Original subtitles

♪ MTV ♪

[inquisitive music]

This is a small town called Shelby, North Carolina.

It's just a small country town, not a lot to do.

If you know 20 different sets of people,

you pretty much know everybody in Shelby.

Would you believe me if I told you

this little town down South

brought the music industry to its knees?

Yes, sir. Love you, man.

Back in the day, this place was printing money...

- That camera? - Yep.

All because they made a little thing called CDs.

The CD manufacturing plant.

That was, like, one of the better jobs.

But who really got paid, hmm?

The town, the artists, or the music industry, hmm?

People love working here with us.

[chuckles]

Rocsi, take one.

I'm Rocsi Diaz, entertainment journalist

and former host of 106 & Park.

This is the secret history of the music biz

that they don't want you to know.

This is the story of how music got free.

You'll get over it.

- Okay, let's go. - Okay.

[upbeat music]

[modem chirping]

It spans the globe like a superhighway.

It is called internet.

Audio computer files, MP3 dropped a bomb

on the multibillion-dollar recording industry.

There's no reason that you have to pick up a CD

in order to buy music. - Pirates go for the hits.

Willfully violated thousands of copyrights.

The goal of the pirates wasn't about money.

- It is not okay. - I talk to kids.

They can't believe it. - Now the court will decide...

And does the punishment fit the crime?

- $222,000. - Something's got to be done.

Will irreparably harm the music industry.

Should you be compensated for your work?

A lot of things are possible.

It doesn't make it right.

That's ultimately where the future should be going.

A whole generation got used to the idea that...

all: Music should be free.

♪ ♪

When man first started reproducing sound

back in the late 1800s, this is what we heard.

[crackly jazz music playing]

Today's stereo systems have improved,

and the sound of music people are listening to

couldn't be better, right? Wrong.

♪ Shimmy, shimmy, ya, shimmy, yam, shimmy, yay ♪

Just when music lovers thought they had assembled

the best audio systems money could buy,

along comes a new technological development.

It's called the Compact Disc, or CD.

Hip-hop was a vinyl game.

It came from the DJs. You know, vinyl's heavy.

Like, you ever carry a crate of records?

♪ Drop that down, pass it all around ♪

CDs, you could throw all your CDs in a CD case,

take them, take the cases out, put them in a CD booklet.

We took pride in it, how we organized it.

You had your fly Walmart CD holder

on your visor with your top ten CDs right there lifted.

Record companies have banded together

to promote a new product.

Music sales were flat from 1978 to 1985.

And then what the music industry did is,

they embraced this CD technology,

and the growth was incredible.

Because they... over ten years, they had gotten

everyone in the world to buy,

rebuy their entire music catalogs.

They sell for around $20 each.

The player itself can cost from $450 to well over $1,000.

[Beck's "The New Pollution"]

'99 was really the biggest year in the music business.

When the CD business took off,

everyone got fat really fast.

[mellow rock music]

Oh, my gosh.

The money that the record labels

would put behind promotion, it was crazy.

It was like almost every single album release

literally turned into a Super Bowl event.

Labels, they used to send cases of champagne

in celebration of, you know, so-and-so's album coming out.

They literally had money to throw around,

and you can see it because of the production

of their videos.

This was during a time period where

it was, like, Backstreet Boys...

The Backstreet Boys will be joining us very soon.

Versus 'NSYNC versus Eminem.

First-week sales are just going through the roof.

The one and only Britney Spears.

Everyone say hi to Britney. All: Hi!

Your first-week sales are everything.

That record's gonna get broken

by the next person that comes out.

That "Marshall Mathers LP," when I looked at that plaque,

I was like, I want that.

It was kind of like printing money for the record industry.

Their revenues skyrocketed.

They could charge more, and their costs went down.

The business was crazy...

600 million, 700 million CDs a year

being shipped in the U.S.

You could sell a million CDs in a week.

That was the business that we were in for years,

where you never had to question it.

You never had to think about it.

Once the CDs and the money came out,

it changes the evolution of how artists

and producers got paid.

