chunks of data over the Internet.

In the first half of the 2000s, TIME interviewed each of these programmers. At the time, it looked as if they were poised to dismantle the entire media-entertainment complex and bring about a digital apocalypse that would make it impossible to charge money for movies, music or TV ever again. Artists would no longer get paid for their work, and the huge entertainment conglomerates, Time Warner among them, would be bombed flat. The pirates were coming for corporate America.

"After all," we wrote in 2003, "you can't have an information economy in which all information is free." And if the apocalypse was coming, Fanning, Johansen, Frankel and Cohen were the four horsemen.

Apocalypse Not
So that didn't happen. Change has come to the entertainment industry, but it's been a lot more complicated and gradual than we expected. And the story of what did happen, and what the pirate kings have done since then, is highly instructive if you want to understand what's going on in the digital world right now. Fanning, Johansen, Frankel and Cohen are all running small, legal Silicon Valley software firms. They've gotten out of the pirate business — if they were ever really in it at all.

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Fanning, the only one of the four who didn't respond to requests for an interview, quit the media-apocalypse business early. In 2001, Napster shut down under the weight of lawsuits that claimed it was aiding and abetting copyright infringement. And in 2002, Fanning founded a new service, Snocap — his attempt to take file sharing legit. With the cooperation of the record companies, Snocap was going to give consumers the power to compensate the artists whose work they downloaded.

But by then, free file-sharing programs were growing virally, and consumers were high on the rush of swapping music hard drive to hard drive for nothing. They traded more than 3 billion files in August 2001 alone. Attaching dollars to those transactions proved to be impossible. It's hard to compete with free. Fanning had created a monster even he couldn't beat. (See a video about the new music biz.)

So he stopped trying. Fanning's next project was a social network for gamers called Rupture, which he sold to Electronic Arts in 2008 for something on the order of $15 million — his first serious payday. His current start-up, Path, which launched in November, is an iPhone-based photo-sharing service.

And Napster? It still exists. The brand was sold at a bankruptcy auction and then sold again, but it has never been restored to anything approaching relevance. It's currently operated by Best Buy as an also-also-ran competitor to iTunes under the slogan "More than just a music store."

The Pirate Who Wasn't
As the author of Gnutella, Justin Frankel was Fanning's rightful successor. Unlike Fanning, he got his payday early in the game. In 1999, after WinAmp hit it big, AOL bought both it and Frankel's company, Nullsoft, for something in the neighborhood of $100 million. That made Frankel a very rich 20-year-old. It also made him an AOL employee.

It wasn't a great match. With Nullsoft, Frankel's modus operandi had been to write the best software he could, then give it away for nothing. At AOL the business of selling software threatened to overwhelm the software itself. "The products that I worked on, it was very much like, We want to make this money out of this. We're doing this deal with these other companies, and so the product is going to do this as a result," he remembers. "No one cared about how users actually experienced it."

Meanwhile, Frankel was writing Gnutella in his spare time. It was a brilliant hack: unlike Napster, it was genuinely distributed, with no central server and therefore no off button for the lawyers to push. He posted it online in March 2000 with a note: "See? AOL can bring you good things!" But reinventing Napster did not endear Frankel to AOL, a huge Internet company that was trying to merge with a major media company, Time Warner, that was in the middle of suing Napster. He left AOL in 2004.

Then he did something funny: instead of glorying in the success of his creations, he walked away. He doesn't use Gnutella, and he never made a dime off it, even though 10 years later, LimeWire — the most popular Gnutella client — still claims 50 million users. "When I wrote it, it was primarily as a sort of, This is proof of what is possible. Let's not all go profit from it," he says. "So it made sense to not even have anything to do with it. It was more of a concept."

See pictures of the movies' most evil computer villans.

Frankel, who recently moved from San Francisco to New York City, now works full time at his company, Cockos (don't ask), which is focused on an audio-production suite called Reaper. He constantly improves it, and he stays in close touch with his customers, who number in the tens of thousands rather than the millions. "There's no goal of growing a certain amount or having an exit strategy," he says. "It's just about enjoying the process and doing the right thing." He would certainly never describe himself as the world's most dangerous geek, as Rolling Stone did in 2004. "I don't see piracy as really being that dangerous," he says. "Ultimately, people who have business models that depend on strong controls for everything — those are flawed models. And I say that as a software developer, where there's a certain level of piracy." Gnutella is ancient history to him. "Digital piracy: Has it destroyed the music industry? No. Has the music industry had to adapt? Sure, and many would say for the better. You have people focusing more on quality, smaller bands, things like that."

"As far as the big business of hits and pop music, did that suffer?" he continues. He shrugs and laughs. "I hope so." (See the all TIME 100 albums.)

Four-Eyed Monsters
Of the four horsemen, Bram Cohen is the only one who still works on the same project he started 10 years ago. He is the co-founder and chief scientist of BitTorrent, a respectable San Francisco firm that pursues commercial applications for Cohen's stunningly effective content-distribution technology.

It's a curious company: a legitimate business built on a technology that is still used to violate copyright on a grand scale. Even though BitTorrent has an installed base of something like 80 million users, it functions a lot like a start-up. A relatively small slice of what goes on on BitTorrent is legal — one recent study put it at 11%. A relatively small slice of that small slice generates income for BitTorrent. (See the all TIME 100 albums.)

Just as Fanning did with Snocap, Cohen tried to move his creation out of the realm of mass piracy and into the legit world of trading bits for money. In 2007, in what was at the time a shocking development, BitTorrent partnered with 20th Century Fox, Paramount, Warner Bros. and MGM, among others, to form the Torrent Entertainment Network, offering movies, TV shows and video games for purchase and rental.

