Tales In Tech History: Napster

Music sharing services were always controversial when they first arrived, but in the heady days of the dot.com boom and before online copyright concerns, they briefly became one of the key drivers of Web 2.0.

The original Napster file sharing service actually began life in 1999 and was the creation of Shawn and John Fanning, along with entrepreneur Sean Parker (who was also incidentally the first president of Facebook).

The premise of Napster was a simple one. It was designed to be a peer-to-peer (P2P) file sharing Internet service that focused mostly on sharing digital audio files (typically MP3 files), which soon led to epic legal battles with the music industry.

Early Days

These legal tussles resulted in the original Napster service having a very short lifespan. Indeed, it only operated between June 1999 and July 2001 – just over two years in fact.

But its influence cannot be underestimated. There was other file sharing software such as IRC and Usenet, but these were not as user friendly.

Additionally, the Napster service specialised in music, and it had a huge amount of digital content on tap that could be downloaded for free, a refreshing change for people that had been strictly limited to physical audio sources for many years (cassette tapes, vinyl records, CDs etc).

Because of this large music selection, Napster became the go to location for rare albums, bootleg recordings, and the latest chart toppers.

All that was needed was a free Napster account (username, password), and it rapidly chalked up a staggering 80 million registered users.

Indeed, Napster was so popular that it had to be banned in many businesses, colleges and universities, because of congestion it caused on their networks.

Legal Battles

Napster was always going to draw the ire of the music industry, and and these copyright concerns did indeed emerge, spearheaded by the heavy metal band Metallica.

Metallica had discovered a demo of their song “I Disappear” had been circulating across the Napster network before it was oficially released.

This led to its demo song being played on several radio stations, and thus Metallica soon discovered that not only did Napster have their demo song online, but also their entire back catalogue of music.

The band  hit Napster with a lawsuit in March 2000, closely followed by rapper Dr Dre.

Both Metallica and Dr Dre had asked for Napster to take down their music (it refused) and these musicans also provided the service with a list of usernames of people who had shared their music.

Napster eventually settled both lawsuits in March 2001, but Napster’s illegal operations were also on the radar of the RIAA (Recording Industry Association of America) who filed a lawsuit against it in late 1999 for the unauthorised distribution of copyrighted material.

Napster was accused of hurting record sales, but its supporters always claimed that the file sharing of MP3s stimulated, rather than hurt, sales. A long court case followed but Napster lost and injunctions were issued, despite a last minute to the US Appeals Court.

Napster was forced to shutter its network in July 2001, and in September Napster agreed to pay music creators and copyright owners a $26m settlement for past, unauthorised uses of music, and as an advance against future licensing royalties of $10 million.

The only problem was Napster didn’t have the money, so it attempted to convert its free service into a reputable subscription system that used a secure file format and audio fingerprinting technology.

But it struggled to get licences from the music industry and in 2002 Napster declared itself bankrupt and its assets were sold to a third party in a bankruptcy auction.

The Rebirths

On 17 May 2002, the assets of bankrupt Napster were due to be acquired by German media firm Bertelsmann for $85m. The German firm hoped to transform Napster into an online music subscription service.

But in September 2002, the sale of Napster was blocked by an American bankruptcy judge and that decision forced Napster to liquidate its assets. The brand and logo were acquired at auction by Roxio which used them to re-brand its Pressplay music service as Napster 2.0, and were then sold again to US electronics retailer Best Buy in September 2008 for $121m.

But Napster was struggling, despite having a reported 700,000 subscribers, and Best Buy sold it on to streaming service Rhapsody. The iconic Napster name eventually disappeared in the United States, but has been revived in several countries after Rhapsody adopted the name wholesale.

Founder Update

Programmer and original co founder of Napster Shawn Fanning became an angel investor and he founded Snocap in 2002 which aspired to be a legitimate marketplace for digital media. It was poorly received and closed down in 2007.

He then went on to develop Rupture, a social networking tool designed to handle the task of publishing gamers’ individual profiles to a communal space. Rupture was later acquired by Electronic Arts for $15m, and Fanning was laid off in 2009.

But he had already started a new company called Path.com and in 2011 Fanning reunited with Napster co-founder Sean Parker to found Airtime.com, a live video sharing website, which is now inactive. It has been relaunched recently as a mobile app for iOS and Android.

John Fanning’s association with Napster ended decades ago, and according to LinkedIn bio, he has been chairman of private equity firm Netcapital since 2001.

Sean Parker meanwhile had (as already mentioned) been Facebook’s first President, but he stepped down in 2005. He was however credited with being a major driver of Facebook in its early years, offering support to founder Mark Zuckerberg when the social network wasn’t as successful as it is now.

Parker later became an investor in Swedish streaming company Spotfiy and in 2016 Forbes ranked Parker as number 772 (with a $2.4bn fortune) in its list of the world’s billionaires.

His journey from Napster to Spotify is the same one that the music industry has followed over the past two decades. Once considered an illegal act, the streaming of files on the Internet is now how a significant number of people choose to listen to music.

Sure, Apple might argue the iPod and iTunes had a significant role to play but its hard to argue against Napster’s role in the digital music revolution.