Companies didn't even actually adjust

the artist royalty rates to increase the amount of payouts

that they were making, even though they were charging

$4 or $5 more for a CD than they were for an LP.

Capitalism was leaking money, and people were figuring out

a way to enrich themselves with culture.

I remember when I found out that it's, like,

less than 2 bucks to print a CD

that you're charging me $15 for.

It's like, oh, wow.

I'm in the wrong side of the business.

You know, we talk about what went wrong.

What went wrong for who, is the question,

the artists or the industry?

In Shelby, there wasn't a lot of jobs around.

Textile mills, that was where most of the people,

for generations, had worked.

Well, now the mill's gone.

So when a new plant came, everybody would try

to get a job at that plant.

[mellow music]

I heard about a CD manufacturing plant

that was hiring.

The plant was so different than what everybody

around here was used to.

It was a go-to job.

You know, I was excited about it.

We had a cafeteria, two break rooms.

Clean environment, AC.

Nice bathrooms.

I mean, just a good environment.

The showers, the lockers, the canteen...

I was like, shit, this a nice place to work.

I love technology, so,

you know, I just wanted to learn everything.

And just seeing the whole process

all the way through was pretty fascinating.

[upbeat music]

A limousine would pull up in front of the plant.

They would bring the master disc in in a briefcase.

They in a clean room.

That's where they actually take the mother...

The mother copy.

And the whole room has to be sealed, air controlled.

Everybody has to be...

Got gloves, gowns, everything.

Yeah, covered.

It looked like one of those virus movies,

like "Outbreak" or something.

Had all this technology, laser-guided vehicles,

robotic arms, motor machines, pressing machines.

You just sit up here pushing a couple

of buttons on a computer.

It'll come, pick up the order for you,

and then it'll bring you another pallet

and set the pallet on there for you.

That probably didn't cost 60¢, 70 to make,

and they were selling for $17.99.

You coming in to work, you seeing plaques.

Dr. Dre, Snoop Dogg, platinum, double platinum.

Diamond. What the hell's diamond?

Oh, man. Damn. Yeah. - Over the top.

I wasn't making but what, $8.50?

- Yeah, $8.50. - $8.50.

That's what I'm saying. They wasn't paying nothing.

While the record industry was on their CD hustle,

a group of music-obsessed teenagers

armed with dial-up internet

were about to change the game forever.

I showed up at college with a 2 gigabyte hard drive.

And by the end of my senior year,

I'd completely filled six hard drives with pirated music.

All of the music that was available

on these file-sharing services

was being put on there by these kids

in their moms' basements.

But I felt that no one had ever really understood

quite what had happened.

So I started investigating it.

[dial-up touch tones beeping]

So there was the internet that the public used,

and then there was the underground.

[inquisitive music]

Going back to the 1980s, there was something

called the warez scene,

or otherwise known as the software scene.

You had all these computer games.

They were kind of expensive, and teenagers got really into

stripping the copy protection off the games.

You know, they would jack the newest "Doom" game

or "Quake" or whatever it was.

Initially, the warez scene was

mostly just about software...

games, programs, things like that.

It was really the allure of, you know, free software,

games, which were expensive, you know?

I didn't have 60 bucks to spend

on a video game at the time.

I was about 15 years old.

Things were not ideal at home.

I had emigrated from Pakistan about four years back,

and, you know, I was still adjusting

and getting used to life here.

And I think I just found a sense of belonging online.

In real life?

In real life, I'm Todd Schaffer.

[chuckles] And at the time, I was living in a place

called Earleton, Florida, which,

if you can find it on a map, congratulations.

It's tiny.

And I guess in many ways, I was just

a regular 12-, 13-year-old kid.

The difference being is that one of my good friends

when I was really young had access to a computer.

I grew up in a weird, interesting part of Brooklyn.

I guess you could say the block I grew up on

was, like, middle class.

My parents were programmers, so at a young age,

we got a computer.

You know, I'm from LA.

We came from a low-income household,

grew up in the projects.

Gangs were everywhere.

Computers are kind of what kept me off the streets.

