The day the music industry sued someone for $72 trillion

In the first decade of the 2000s, the recorded music industry lost millions to piracy. One of its solutions was to sue someone for more than the GDP of Earth.

In 1999, the recorded music industry was swimming, drowning in money. CDs had been on an upward trajectory for more than 15 years, reaching sales of 2.4 billion globally and one billion units in the U.S. alone in 2000.

Despite the massive scale of the CD industry and plants running flat out around the world, the promised decline in prices never came. In fact, the industry was caught in a price-fixing scheme that inflated the cost of CDs between 1995 and 2000 with a marketing plan called “minimum advertised pricing.” It’s estimated customers were overcharged US$500 million and up to US$5 per album. (The case was settled with a fine and a promise to give US$75 million to public and non-profit groups.)

At the same time, labels moved to eliminate the more affordable CD single. “Want just that one song? Too bad! Buy the whole album for 20 bucks!” And given the perceived rise in one-hit wonders by the end of the ’90s, music fans were in a surly mood.

The dam began to burst on June 1, 1999, when v1.0 of Napster was released into the wild. Within 18 months, the service had more than 80 million users sharing MP3s they didn’t pay for. Other illegal file-sharing programs popped up. Audio-Galaxy, Kazaa, BearShare, Grokster and dozens more. Other music fans turned to legal-but-often-used-illegally software like BitTorrent and uTorrent, programs that powered networks like The Pirate Bay.

As the ’00s continued, CD sales were in freefall, costing the industry and artists untold billions. People were laid off and artists were dropped from rosters. Unable to get a handle on new digital realities, the industry was in full panic mode. The only real tool it had at its disposal was filing lawsuits, with the Recording Industry Association of America (RIAA) leading the way.

The RIAA had been successful in shutting down Napster. The organization came after the country hard, forcing it to cease operations in 2001. By June 2002, Napster had filed for bankruptcy. The Grokster and Morpheus case lasted four years before the U.S. Supreme Court ruled that file-sharing services could be held liable for copyright infringement. A suit against BearShare was settled out of court for US$30 million in 2006. Kazaa was also done by 2006, settling for US$100 million.

But this was small change compared with what the RIAA demanded from LimeWire.

A free version of the program was launched by Mark Gorton in 2000, followed later by a pro version that cost US$35 a year. It was so popular that by 2007, it was estimated to be installed on one-third of all personal computers on the planet, despite some versions being very buggy and opening anyone’s computer to malware and theft of non-music documents.