The Rise and Fall of Napster

This episode explores the revolutionary journey of Napster, detailing its inception, meteoric rise, legal battles, and eventual decline.

1. Napster transformed digital music distribution, making it accessible and free but controversial.
2. The legal battles highlighted the clash between advancing technology and established copyright laws.
3. Despite its shutdown, Napster influenced future digital platforms, including Spotify.
4. The music industry's resistance to digital change foreshadowed ongoing challenges in adapting to technological innovations.
5. Napster's story is a testament to the profound impact that a single technological innovation can have on global industries.

1. The Birth of Napster

Sean Fanning's creation of Napster in his dorm room marks the beginning of a digital revolution. The platform allowed unprecedented access to music, bypassing traditional industry barriers. Sean Fanning: "Napster is about bringing artists and fans closer together."

2. Rapid Growth and Industry Shock

Napster's user base explodes, causing significant disruptions in music sales and alarming industry executives. Sean Parker: "We knew we were onto something big, but the backlash was faster and fiercer than we expected."

3. Legal Battles

The confrontation with the music industry intensifies as artists and record labels sue Napster, leading to high-profile court cases. Lars Ulrich: "Napster is trafficking stolen goods. It's as simple as that."

4. The Fall

A court ruling mandates Napster's shutdown, marking the end of its service but not the issues it raised. Judge Marilyn Patel: "Unless you can guarantee 100% reliability in preventing copyright infringement, Napster must cease operations."

• Embrace Change: Stay adaptable by embracing new technologies instead of resisting them.
• Understand Legal Boundaries: For tech innovators, understanding copyright and legal boundaries is crucial.
• Support Artists: Engage with platforms that ensure fair compensation for artists.
• Explore Alternatives: Look for or develop alternatives that respect copyrights but also advance accessibility.
• Learn from History: Use Napster’s story as a lesson in the potential consequences of disrupting established industries.

July 11, 2001. Following a protracted legal battle, the peer-to-peer music sharing software, Napster, is forced to cease operations - but not before it changed the music industry forever. This episode originally aired in 2023.

People

Sean Fanning, Sean Parker, Lars Ulrich, Dr. Dre

Companies

Napster, Metallica, Dr. Dre's Production

Books

None

Guest Name(s):

None

Content Warnings:

None

Lindsey Graham
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it's 1998. Inside a dorm room at Northeastern University in Boston, 18 year old Sean fanning taps away feverishly at his PC keyboard, his pale face illuminated by a glowing screen. Sean, an amateur computer programmer, is working on something that's been taking up more and more of his time lately, an idea for a new piece of software that allows users to share digital music files for free. Sean takes a slurp from his soda cup. His dorm is cluttered with stacks of unread books and piles of dirty clothes.

Ever since he started building the software, Sean's studies, as well as his personal hygiene, have fallen by the wayside. Deciding to take a break from coding, Sean instead logs into an Internet chat room. This is where Sean feels most comfortable among his fellow computer wizards. He types out a message outlining his idea for the music sharing platform. He explains that right now, pulling mp3 files off the Internet is time consuming and unreliable.

If people could share their digital music libraries, users would have immediate access to millions of songs without having to buy cds. But to Shawn's disappointment, nobody in the chat room seems to share his vision, except for one individual. A message appears on Sean's screen. It's from 19 year old Sean Parker, a precocious young tech entrepreneur from California. Parker likes Seans idea, and the two teenagers make plans to collaborate.

By the time Shawn logs out of the chat room, its nearly 02:00 a.m. he yawns, then takes another sip of soda and gets back to writing code.

In the late 1990s, the music business is booming. Profits from cd sales are stratospheric, and industry executives are expecting billions more to come. But when recent high school graduates Sean Fanning and Sean Parker introduce Napster, everything will change. Within a year, the platform will have tens of millions of users, and the traditional music industry will be left reeling as fans are suddenly able to digitally access nearly every song ever recorded free of charge. But the record companies will soon hit back, accusing Napster of violating copyright laws and dragging the platform's founders through a protracted legal battle that will ultimately lead to Napsters court mandated closure on July 11, 2001.

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Lindsey Graham
From noiser and airship, I'm Lindsey Graham, and this is History daily.

History is made every day on this podcast. Every day, we tell the true stories of the people and events that shaped our world. Today is July 11, 2001. The rise and fall of Napster.

It's early 2000 in San Mateo, California, over a year before Napster will be shut down. Inside a small office above a bank, Sean Fanning and Sean Parker, the founders of Napster, Incorporated, stare at a whiteboard. Considering the dizzying figure scrawled across it. These numbers represent how many people in the last six months have installed Napster, a peer to peer file sharing platform, and are currently using it to download music from other people's computers. Today, that number is around 80 million.

