If the successive waves of online music pioneers included many who were pushing the technological, social, and legal limits for a mixture of aesthetic hopes and utopian dreams, what pushed MP3.com founder Michael Robertson was something different. He hadn’t cared very much about music since ending a brief stint playing clarinet in his high-school band. But Robertson was a natural-born capitalist.

“Well, you know, I grew up really poor,” Robertson said once in an unguarded moment. “I think that has a way of motivating people.”

Blond, boyish-looking, and with the constantly upbeat manner of a salesman or a preacher, Robertson grew up in San Diego in a very religious family with modest means. Not interested in more of the same for himself and his kids, Robertson jumped into the world of high tech by starting two software companies after receiving his B.A. in cognitive science from University of California, San Diego. His enthusiasm faded for one, and the second wasn’t very successful. So, not yet 30, he launched a third enterprise, run out of his garage, that enabled different types of Internet searches.

While looking at logs of his site’s traffic, he noticed that the term “MP3” was incredibly popular. A little research and a thousand bucks later he had bought the MP3.com domain. In November 1997, Robertson launched the MP3.com Web site.

MP3.com—largely because of its domain name—soon became the gathering post for people interested in online music.

In February 1998, Robertson tossed around an idea with some new friends online about hosting a small gathering to promote and discuss MP3. The event was to be just “some kind of slumber party where you order a pizza” and talk with a few other enthusiasts, Robertson said. He announced the event on the MP3.com site—and was stunned by the response. The number who signed up to attend quickly reached 500. Record-industry and high-tech big shots, and even a member of Congress, said they would come. Hasty plans were made to host the event at the University of California, San Diego.

The conference was a heady moment for those who had latched on to the promising new way of getting music over the Internet. For years, Webheads had speculated about being able to get music at the touch of a button over the Internet, and now the moment they’d been waiting for seemed at hand. One of the organizers described feeling “like a Scotsman in Braveheart.”

Robertson leaped onto the college auditorium stage; he was riding high on the excitement. He praised MP3 as a “collective effort, from kids in high school to men in business.”

Perhaps it was just the shock of instantly becoming players in a business that had seemed so far out of reach, but the hacker developers of the MP3 revolution displayed a remarkable amount of respect and empathy for the record industry. Rather than gloating over newfound power, most of the speakers bent over backward to suggest ways for record labels to make money, for instance by using MP3 to sell their back catalog.

The record labels, though, did not reciprocate. In three weeks’ time, Robertson would find himself the outsider at a music industry panel discussion hosted by the Los Angeles chapter of the Recording Academy. From the outset it was clear that this was not your typical Internet event: Instead of a Spartan college campus, the posh Hotel Nikko in Hollywood was the site for the discussion. Perfume wafted heavily through the room, and there wasn’t a software T-shirt in sight. A huge golden gramophone was perched at the side of the stage, lest anyone forget that the Recording Academy was the group that awards the Grammies.

Michael Green, president and CEO of the academy, started the evening by saying that, with downloadable music, “the stakes are incredibly high.” He should have known: The discrepancy between his position with the “nonprofit” academy and his income was a frequent subject for the Los Angeles Times, which reported that he “drives a Mercedes-Benz, enjoys a membership at the Bel-Air Country Club, and makes $1.3 million a year—all at the expense of the academy and its charitable arms.”

Mike Farrace, vice president of Tower Records [www.towerrecords.com], summarized the panel’s message when he warned that the freedom the Internet offered didn’t exempt anyone from financial responsibilities. “It’s time that we show people that, if you want the free goodies, you’re going to have to pay!” he said. The spirit was there, even if the precise logic wasn’t.

When the floor opened for questions, the panelists steeled themselves against an onslaught. Among the first to speak was music attorney Ken Hertz, whose laid-back beachcomber appearance belied his power as deal maker for Hollywood stars such as Will Smith, Alanis Morissette, and Courtney Love. How, he asked the panel, did these company men get off saying that they were so interested in preserving artists’ profits? Everyone with a record contract knows that artists make almost no money from selling records. Industry opposition to the Internet, he suggested, was motivated by greed, and cloaking it as concern for artists’ rights wouldn’t fly.

When Robertson rose to the microphone it seemed like less than half of the panelists knew who he was. Those who did viewed him as riffraff—Robertson told a San Diego newspaper, “Some of my contacts up in L.A. say, ‘Michael, you know they think you’re Satan, right?’ I say ‘I’m blond. I can’t be Satan.’” (He would take pains to preserve that blond, angelic look and could sometimes be seen in quiet moments before conferences spritzing his hair in the shadow of his limousine.)

Robertson told the panel that the software industry had learned to deal with piracy; the music industry, he suggested, should do the same. When told by the moderator to ask a question and not make speeches, Robertson said the music industry should stop seeing the Internet community as a threat. “We’re here to embrace you,” he said, arms outreached, smiling beatifically.