You know, online, you could have

multiple identities if you want.

You know, I didn't have to be this poor kid down the block.

I could be anybody.

It was almost like this world outside of the current world.

Being online was a way for me to escape from the real world.

[inquisitive music]

I started on IRC.

IRC was a protocol that is used for chat.

I got into, you know, a bunch of public channels

and started meeting different people.

You know, I hadn't been exposed to the world

in any kind of way.

Yet, in the evenings, I'm sitting here

talking to people from Australia

and California, Europe.

It was so primitive back then.

There was no, like, profile images.

No one knew what you looked like.

So it was, you know, really pure

interaction back then.

They're united across boundaries of class

and race and identity.

But everyone disguised themselves behind alts.

They didn't really know anything about one another.

You know, they were anonymous.

From what I recall, I was conversing with someone.

We were talking about audio compression.

It was after the conversation with this person

that I went to the website for the Fraunhofer Institute.

The Fraunhofer Institute in Germany,

they were led by a man named Karlheinz Brandenburg,

who is a mathematics wizard and an audio engineer

and a computer programmer.

Starting in the 1980s, he spent 10, 15 years

figuring out how he could delete information

from compact disc files, shrink the music,

and stream it over the telephone.

It took him about ten years until he had something

that was reasonably working well.

But they weren't able to find commercial success

with this technology.

There was a lot of politics involved.

So in the end, Brandenburg,

kind of in desperation in the mid-'90s,

just posted this MP3 encoder...

basically this shrinking ray for music...

online for public download for free.

The warez scene picked it up,

and then it got me thinking.

What if I could extract the CD audio into a WAV file

and then compress that?

The first song that I ripped was

Metallica's "Until It Sleeps."

♪ It hates you, so hold me ♪

[modem chirping]

I guess the rest is history.

[inquisitive music]

The Recording Industry Association

is really the trade group for America's record companies.

We counted sales to certify gold and platinum records.

And we had a, you know, huge anti-piracy force.

The American music and recording industry

has long been the hapless victim

of the worldwide illicit reproduction

and sale of our copyrighted sound recordings.

And this practice, of course, is popularly known as piracy.

Physical piracy, it's historic.

Like, in the old days, like,

the guys would open the trunk of their car,

and they... you know, they would have a bunch of cassettes

and hand them out on the street.

If I see my tape out there,

I'm throwing your whole table up,

and you might get robbed.

We sent an MTV staffer to Uptown Manhattan

to snoop out the price and the availability

of pirated Jay-Z discs.

Physical pirates, they were selling fake CDs

or fake cassettes, and they were distributing them

to flea markets or, you know, around the world.

And it was actually a really big business.

The piracy and counterfeiting

of which I speak

is estimated to total about $1.2 billion in value,

and it represents one out of every four recordings

sold in world markets.

And the perception was that this physical piracy

really hurt sales.

Piracy harms America... its creativity,

our balance of payments, and our rights owners.

Come on. Let's be honest.

Who really gets hurt by piracy?

Was it really harming the country as a whole, hmm?

Or was this a warning signal for an industry

that refused to change?

Around 1994, maybe, I was working

at the CD manufacturing plant.

You had to start out as a temp,

and then chances are, you would become

a full-time employee, which paid a whole lot

more money than being a temp.

[upbeat music]

I was at work every day on time.

I worked all the overtime they asked me to work,

and I gave it 100%.

So they moved me up.

It felt good, you know, starting from the bottom

and then gradually making my way to the top.

Working at the plant, I got invited to a party.

And when I went to this Christmas party,

I noticed CDs laying around that was not out.

So then I kind of put it all together,

and I figured out, you know, somebody inside the plant

was kind of smuggling CDs out.

Dell, he ain't slow.

He started noticing.

He was like, how you getting over here

to do such, such, such, such?

I was like, well, Dell, look.

You sending me over here to clean up?

"Oh, hell, yeah, boss. I got you. I'll clean up."

I'ma clean up everything.

"I'ma go all over there, clean up real good."

There'd be CDs just sitting on the floor,

and you'd have to go clean that stuff up.

