The Music Wars from 30,000 feet: Meet Chris Castle
'Don't expect another Bob Dylan'
Interview Ebullient lawyer Chris Castle has a unique perspective on the Music Wars. A former Sony and A&M executive who "switched sides" to Silicon Valley, then found himself defending the original Napster, which he called one of the greatest inventions of the 20th Century. His clients range from technology companies to major recording artists.
So to introduce the first of some regular specials from Chris, here are his views on the music business' biggest errors - and whether there's any cause for optimism. He's never dull, it's mostly Chris in his own words...
"Last to Market"
I'll tell you why I moved to Silicon Valley: In 1997 I was in private practice in LA and a guy came into my office one day, he lived in Silicon Valley and he wanted to create a hosted retail store that was essentially like iTunes. And so he wanted download licenses from the major labels.
I gave it a shot at the major labels - and one of the guys I called said to me: "You know what? We're going to take our time getting into this space. We've decided we're going to be last to market."
I said: "Did you really say that? I've never heard anyone say they want to be last to market before." He replied: "Yeah, we'll see what everyone else does. We don't think it's much of a business." And at that moment I put down the phone and an hour later Hank Barry called me and asked me if I wanted to come to Wilson Sonsini. I thought: I can't take this any more! I went to Wilson.
While I was at A&M in the early 90s, I pointed out to a guy at the RIAA that there was this thing called "newsgroups", and they were posting files. I said to him that there's a very short step between that and something we don't like. I was told: "Oh no, we've got the net covered! Don't worry about it: those pirates selling CDs online - we've got them cold!"
I said that was going to pale into insignificance beside what was coming next.
Tell me about trying to take Napster legal, back in 2000 and 2001...
Bertelsmann invested in Napster because they thought it would eventually result in a paying service, which was the intention. There was a version of Napster that I worked on that was a subscription service that never launched. It wasn't that different to what you'd see now - it was something like what you'd call now a walled-garden P2P. It had file identification, a registry of sorts where the system could look up what was licensed. It would have opportunities for copyright owners to claim versions and tracks that were out there they'd forgotten about or didn’t know about - like live recordings - and get paid for them. There were a lot of features that were appealing.
Napster had deals with the Harry Fox Agency, AIM and some other indie labels: there were early believers. Frankly, Napster got pretty close but couldn't quite get close enough to sign deals with the majors.
Was it major label pressure that killed it?
That was certainly one significant factor. Eventually even cats run out of lives. For whatever reason, I really don't think the decision makers on the label side understood just how pervasive [file sharing] really was. Label people would say at that time that "we're losing a generation of consumers". I'd say: "I wouldn't worry about that - that's already happened."
Then P2P went decentralized and really took off. You represent artists but you're not a fan of the RIAA's litigation policy.
I like to say that the day they invented fire, the first arsonist was born. But that wasn't a reason not to use fire.
“Control of content in a strategic way was how the music business worked. That's gone now.”
The record industry has always had a market-clearing level of piracy, and we've lived with that. We're way beyond that now. But you have to have both the stick and the carrot, and unfortunately, it's been too heavy on the stick for quite a while. Going down the stick path was a decision made by Hilary Rosen [former RIAA chief executive] that was a huge mistake, particularly in the absence of much carrot. It set the stage for many of the problems we have now.
It's become a cause. Did the music industry ever think it could shut it down? I still hear this from old label types: "Can you turn the internet off please? Just find the off-switch, so nobody shares music any more?"
“The day they invented fire, the first arsonist was born. But that wasn't a reason not to use fire...”
What was underestimated was the willingness on the part of some companies to oppose them and challenge them. We'd not encountered this before in the music business. I mean the Kazaa attitude: screw you, we're going to take your stuff - and we'll find lawyers who find 18 different ways to dance on the head of a pin. The music business was used to being able to restrict access to things. That's they way it had worked for years. So, for example: the only way you can buy three newly discovered tracks by an artist who has been dead 20 years is via a new double album. That control of content in a strategic way was how the music business worked. That's gone, now.
So what they didn't anticipate is that there'd be people who would be very defiant and very hard to catch - and who would drink the Kool Aid.
The downloaders love to say how much the music sucks "...and I'm going to steal it all". They remind me of the old Catskills joke: "The food's terrible ... and in such small portions!" It just doesn't make sense.
Some downloaders justify themselves by saying: "It's OK to download because record companies screw the artists all the time.” And record companies have been known to that. But historically, record companies are the only people who invested in the content, for better or worse. So all these people feel justified in taking the chance on downloading, because there's very little chance of getting caught. There's a Congress that doesn't know what to do, and historically there were record companies who completely misunderstood what the new reality was. That's a hell of a Molotov cocktail.
“Downloaders remind me of the old Catskills joke: the food's terrible and in such small portions!”
A lot of people in the Valley thought they could rush to Congress and essentially repeal copyright. But how could it possibly be the law that "sharing" someone's property with 60 million of your friends could be fair use? If that was happening in the physical world, they'd send in the Army. The courts have largely ruled in favor of copyright owners in a string of cases, but the cavalry is not coming to the rescue. And that’s really frustrating if you believe that there can be a market online because a fundamental ingredient of a market is property rights.
Next page: The biggest mistakes: DRM and licensing