Like Fanning, Cohen learned that getting out of the piracy business is harder than it looks. "Everything about it was a disaster," he says. The Torrent Entertainment Network shut down at the end of 2008. In retrospect, you can see why it didn't work. BitTorrent isn't user-friendly enough for a mass audience, and on a deeper level it's just too efficient. It moves huge amounts of data quickly and virally. When you want to attach dollars to data, you have to slow the bit stream down, track it and control it using inelegant technologies like digital-rights management (DRM), which restricts what users can do with what they buy.

"I learned a lot of lessons from that failure," Cohen says ruefully. His strategy now is to work with people who want what he has to offer: rapid, viral digital distribution. "Instead of going to major content holders and paying them up front for the privilege of trying to leverage our channel, we're just taking the very large channel we have and going to people who are interested in doing things in a much more open manner."

See pictures of a brief history of the computer.

So far, the interested parties include the makers of an indie film called Four Eyed Monsters and the creators of an independent TV show called Pioneer One, which to date consists of one episode, though there are a couple more on the way. It's frustrating: Cohen is sitting on a fire hose, the kind of runaway technological success story that coders dream of, and the big players don't want to play.

Why does he bother? As a coding legend, Cohen could easily find employment at a big corporation. But that's not his style. "I need a certain amount of freedom," he says. He's now working on something wholly new: a peer-to-peer system designed for streaming real-time data instead of discrete files. It's a project that could have enormous potential as a way to distribute live media, like news or sports, over the Net. He still maintains BitTorrent, but it doesn't take up that much of his time. "I kind of got it right when I first made it," he says. (Watch the TIME 100 Social Media Roundtable.)

The Easy Way Out
So what ever happened to the pirate apocalypse of yesteryear? In the U.S., piracy hasn't turned out to be quite as bad for content producers as everybody thought. A report by the U.S. Government Accountability Office released last April labored mightily to establish a strong link between piracy and lost sales, but the results were inconclusive.

What's striking about the pirate kings is that they've been much less successful in the straight world than they were as pirates. An anarchic worldview coupled with brilliant code doesn't travel as well as you'd think in the bean-counting world of legitimate commerce. Good code empowers users by giving them choices and options, but empowered users aren't necessarily good for business. What you need to hit it really big in legitimate commerce is an authoritarian sensibility that limits users to doing what you want them to.

Which brings us to another important reason the media apocalypse never happened: Steve Jobs. On April 28, 2003, the very day TIME published a grand excursus on the explosive growth of file sharing, Apple unveiled the iTunes Music Store. At the time, it was difficult to see why iTunes would succeed where Snocap, among many others, had failed. Because, again, how do you compete with free?

But iTunes did succeed. Apple's relentless emphasis on simple, attractive user interfaces, backed by Jobs' steely negotiating power in dealing with music studios, produced a streamlined, curated service with which you could download and transfer music with a minimum of fuss. And we did — even though it cost us money and our purchases were bogged down with DRM that constrained what we could do with them.

It turns out that there is something that can compete with free: easy. Napster, Gnutella and BitTorrent never attained the user-friendliness that Apple products have, and nobody vets the content on file-sharing networks, so while the number of files on offer is enormous, the files are rotten with ads, porn, spyware and other garbage. When Jobs offered us the easy way out, we took it. Freedom is overrated, apparently — at least where digital media are concerned. (See the top 10 Apple moments.)

It's a lesson that the youngest of the pirate kings has studied very carefully. Like Fanning, Frankel and Cohen, Jon Lech Johansen was never really a pirate at all. He didn't help crack the encryption on DVDs because he wanted to crush Hollywood. He did it because he wanted to watch movies on his computer. His computer ran the Linux operating system, and in 1999 there was no DVD-playing program for Linux. So he and his partners decided to make one, and to do that, they had to figure out how to decrypt DVDs.

When the Motion Picture Association of America found out, it complained about Johansen to the Norwegian government, which duly arrested him. He stood trial in Oslo not once but twice on hacking charges. He was acquitted both times. It turns out it's not against the law to decrypt a DVD that you bought and paid for.

But Johansen was genuinely interested in preserving what he sees as the right of consumers to do whatever they want with the digital media they buy, the same way we do with, for example, a physical book — use it repeatedly or lend it out as we choose. In 2005, Johansen moved to California, where he reverse engineered FairPlay, the DRM software Apple was using to protect its media files. By then he'd noticed how attractive the Apple user experience was, and he thought it should be possible to bring that to the wider, more chaotic world of non-Apple products. "We saw there were a lot of devices out there, and none of them worked as well as they should," says Johansen, who at the ripe age of 26 is as good a pitchman as he is a coder. "So we set out to build a system that will allow these devices to interoperate and provide consumers with a great media experience."

By "we," Johansen means his company, doubleTwist, which he co-founded in 2007. The doubleTwist software, which is free, is a kind of Rosetta stone for digital-media files: it can translate, reconcile and organize files from about 500 different devices and bring them together into one elegant interface. In June, doubleTwist introduced an Android app, and some 500,000 people have since downloaded it. Last year, doubleTwist scored a piratical coup by taking out an ad that read: "The Cure for iPhone Envy. Your iTunes library on any device. In seconds." It ran on the side of the building that houses San Francisco's flagship Apple store.

Johansen rejects any attempt to associate him with piracy. "As far as I'm concerned, it has nothing to do with me," he says. "I support fair use, which means that when you actually legally acquire content, you should have the right to use that content on any of your devices, using any application." For Johansen as for all of the pirate kings, it was always about writing good code, and what good code does is give power to the people who use it. That's the real reason the pirate apocalypse never happened. The pirates never wanted music and movies and all the rest of it to be free — at least, not in the financial sense. They wanted it to be free as in freedom.

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