I mean, they printing money,

and they leaving it on the floor.

Shit, I'm picking me up some.

At first I was like, I'ma take just one.

Then I said, [...] this shit. This Mary J. Blige.

I might scratch it. I'm taking all this shit.

So, gradually, as I seen more CDs,

I started taking more CDs.

And I started giving them out for Christmas presents,

birthday presents.

I had so many CDs.

I ain't feel bad, not even a little bit.

I did in the beginning, but then I thought about it.

I didn't. I didn't.

I didn't. I ain't feel bad.

I felt bad at first.

If they wanted me to be good, they would've paid me more.

[modem chirping]

[inquisitive music]

The music industry had always been

really concerned about piracy.

When the home cassette tape recorder was introduced,

their sales plummeted through the floor,

as people started to create cassette dubs

rather than buying albums.

And in the mid-'90s, they were really,

really worried about CD burners.

They thought that was the big risk,

and that's where they had all of their attention.

Once file-sharing technology came along,

they understood, though, that everything

that had come before was nothing.

Okay, we're speeding, John.

Have you heard of this thing, MP3?

It's this... - I just got it.

- Yeah? - I just picked it up.

Really?

- You can download... - You can download songs

from the internet. - Right.

You can download songs and then, you know,

basically pass them around.

And you can play them back, and you can...

and copyrighted songs.

[upbeat music]

At this time, you've got broadband internet.

You have a computer with a compact disc tray in it.

Your hard drive is getting just big enough.

And then, of course, the warez scene

gets ahold of Fraunhofer's MP3 shrink ray,

which you can apply for free to your compact disc

to shrink it by 90% or more.

Before that, if you wanted to download an audio file,

it was huge.

The equivalent of a song might take you hours to download.

It was one thing to take, you know,

a software application like a game,

you know, some editing, you know, tools or whatever.

It was another to, like, take a file format

that was too big to download or upload

and compress it by a factor of, like, 10 to 30.

I mean, it was of the coolest technologies

that any of us had ever seen, right?

Like, it all of a sudden made possible

the transmission of music.

People just started, you know,

ripping music and sharing it.

The fact that just a bunch of ragtag group of hackers

all got their hands on it and just thought

it was the coolest thing ever,

we ended up using the technology

just to innocuously share, you know, whatever records

we had in our own house, you know, with one another.

So that spawned this whole second wave

in the warez scene.

Music's probably been the one constant in my life

since I was very young.

Especially towards, like, high school,

people started to throw parties.

Friends were into DJing.

Hip-hop was a thing.

I was into hip-hop. Like, I was a DJ.

It all kind of based around this common theme

of loving music.

Very quickly, they started to organize

MP3 ripping scene groups.

Four or five groups sprang up in competition

within a couple weeks.

The very first was a group called CDA,

which was Compress Da Audio.

Our group name was Old School Classics.

I was "the leader" of OSC.

The Apocalypse Production Crew

were a dominant force to be reckoned with.

I mean, APC was the top dog for a long time.

Being in APC, RNS was a group that we raced to releases.

RNS was the number-one MP3 group in the scene.

RNS was the three-letter acronym for Rabid Neurosis.

The leader of the group was a 14-year-old named Al Capone.

I kind of settled on the Al Capone moniker

because of bootlegging.

In my 12-year-old, 13-year-old mind,

I fancied myself as far larger and more important than I was.

When I joined the RNS channel, it was less than 15 people.

I would be given the operator status,

which was kind of a kingmaking thing,

I guess, for my knowledge of how to move files around.

I was not a wealthy kid. $15 was a big deal.

Like, if I wanted to go buy an album,

mowing a lawn back then, like, that was a $20 job.

We would all rifle through the CD collections at home

and rip the single track and upload it.

As kind of the technology progressed

and we went from 28.8K modems to DSL and cable modems,

you know, the ability from going from single tracks

up to entire albums started.

I joined as a ripper.

I would have the responsibility of ripping a CD,

taking those tracks, uploading those files onto a server,

and then that gets distributed across the RNS sites.