Sean Fanning scratches his shaved head, his eyes wide with incredulity. Napster was his brainchild, an idea he came up with in his college dorm. Now it's reshaping the music industry, fundamentally changing the way people consume songs. Sean didn't expect his creation to make such an immediate impact, though he's not surprised by Napster's popularity, the average college student can't afford to pay $17 for a cd to listen to their favorite artist's new album. Napster cuts the recording companies and artists out completely by allowing people to download songs for free.

After launching Napster last June, Sean dropped out of college and moved to California where Parker was raising seed capital from investors. The pair hired friends from the Internet as staff and opened Napster headquarters here in the San Francisco Bay Area in the heart of Silicon Valley. These past few months have been difficult, but thrilling. The young team of programmers often work through the night sleeping under their desks if they have to, just to keep the servers running. Waste paper baskets overflow with Red Bull cans and a boombox blares hip hop to ensure the teams remain alert.

With 80 million users already, Napster is fast becoming one of the most successful web applications ever invented and the greatest threat the record industry has ever known. In the twelve months since Napster's launch, the big record labels recorded their first profit decline in decades. At the whiteboard, Shawn looks over at Parker who grins back at him with a twinkle in his eye. After marveling at their initial success, the pair discuss next steps. They both agree that while disrupting the music industry is entertaining, it could get them into trouble.

As soon as they wake up to the dangers of digital distribution, record label bosses will start looking for ways to shut Napster down. If they want to survive. Sean and Parker will need to find a way to collaborate with labels and artists. So the two founders appeal to their first CEO, venture capitalist Eileen Richardson. During a meeting that afternoon, Eileen makes a suggestion.

What if they agreed to charge a rate of $1 per song, offering the record labels a cut of the proceeds. This would allow customers to pick and choose individual songs they like without having to purchase an entire album. And without any of the overheads involved in manufacturing cds, the record labels would quickly turn to profit. Shawn likes the idea and points out that this business model would allow smaller, less well known artists to make money from digital downloads. Thats what Napster is all about, bringing artists and fans closer together by making the music industry more accessible.

But after reaching out to the record companies, the Napster board receives a string of rebuffs. Industry executives fear that Napsters digital distribution model will destroy the cd business. And because artists royalties come exclusively through cd sales, the labels would have to rewrite all existing contracts. A process that could take years. But the Napster team doesnt have time to dwell on the record companys reservations.

Theyre too busy growing their platform, gaining more subscribers, building their database of songs, and turning Napster into a cultural phenomenon. Music journalists across the world soon proclaim the arrival of a new digital revolution, with Sean featuring on the COVID of Time magazine beneath the headline whats next for Napster? Its a question that Sean and his team are asking themselves daily because amidst all the excitement, dark clouds are gathering overhead. Powerful figures in the music industry are decrying Napster's founders as crooks, robbing the music industry and violating copyright law. In the process.

One representative from a major label will declare Napster the most insidious website I've ever seen. For though many will see Napster as a force for good, others will see it as a vehicle for piracy, facilitating the distribution of songs without the artists permission. And these critics won't rest until this revolutionary new platform is taken down.

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It's January 2000. Inside a conference room in the south of France, just over a year before Napster's downfall, Allison Wenham, head of the association of Independent Music, is attending an annual trade fair for the recording industry. She sips bottled water as major label bosses discuss how digital music distribution is threatening the future of their business. As she listens, it dawns on Allison that unless they get with the times, the record companies she represents could find themselves left behind by history. Because ever since Napster was launched six months ago, the platform's success has plunged the recording industry into a tailspin of panic.

With profits falling for the first time in decades. It's no surprise that at this year's trade fair, the majority of the conversations Allison's had revolve around Napster. But what has become clear is that most senior executives don't understand the significance of this new technology and how it represents the future of music. All they want to do is shut it down. The trouble is, nobody seems to know how.

At the trade fair, one major label boss jumps to his feet. His face flushed with indignation. He announces that he's come up with a solution. They should ban the Internet. By the time Allison leaves the conference, her head is swimming.

She knows the Recording Industry association of America has already sued Napster, claiming the platform has allowed users to violate copyright law. But Allison, who represents several smaller independent record labels, doesn't think fighting Napster is the right approach. In her mind, Napster has started something that cannot be undone. Either the record companies ride the wave of advancing technology or get washed away in the flood. In the coming months, Allison and her colleagues at the association of Independent Music try to negotiate a deal with Napster.

Napster's representatives explain the new business model they're working on, charging users a flat rate subscription fee, a cut of which they would offer to labels and artists. Allison outlines what they would expect in advances and royalties, and the two parties eventually reach an agreement. By the time Allison leaves the final meeting, she feels pleased to have joined the digital revolution. But while some in the industry try to make deals with Napster, others are continuing to attack until now, Napster's founders have managed to keep their legal struggles out of the mainstream media. But all that changes in the spring of 2000 when Lars Ulrich, the drummer for popular heavy metal group Metallica, receives a call from his band manager.

