The mp3 was caught in a bind. The music industry wouldn’t license the technology without a critical mass of mp3 players, and the electronics industry wouldn’t manufacture the players without a critical mass of mp3 users. Fraunhofer was beginning to realize that, while scrappy independence was fun, it was also unprofitable. They needed corporate support. Despite Linde’s involvement, Thomson didn’t really seem interested in the project anymore, and AT&T had walked away after the final disappointment in Erlangen. So they began to discuss a new idea: they’d replace the mp3 with a second-generation psychoacoustic encoder, one that would be faster to run, one that would be easier to use, and one that would not use MUSICAM’s goddamned filter bank.
Brandenburg originally called it “NBC”: Not Backward Compatible. The name was a distinct rebuke to MPEG, a signal that they would not enter any more beauty contests. With time, though, this chippy attitude faded, and Fraunhofer eventually gave the project a less combative name: Advanced Audio Coding (AAC).
Brandenburg enlisted corporate stakeholders into the AAC project from the very start. Sony, AT&T, and Dolby were all given large shares, with the understanding that they would fight as hard for AAC as Philips was fighting for the mp2. Politics or no, the next thing Brandenburg made was going to get used. He directed his team to wrap up their work on the mp3 and focus on AAC instead. A new crop of graduate students was assigned to the project, and once again James Johnston provided support. Meanwhile, Grill was given one final piece of mp3-related work: Brandenburg directed him to make an mp3 player for Windows 95.
He was done within a month. Dubbed WinPlay3, this player also fit on a 3.5-inch floppy disk. As Grill tended to write software for other engineers, his sense of design was poor. WinPlay3 was an ugly, uncustomizable blue-on-gray box, with no ability to make playlists or edit the names of songs, and its user interface unnecessarily mimicked the appearance of a monochrome LCD screen.
The finishing touch was the filenames. Microsoft required all files on Windows 95 to have a three-letter filename appended to them. This had led to some rather strange naming conventions, like “.jpg”—Joint Photographic Experts Group—and “.gif”—Graphics Interchange Format. Grill, at this point, pushed for the technology to be rebranded. The name “Moving Picture Experts Group, Audio Layer III” could certainly be improved upon, and doing so would also allow Fraunhofer to distance themselves from the politically biased standards committees. But after some discussion the team decided to embrace their heritage and use the filename extension “.mp3”. Steve Church’s promotional work in the United States meant they already had something resembling a brand. Fraunhofer also realized that MUSICAM was encoding files in Windows. They were using the filename “.mp2,” and that meant MPEG had given them an unexpected gift. While the two technologies were bitter rivals that had been developed in parallel, the naming scheme implied that the mp3 was somehow the mp2’s successor—a misconception that worked in Fraunhofer’s favor.
Grill finished the program in July and began distributing it on floppy disk as “crippleware.” WinPlay3 had the capacity to play twenty songs, and then, like a message from the Impossible Missions Force, it self-destructed. If you wanted to continue using it past that point, you were required to send a registration fee to Fraunhofer and wait for them to send you back a serial number. WinPlay3 debuted in August, and Grill waited for the sales to trickle in.
Nothing. After some discussions with Linde, Brandenburg and Grill came to understand the problem. Why would anyone purchase a music player if there was no music to be played on it? Before they could sell an mp3 player, they’d have to generate a critical mass of mp3 files. And, to do that, they’d first have to sell a bunch of encoders. And to do that, you’d have to have an mp3 player, which no one was going to make without a bunch of files.
It was a classic catch-22, but Brandenburg wasn’t giving up. What did you do with a locked-out technology? You lowered the price. In the first, unsuccessful attempts, Brandenburg had tried to charge users $125 per encoding license. By the middle of 1995, in consultation with Linde, this had been lowered to $12.50. By late 1995 it was down to $5. Frozen out by MPEG, Brandenburg still worked relentlessly to push the technology into as many hands as he could.
Watching Brandenburg hustle, Linde began to revise his initial impressions. Brandenburg wasn’t just a scientist. Underneath the geeky exterior beat the heart of a cunning business strategist. He was a terrible salesman, to be sure. He generated no excitement in potential customers, and his idea of effective marketing material was a binder full of single-spaced engineering data. But he could think strategically, was comfortable with delegation, and had an excellent understanding of his position in the marketplace. He worked relentlessly, and he had terrific instincts about where new opportunities might be found.
The mp3’s first website went live in late 1995. In the top left corner, a spiky red starburst shouted, NEU! Below this were a half dozen blue download links on a plain white background in hand-coded hypertext. The links offered versions of the L3Enc mp3 encoder for DOS, Windows, and Linux. Apple was not included—Bernhard Grill found the company’s programming environment cumbersome and their user interface patronizing. With such a small share of the home computer market, he didn’t think building an encoder for Macintosh was worth his time.
The download links on the Fraunhofer page offered L3Enc for sale at the new price point: zero. L3Enc was “shareware,” a freely distributable demonstration program that permitted users unlimited access to the software. Accompanying the application was a small text file from Fraunhofer, encouraging users to share the program with others, and if they liked it, to please send 85 deutsche marks to Fraunhofer IIS in Erlangen, Germany, payable by mail or fax.
Brandenburg figured this would expose the technology to a wider audience and maybe make some money on the side. Linde was unconvinced but willing to follow Brandenburg’s lead. Grill was skeptical—practically offended—and felt they’d been reduced to begging. And, initially at least, his skepticism was justified. The shareware encoder was a flop, and very few users faxed in their deutsche marks. Over its lifetime, the downloadable L3Enc demo earned less than five hundred dollars.
CHAPTER 5
By 1996, Dell Glover and Tony Dockery had both secured full-time employment at the PolyGram plant. Though they still worked the shrink-wrapper, the two began to receive training for eventual placement in more skilled positions. The move to permanent also meant higher base pay, limited benefits, and, most important, the possibility of overtime. The base wage was now $11 an hour. Once you worked more than forty hours a week, it increased to $16.50. On most weeks Glover would work more than seventy, clocking six 12-hour days in a row. On the seventh day he rested—but only because plant regulations required him to take a day off. His gross take-home was more than a thousand bucks a week. It was good money for an unskilled laborer with no college education, but it wasn’t enough. There were just so many things to buy.
Glover had a remarkable facility for mental accounting. He didn’t budget or keep records, but tracked his cash flows in a mental ledger. On one side was earnings, where, going all the way back to his days as a dishwasher, he could quickly estimate what he had earned in a given week in a given year. On the other side was living expenses, which contained entries for things like utilities, groceries, and rent. Net those two amounts, and you arrived at Glover’s ultimate bottom line: the cash available for high-end discretionary purchases.