Like, we were the sources for services like Napster

and Kazaa and LimeWire.

Kazaa and LimeWire, Napster were just feeding

off of what they were doing.

This was the dawn of the golden age

of internet piracy.

While the pirates were building

a brand-new digital world,

the record industry was still living in the past.

So, in the early fall of '99,

my head of anti-piracy came to me and said,

you got to look at this.

And he literally came into my office,

you know, took over my computer,

and turned on Napster.

So now that we have Napster, how do we use it?

He said, pick a song.

Do you want to type in any name of an artist?

So I said, you know, Madonna, "Holiday."

Let's do Butthole Surfers, 'cause butthole is a cool name.

Surfers.

And then... - Just hit Enter.

Hit Enter.

And sure enough, 60 versions of Madonna, "Holiday," came up.

So we got a lot of Butthole Surfers.

It was like, whoa.

And at the bottom of the Napster application,

you could see how many people were online at the time

and how many songs were online at the time.

I said, this is unbelievable.

Let's reach out to them, because maybe they don't know

that this is completely illegal,

like completely [...] illegal.

Within a few weeks, we got a call back

from somebody who had said that

they had just started at Napster.

[line trills]

And we said, well...

Welcome back to "1515."

The Recording Industry Association of America

has filed a gigantic lawsuit against Napster,

although the company, which stores

no illicit music itself, doesn't seem too concerned.

So we sued them in December of 1999,

but, of course, that didn't shut it down.

It only made it more popular.

Napster was growing and growing.

How many MP3s do you have on your computer?

About 600.

Maybe, like, a hundred or something.

Uh, 6,000 or 7,000.

- Come again? - 6,000 or 7,000.

When Napster first came about,

I didn't understand the internet yet.

I thought Yahoo was a person.

Right now it's trying to log in,

but a lot of people are trying to get on.

So it's popular.

I hadn't heard of MP3s when I came to school.

One day, one of my friends sent me

the player that plays them and a song and said,

look what this does.

And, you know, we experimented around with it

and found out that we could go onto the network

and find other songs.

So here you have this one platform that is...

"I can get everything I want."

[upbeat music]

"MP3," I've heard rumors

that it's the second-most searched word

on the Internet after "sex."

When people started going to these peer-to-peer sites...

[record scratches]

Yeah, crazy.

[laughter] It's crazy.

Do you see how we are?

And this shit is that long ago.

It was maddening.

It was like, here we go. Here we go.

Battleship, battleship.

Get to your stations.

You'll get sites with just thousands of different songs.

- So it's easy, you would say? - It's very easy.

I don't even know.

Is there a statute of limitation on this shit

before I start saying that I was downloading

and I was a part of Napster?

It was so bad.

Oh, my gosh.

The pirates are out to get you.

Don't let them brand you with their mark.

You need to make an income somehow.

You got to pay the bills.

The way that it's set up right now, it's theft.

If you worked at McDonald's and we went into your store

and took all your meat and you had to pay for that,

you're gonna be kind of upset.

[dramatic music]

Musicians should be able to earn from their work.

This is about Metallica and Napster.

Let there be no question about that.

That's billions of dollars. Something's got to be done.

Since the time that our case has been before the courts,

Napster has grown from a few thousand users

to over 50 million users.

You're not opposed, I gather,

to file sharing on the internet?

I do support people sharing music.

Unfortunately, right now I'm being accused

of sharing music that I'm not supposed to share.

[inquisitive music]

This was the thing about Napster.

It had a huge amount of music on it

that you couldn't get anywhere else,

music that wasn't sold by the record companies

or by the artists, that was very tightly controlled,

and, in fact, artists never would have released it.

There's this song that everybody wants to hear,

the last Nirvana song we ever recorded,

which is a cool thing.

The track is called "You Know You're Right."

Everybody knew we had it.

We were like, we're never gonna release it.

But then this past May,

the song was leaked onto the internet.

The fun thing about Napster was,

it had such a diversity of music.

We weren't into it for, you know, making millions

off of the backs of artists or anything.