As Lars listens, his expression changes from one of mild confusion to one of fury. Apparently while listening to the radio that afternoon, the manager heard a song he recognized. It was a single recently recorded by Metallica, only it hasn't been released yet. Someone had leaked it. Now it's playing on radio stations across the country.

Metallica's lawyer does some digging and traces the leaked song back to the music sharing platform Napster. The more Lars and his bandmates learn about Napster, the more furious they become. By allowing users to share and download songs for free without the artists express permission or any compensation, Napster is effectively trafficking stolen goods. So in April, Metallica sues. Lars and his bandmates publish a press release stating it is sickening to know that our art is being traded like a commodity rather than the art that it is.

From a business standpoint, this is about piracy, taking something that doesnt belong to you. Metallica's court case rumbles on for months and soon the band has joined in their lawsuit by another aggrieved artist, the rapper Doctor Dre, whose songs are also being downloaded by thousands of Napster users. With such high profile musicians open openly criticizing the platform, Napster faces a deluge of negative press. The case against them becomes an ideological struggle about music in the digital age. To many, it isnt clear who holds the moral high ground.

Napsters lawyers argue that the platform is only trying to make music freely accessible to those who cant afford it. While the legal teams representing Metallica and Doctor Dre argue that their clients copyrights have been violated and they deserve compensation. Ultimately, a district judge in San Francisco will side with the artists, finding Napster guilty. Napster will be ordered to remove all songs by Metallica and Doctor Dre from their service. But then another lawsuit brought against Napster by the Recording Industry association of America will conclude in February 2001, with Napster required to implement more stringent measures to crack down on copyright infringement or Facebook permanent closure.

But Napster will appeal the verdict, leading to one final confrontation in court, where Napster's fate and that of music streaming in the digital age will be decided.

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Lindsey Graham
Its July 11, 2001 Hank Barry, Napsters CEO, sits stiffly inside a crowded courtroom in San Francisco. Looking down on him is Judge Marilyn Patel, her brow furrowed with disapproval as the prosecution's counsel reads their statement. Hank slumps lower in his seat, fearing that this trial is not going his way. Napster has been embroiled in legal struggles since the start. The first challenge was brought by the Recording Industry association of America, who represented 18 different record companies accusing Napster of copyright infringement.

Meanwhile, a joint lawsuit filed by Metallica and Doctor Dre was closed earlier this year, and Napster was forced to remove those artists songs from their site. But ultimately, it's the ongoing court battle with Recording industry association that has come back to haunt Napster most. Back in February, Judge Patel ordered Napster to shut down or implement more stringent measures to crack down on copyright infringement. Since then, Napster has temporarily suspended its servers while programmers have been developing new filtering technology. But Napster also returned to court to appeal the verdict.

Now in the courtroom, its Hanks time to speak, and he explains to Judge Patel that Napsters innovative filtering technology is 99.5% 4% reliable at cracking down on the distribution of copyrighted material. But the judges frown only deepens. She says that unless they can promise 100% reliability, her verdict is the same. Napster will have to cease operations, Hank explains. They cannot guarantee complete reliability.

It just isnt possible. And immediately murmurs of vindication rise from the prosecution's bench. They know theyve won. Sure enough, Judge Patel rules in favor of the recording industry yet again, ordering Napster to shut down its entire network immediately. Napster is also forced to pay the record companies $26 million for the use of copyrighted material, and within a year, Napster will file for bankruptcy.

Sean Fanning and Sean Parker, Napsters co founders, will leave the failed project disheartened but not discouraged. Both will go on to have successful careers as tech entrepreneurs, with Parker becoming an early investor in a new music streaming site called Spotify, one which will go on to enjoy success that Napster could never achieve. Following Napster's demise, many commentators will argue that the innovative file sharing platform simply came too early, that the world wasn't yet ready for the service it offered. Because, unable to keep up with advancing technology in the digital age, the record companies decided to take Napster down rather than move with the times. These days, the controversy over free music streaming rumbles on.

Multiple artists have boycotted digital streaming platforms over how little they pay, no doubt pining for an earlier era where record sales kept the music industry booming. But that era is over, despite the efforts of the recording industry, who only succeeded in delaying the inevitable when Napster was ordered to shut down on July 1121.

Next on History Daily, July 12, 1979 the symbolic end to the disco genre is marked by disco Demolition Night, a major league baseball promotion that goes awry from noiser and airship. This is History daily, hosted, edited, and executive produced by me, Lindsey Graham. Audio editing by Emily Burke. Sound design by Misha Stanton. Music by Lindsey Graham.

This episode is written and researched by Joe Viner. Executive producers are Alexandra Curry Buckner for airship and Pascal Hughes for r.

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