“That may be so,” responded the representative from the Recording Industry Association of America, the industry’s main trade group [www.riaa.com]. The RIAA man was much older than everyone else on the panel and had spoken that night with a bitter aloofness that suggested he had much better things to be doing. “But we’re not interested in embracing just anyone,” he said with a look of distaste. The evening ended on that sour note.

As a group, the major labels treated technology such as CDs and Minidiscs as gifts that were theirs to dole out, in measured doses, with each shot giving just enough of a lift to fuel a consumer spending spree. A nice, even progression was the key to longevity, especially at large corporations that were kept afloat in bad times through the selling and repackaging of back catalogs.

In the world before the Web, consumers might have gone along with the slow drip of new technologies the industry had in mind for them. But after a decade of tech-industry hype, beginning with Apple Computer Inc.’s [www.apple.com] famous Orwellian 1984 Super Bowl ad, in which the personal computer was presented as a force against Big Brother, consumers took to heart the urgings toward self-liberation. If a technology was moving too slowly, or its restrictions seemed overbearing, the tools to fix the problem were in easy reach: many sat on everyone’s desktop. Whether building an MP3 player that did just what was wanted, or making another format that did more than MP3 offered, tinkering with the system to make it fit specific needs and desires was the order of the day.

Through the mid-1990s, the RIAA saw minimal threat from copyright violations on the Internet. But that changed drastically in the late ’90s. Because fan sites made no effort to hide—they were aching to spread the word about the music they loved—these were the first to come under the gun.

Dealings with Oasis fans typified the shut-them-all-down approach. In May 1997, Sarah Frederikson, an employee of the band’s management, sent an e-mail to nearly all Oasis fan sites, insisting that they take down all copyrighted materials: photos, song clips, and lyrics. The letter was evidently following a lead by Sony Corp. [www.sony.com], though Oasis management would later claim full responsibility. A small carrot was dangled: Those who cooperated would be included in the official Oasis “fan page links” section. Otherwise, the letter said, “We will be forced to take appropriate action.” By the time a 30-day deadline had arrived, the vast majority of fan pages had closed.

The same year, Sony Records itself shut down a fan site dedicated to Oasis. An English fan, Derek Gorman, had been serving up clips of songs from a coming Oasis album, which he’d downloaded from an official Sony site. While the clips were not full-length songs, and served to whet appetites for more music, Sony wanted full control and contacted Gorman’s service provider, which turned off the offending site.

This was the typical pattern for the labels, and it left a long trail of disillusioned, embittered online fans. Their first contact with the music industry—which made its billions nurturing devotion and involvement—was one of threats, finger-pointing, and legal action.

For a brief time after going public in 1999, MP3.com carried a valuation of $6.9 billion, exceeding EMI’s valuation of $6.4 billion [www.emigroup.com], but the stock soon tumbled, and Robertson was itching to prove that the stock market had been correct in regarding MP3.com so highly. But how could he top Napster Inc., which offered access to nearly every musical piece a person could want? He decided to play an entirely different game: He would give users what they already had!

The idea was sound: Let anyone who owns a CD have access to that music over the Web, no matter where the original disc was. Other companies were offering something similar that let users copy their CDs and upload them to a private locker that they could access anywhere. But getting all that music into the locker was an enormous chore. By contrast, Robertson’s Beam-it would merely verify that users actually had a CD in their computers, and then, instead of ripping and uploading all the songs, it would just note in the records that the particular user owned the album. To stream back the album, Beam-it would pull from a digital library ripped from more than 40,000 disks that the company had bought. After all, it didn’t matter whether what was being streamed came from the consumer’s CD or MP3.com’s, as long as the recording was the same.

The service was launched Jan. 12, 2000. On Jan. 21, the RIAA sued.

“Simply put, it is not legal to compile a vast database of our members’ sound recordings with no permission and no license,” the RIAA wrote to Robertson. There were precedents that established that you could make a duplicate of a copyrighted work for your own use, but it wasn’t legal for a company to do that for you.

The RIAA asked for a summary judgment to shut down the service, and on April 28 Judge Jed Rakoff of the Southern District Court of New York complied. The judge later set a penalty of $25,000 a song, an enormous amount when you consider that the company had digitized as many as 40,000 CDs—and contracts specify that all such payments go to the record companies, not the artists.

Even though he was shut down, in the aftermath of the suit Robertson made a haunting point: “If you don’t give people who buy the music the right to listen to it, you remove the incentive to buy the music!”

From the book, Sonic Boom: Napster, MP3, and the New Pioneers of Music, by John Alderman. Copyright ©2001. Reprinted by arrangement with Perseus Publishing. All rights reserved.