Like, straight up, we just wanted music really bad.

This person was in Spain, and he put clips of it up.

I guess we're more of the Robin Hood, right?

You know, we're just spreading the music

and getting it out there, and we're just listening to it.

It was so fan-centric. I really got that.

And that's why the whole thing was just really hard.

Music, believe it or not, used to come out every Tuesday.

[chuckles]

Why Tuesdays? I don't know.

Systems... it's accounting.

The industry was built on that foundational truth.

You wanted the independent distributors and the retailers

to all have the music as close to the same moment as you can.

It goes back decades.

As soon as the scene group started pirating music,

they turned it into a race.

And it was a race to be the first

with a new song on the internet.

[Outkast's "B.O.B."]

When you're, like, a Tuesday ripper,

which is somebody that gets stuff on release day,

Monday night, you're doing a release check.

And you build a route to where you were gonna go

to pick up releases on Tuesday morning.

CDs usually came out on Tuesdays in stores.

It was imperative that, once we had access

to the physical CD itself,

that we would rip it as fast as possible,

upload it onto the internet.

To us, I guess, it was a game.

You'd drive to Best Buy, and you'd wait for it to open.

'Cause the minute the doors open,

you're going straight to the singles rack.

You'd end up getting pissed off at Best Buy employees

'cause you know they have it, and they're like,

oh, well, we just haven't put them out yet.

"I need you to go get it."

They started bribing people who worked at Walmart

to leak them stuff, because the discs would show up

a week or two in advance and be sitting

in the back of the store.

I only need one.

You have to get home, rip it, scan all the cover files,

and everything has to be perfect,

and hopefully none of the other 400 people globally

are gonna upload it 5 seconds faster than you.

Then they realized it was possible to sometimes get

the compact disc before the release date.

Maybe the music company sent out a promo disc

to a radio station.

I worked at a college radio station,

and once I became the station manager,

that would give me access to the mailbox.

So all the CDs that would come in,

I would be the person to be able to open the boxes

and then rush them back to my dorm room,

rip them, upload it,

and then bring those CDs back to the office

before, you know, anybody knew anything about it.

Two of my biggest releases for RNS

was Ludacris's first album, "Back For the First Time,"

and also Outkast, "Stankonia."

Seeing that package from Def Jam, ripping it open

and seeing what it was, and being like, oh, shit,

this needs to go up right now.

You go out and you look at the largest names ever

to grace the front page of "XXL,"

and you name it, we got their album.

We ripped every single Def Jam album.

You had, like, DMX, Method Man, Ja Rule, Ashanti,

all the Jay-Z albums, Freeway, all of Murder Inc.,

State Property, Yayo, and Lloyd Banks,

the Eminem album.

As soon as the artists turned in the record,

you could, like, set a stopwatch

for how soon it was going to leak.

One of the unintended effects was that

it broke the whole Tuesday thing, right?

'Cause now what was Tuesday, right?

People wanted to listen to new music

on any time they felt like it.

You could just see that we were affecting the way

that they were releasing music.

Berman changed the street date.

I think you moved it to Friday. - Yeah.

We moved the street date up, and it became a cycle with us

that we always had our street date that we marketed to,

and then we had our plan B, and then we had our,

"Okay, we're just gonna have to pivot."

And if you had to spend

an extra few hundred thousand dollars on shipping,

that's what the price of the game was.

The economic damage they caused was real.

It's not an exaggeration to say that they were

the ones running the entire music distribution platform.

While the industry was trying

to rewrite the playbook...

Eventually, the scene said, well,

maybe it's possible to get the music even earlier.

The pirates were already changing the game.

And so they kept burrowing

into the music industry supply chain.

And they kept getting further and further up the ladder,

first through the promo guys,

then through the distribution guys.

And then, finally, they found a link

into the music pressing plant itself.

[inquisitive music]

♪ ♪

[birds chirping]

So, growing up, I didn't get out of Shelby a lot.

You know, wasn't really anything to do around here,

so I spent a lot of time on the computer.

