The $72 trillion lawsuit: how Limewire died | Sidebean

0:00This video is brought to you by Chard Mogul. Chard Mogul automatically generates all the SaaS subscription analytics you need to run your business like a pro. Use Chard Mogul to measure, understand, and grow your recurring revenue. Go to www.chard Mogul.com slash slipe me to get a $50 month discount on your first 12 months. Imagine facing a lawsuit for $75 trillion. As a reference, the US GDP in 2019 was $21 trillion. So someone pissed off the wrong crowd and that someone was lime-wired. It was one of the most popular P2P clients into 2000s. It allowed millions of people, not me, I never downloaded illegal music. To download music, images, software, and videos. But its legacy is of course tainted with darkness. So what happens to lime-wired? We'll tell you all about it in this episode of CompanyFrensix from our new CompanyFrensix studio. Mark Gorton is a creative man. In seventh grade, for example, he created a scale model of his

1:01school because he wanted to. And music wasn't in his sights. Instead, his background was a mix of engineering, trading, and investment. His relationship with file transfers came as a business opportunity. But let's quickly talk about this peer-to-peer system or P2P. A P2P connects to computers directly. In the case of file transfers, it's so users can share files with others with your peers. But for Gorton, it was more than file transfers. He envisioned an entire marketplace. Thanks to how P2P worked. So we found it lime-grouped to build a corporate server using Nutella. No, not bad. Nutella is a protocol with a straightforward idea. A series of queries and responses allows for individual computers to talk to each other. So there's no need for central servers. So it was the first large decentralized P2P network. But there was an added benefit. Nutella allowed to build platforms over it, which was the lime-groups idea. And so they created lime-wired. And let's be clear, in the late 90s and 2000s, many people used Nutella as a base. But lime-wired took it one step further. First of all, lime-wired was easy to use, search, choose, and click.

2:05Resto, but even though it would become the most used P2P software, it started wasn't easy. After lime-wired launched in 2000, 90% of the downloads failed because of fake user servers. And to improve this, engineers introduced verification protocols making downloads easier and more reliable. But lime-wired did little to improve on content. And this would bite. So things were going well, but at a snail-space until the Napster lost it. Go watch our video on Napster. The media loves covering Napster, so as the newest blast viewers with images of Napster, more than one became curious about downloading and P2P systems. Plus, the world was changed, even the New York Times had read that Napster would only add field to the fire. People wanted to consume music more freely, even if it meant painting illegal. Then, of course, there's the other ingredients. And P3s. The format was revolutionizing the music industry with high quality and small and fine sizes. Lime-wired had it all for a triumphant rise to the top. And the recipe was easy after you clicked and the bar hit 100% to have whatever you had requested. Well, not quite.

3:05People loved lime-wired. By 2015, there were 1.7 million users downloading music and videos and software. The company had even created a pro version which promised faster downloads and more connections for a one-time payment of $29. Anyway, the program was fast, easy to use and with tons of stuff to download. As a result, lime-wired became an escape for teenagers who spent hours downloading endless gigabytes of content. But in a sense, one of Lime-wired's greatest features became its biggest flaw. Remember how we spoke about control? Well, Lime-wired had no capacity for fingerprinting and filtering content. And for most users, this was a significant problem. You downloaded an album thinking it was from this band and it turned out it wasn't. But hey, at least you got to know some new bands. Well, the problem is much more severe than just mislabel music. There was almost no filtering and control and users could access millions of random servers worldwide. So hackers of course took advantage. They littered the Lime-wired ecosystem with viruses, wares and buns. So there was no guarantee the next download wouldn't kill your computer. Lime-wired's system was so loose that you could download Lime-wired pro

4:07within Lime-wired. For free, the only problem was that it could end up being a virus. And this wasn't the worst thing about Lime-wired. It also became littered with pornography, including children. So you could be downloading what you think is your favorite movie, but instead end up in possession of child pornography. Many people ended up in jail and while some claimed they were ignorant, many local and national laws insisted that computer ignorance was no excuse. But Lime-wired self-loaded in a legal cloud of uncertainty. There wasn't a clear answer. It was Lime-wired responsible. Moreover, the nature of P2P meant the company had little control. Ironically, it wasn't pornography that caused Lime-wires the mines. It's hard to bring to hear that this content carried on in Lime-wired until it shut down. Authorities made considerable efforts to stop this, but they could only track individuals instead of an entire P2P system. But first we must go back to 2006. That year, the Record Industry Association of America or RAAA sued Lime-wired. If this name sounds familiar, it's because they also sued Napster. The RAAA claimed that Lime-wired made

5:08illegally downloading music easier for millions of users, and they wanted to stop all those people from having access to their creative material. Now, this story is very similar to other cases, such as Napster, but where this one gets interesting is. In 2007, Mark Gorton reached out to the record companies to sell their songs through Lime-wired by blocking those songs and charging for them. But the plan, of course, backed first. The judge, Kenba Wood, ruled that by blocking and charging for the songs, he was actually evidencing that Lime-wired was illegal, not a really move. Also, the RAAA didn't want anything to do with a program that flooded computers with viruses and wears, so they fired back. Now, the music industry wanted to make illegal downloads harder to come by, and their strategy was simple, attack the source, and the evidence was there. Lime-wired increased its revenue from $6 million to $20 million in 2006, so they profited while the RAAA and its company's lost money. And let's remember, the RAAA isn't small. Once this organization sued you, you either settled or settled and tried to go legit. Lime-wired tried the second, to no avail. And from a legal stand for the RAAA was rights. Judge Wood agreed. The downloads were

6:13illegal, but then they went crazy. They claimed that every copyright violation had cost them $130,000, and that Lime-wired had distributed 11,000 songs legally. At all that up, you get 75 trillion. And as you can imagine, Judge Wood called it absurd, and we agree it's just an impossible amount. But you know what's not impossible? It's keeping track of your business. And if you want to squeeze every bit of value from your subscription data, there's Church Muggle. We've been using Church Muggle for over five years to track the performance of our SaaS business, and if you haven't already, I highly recommend you watch the video that we produced in partnership with them, customer churn how to save your starter. This video dives into what churn is, and why it can be deadly for a SaaS business, as we know all too well. Thankfully, a tool like Church Muggle can save your business by providing you with incredibly valuable insights about customer churn so that you can quickly reduce it by addressing the root of the problem. Church Muggle is free for any company with under $10,000 in MRR. If you have over 10K MRR, you can get a $50 month credit for 12 months by going to churnmuggle.com slash slide fee. Once again, a big thanks to the Tourmology and for sponsoring this video. And then back to that crazy lawsuit. Since 75 trillion was absurd, both

7:16sides had to compromise. In 2010, the Judge ruled that Lime-wired had to seize activities and pay for damages. But not the 75 trillion. In the end, Lime-wired settled with the record industry for $100 million. They of course shut down operations, but they left their mark just weeks after the lawsuit, a group of hackers created a fork version of Lime-wired called Lime-Wired Pirate Edition. And after the lawsuit ended, the hacker group anonymous threatened to attack the RIA's website. That's how much people cared about free music. The impact that Lime-wired and other platforms had on how we consume content remains to this day. It helped shape the future of entire industries, but it was far too flawed. People will continue to find creative ways to download stuff. And indeed, if they want to know about the origins, they'll look back at history. And they're going to see Lime-wired. Thanks a lot for watching guys. Make sure to drop us comments and hit that subscribe button if you enjoyed the video. We have new company forensics episodes coming every single week. So stay tuned for that. We'll see you next time.