[inquisitive music]

I like to learn, so I was pretty much fascinated

by how computers work.

He's always been that innovator.

He always wanted to start something,

and he was always interested in stuff

that we didn't have anything... any idea about,

like the computers and technology.

You took him down to Sears. - Yeah.

Was he old... he wasn't even old enough to drive.

And he went and purchased a computer.

So, when I got my first computer, I took it apart,

and I put it back together just to see

how everything tied in together.

He done tore that computer up.

[laughter]

And he put it back together. - Yeah, he did.

- And I was impressed. - Yeah.

Dell, the boy is a genius.

He was supposed to be on Wall Street somewhere.

Shelby too little for him.

I was completely self-taught,

never had a class.

Call it a gift from God, I just kind of knew.

I had this building built in the backyard.

I had ran me a network cable down there, you know,

so I would have internet, and that pretty much

became, like, my little workshop.

Tony Docker was a friend of mine

who worked at the CD plant.

I found out he had a computer, and he found out I had one.

So we started hanging out and started doing things,

you know, pretty much on the computer side.

He came out and sat me down at his computer and said

some guys wanted to talk to me.

Kali, he asked me to be a member of the group RNS.

I didn't know a lot about him.

I knew he was from California.

He was always paranoid about, you know, the Feds,

so he took a lot of precautions.

You know, he only talked to you

through encrypted software.

The screen name Kali is K-A-L-I,

which is a reference to the Hindu God of death.

Who is Kali? He liked to smoke weed.

He likes to listen to hip-hop. He was in California.

We had a lot of conversations,

and we knew each other for many years.

But I never knew his name.

It was a big deal for Kali to be

number one as far as on releases.

He did not want to get beat on any leaks.

He wanted us to be the first group to leak it.

He was the one that was able to sort of bring RNS

from top two to undisputed number one in the MP3 scene.

♪ ♪

He was able to consistently get major releases

two and three weeks ahead of time,

which was kind of unheard of.

♪ ♪

Kali knew I worked for Universal Music

and I could get the stuff

before anybody else could get it.

[suspenseful music]

♪ ♪

I did remember seeing Adeg, A-D-E-G, in the channel.

I didn't know who he was.

Adeg was the star.

He was Kali's number-one ripper.

He kept him hidden and didn't want anybody

to know who he was.

Kali, he only really cared about, like, the cachet

of winning within the scene.

There was just always something that bugged me about him.

♪ ♪

Kali was the mastermind of RNS,

and he took over from Al Capone.

And some say he actually sort of, like,

he had a coup and ended up in charge

of this music distribution and leaking group

that was Rabid Neurosis.

Under Kali's leadership,

the group took it to the next level.

We started to see an increasing amount

of pre-release music, which means before it was

available to the public.

That became, like, yet an additional problem.

'Cause Paul Rosenberg is blowing up, yo.

That's what it is.

Yo, let's get the camera on Paul Rosenberg for a minute.

By the time we were doing "The Eminem Show,"

there was a lot of anxiety around albums leaking.

I think the first major leak,

I believe it was "The Eminem Show."

MTV.com is reporting

all 20 songs were leaked to the internet.

No other radio station has the balls to play this, Anthony!

The world debut of the new Eminem.

♪ This looks like a job for me ♪

♪ So everybody just follow me ♪

All that work, like,

days, months, hours that I spent

writing it, recording it, tweaking it,

like, all that shit, now these songs leak.

And I'm, like, [...].

It was like music should be free,

and then it's like, okay, well, here's what

you don't understand if music should be free.

I have an engineer to pay.

There's an entire army of people that work at Interscope

that need their paycheck.

[laughs] You don't understand.

This Eminem thing is bizarre.

It was annoying.

It was messing with his creative process

and how he wanted people to hear it.

What do I do?

Do I try to make songs like those that leaked?

But then people go,

well, we already heard that from you.

Well, we just found out today that we have no choice

but because of demand and the piracy and everything

that's going on out there that we have to push

the Eminem album up, the new album,

"The Eminem Show," up to May 28th rather than June 4th.

The whole marketing plan went out the window.

I mean, every hour that record was out,

you were losing sales.

I'm, you know, falling over my desk,

and Eminem's screaming at me.

[tense music]

What do I want people at home to know about this record?

It's out today.

Like, us ripping a record,

it was actually good for the artist.

It was free exposure.

Your copy off the internet is, like, not shit.

It sounds like shit.

We just shrugged it off and figured, like,

they sort of don't get it.

This is the first time that Eminem

has put lyrics in the album so people can read the album.

And there's lyrics in it.

It has a free DVD on the first two million copies.

And there's a DVD that it comes with,

and there's, like, a lot of cool stuff,

like, extra bonus stuff that you can get if you go out

and you buy the CD.

And we have no choice but to stop everything else

we're doing and get this record out.

As the album got released, probably a month

before the release date,

he had to reschedule his tours.

And he was pretty upset, from what I read.

Whoever put my [bleep] on the internet,

I want to meet that mother[bleep] and beat

the [bleep] out of him.

[mockingly] Oh, I got Eminem's new CD.

I got Eminem's new CD.

[normally] That was my first album that suffered,

so it was devastating to me in the sense of, like,

oh, I just did all that for nothing.

As an artist, you want to make something

for the world to have,

and now you're complaining that it's being distributed?

Come on.

When Eminem hits, that became the waterfall

for all those ones that followed.

Korn's "Untouchables" was leaked a full two months

before its release date.

The Recording Industry Association of America

stopped internet postings of Madonna's new single.

The track, it got leaked.

♪ Da-da-da-da-da ♪

It started moving faster.

You were sitting here waiting.

What's the date gonna be?

Is that 12 days in front?

Is that 9 days in front?

Is that 14 days in front?

You could do whatever you wanted to do

to make the process of recording an album

a security stronghold.

You could record the album in the Pentagon,

Navy SEALs inside the studio.

The second you handed that album over

for it to be manufactured, that was it.

This is 50 Cent.

My album's coming out February 11th.

I turned the album in.

It was in the possession of the actual record company,

the CD release.

It would come out, like,

three, four weeks ahead of time.

And all the work that you put in

and the brainpower and the hours

and everything that you put into your project

is kind of out the window now.

Anytime a leak happened, suddenly you have

millions of dollars at stake.

How are we gonna deal with this?

I think Berman usually was always the one

to break the news, and Berman would just go...

I mean, just the look on his face,

knowing the call he had to make.

Berman was a wolf when it come to that.

He be like, Timbaland, nothing is gonna get leaked.

I promise you.

They were looking at the company saying,

well, somebody broke it down on your side.

The music industry was chasing itself in circles

trying to pinpoint the source of these leaks.

Steve Berman couldn't even explain it to me.

I'm saying, explain to me this shit.

Artists were pointing at the labels.

- They were [...] pissed. - They were pissed.

They were [...] pissed.

Get the [...] off my phone, Steve.

Labels were pointing at Napster.

We've looked at how our mastering is happening.

The manufacturing plants now have extra security.

It's not us. It can't be us.

He probably throw his hands up.

[...] hell.

Naturally, if anybody tells you

they didn't feel abject fear, they're full of shit,

'cause we were terrified for us.

We were terrified for the art.

We were terrified about everything,

and we didn't understand it.

None of them ever suspected a factory worker

down in a little town called Shelby.

You have to think,

what if there's a giant hole in the boat, and it's not fixable?

What do we do?

I remember Jimmy walking in and saying,

we got to flip this. We got to attack the problem.

I didn't give a shit what anybody was doing.

I was a CEO, and I was like, I can't live like this.

I don't want to be the guy to sell the last CD.

That's where we put on... I don't say hard hats.

I say helmets. Like, we were at war.

It's one of the biggest exports America has,

and it's going out of business.

They all thought they'd seen the worst.

I never could picture it being one person.

But Dell's plan...

Adeg, he was a star.

Without him, none of this would have happened.

[chuckles] Well, Dell's plan was just taking shape.

[chuckles] Well, Dell's plan was just taking shape.