"Music is ultimately gonna be free." -- Billy Corgan, The Smashing Pumpkins
Sure, Napster made a dent in the world and everyone now-a-days knows all about Napster and it's entourage. But I bet in 5 years no one will remember anything save a few passing details. History is written by the winners and while Napster was a contender, it couldn't survive the impossible odds its faced. But it was an exciting journey.
Here we go.
Napster was creation of of Northeastern University freshman Shawn Fanning, some time in late 1998. It's wasn't really a "child" or "project", but simply started out as a clever hack that was never meant to go farther than Fanning's dorm. However, it became popular all around NU and not being one to ignore opportunity, Fanning left NU in January '99 and started "Napster" as a company in May 1999. Now long after that it created it's first ripples in the water when public file sharing was opened on June 1st of 1999.
But they found out too soon that there was difficultly in making money
from distribution freedom -- after all, how do you get money from free music? Napsters' first reprive came in August when John Fanning, Shawn's uncle, invested his own money and that of other rallied investors to keep the company solvent for another six months. About this time, in September, Eileen Richardson was taken on as Napster's CEO, their "responsible face" and parental supervision.
From here on in, things start getting sticky. Despite negotiation
with several major record label, nothing ever comes through. In November of 1999, Napster was very close in signing some important use contracts with major record labels, an action that could drastically change the face of digital music.
Instead, every label pulled out of negotiations with the news of a
suit brought by the RIAA and it's Labels over copyright violations. The suit, demanding $100,000 USD for every violation (e.g. every time a song was copied) hit the fledgling company in December 7th, 1999. An appropriate date because it would serve as a watershed event in fair use and file-swapping history.
The suit came as a shock to a lot of people who had been sharing and space shifting music for some time under several already established precedents such as the Home Recording Act of 1992 and the 9th circuit RIAA vs. Diamond Multimedia ruling in 1999. As far as must consumers were concerned, the law was on you side with regard to copying music with your friends. What the RIAA case was going to establish was that this was only if you didn't have too many friends.
The first ruling on this case came in July of 2000 when Judge Marilyn
Hall Patel issued an injunction against Napster and ordered the company to halt distribution of copyrighted media on it's service. While this ruling was stayed some 2 days later by the 9th Circuit Court of Appeals it was Napsters first step downhill.
A little before this, in April, came another famous suit, and the one that would throw Napster into fame and infamy -- Metallica vs. Napster.
Talk about a tizzy. This was different from the RIAA or some
executive somewhere; this was personal. You could easily dismiss the
venom of law suits when those tossing them around where anonymous
pen-pushers in high-rises. But when the person raising a fuss is someone
who is widely known by people who don't even own a computer? Well,
that's a whole new game.
Metallica, as a group, was probably one of the worse choices as the
front-men for a giant legal media circus. Why? Because, early in their life they gained their initial fame by -- that's right -- people trading their music for free and without their permission. And so now they are trying to sue people for the same thing? It was, in hindsight, a subtle tactical blunder, but at the time is served to draw the battle lines. Mettalica meant business, and they wouldn't relent.
But with the same hard edge that you expect from their music, they
also persued Napster going as far as gaining the names of over 300,000
people who were illegally offering files with "Metallica" in the title on
Napster and demanding those users be removed. This demand was executed by printing out all 300,000 names and having them couriered to Napsters
headquarters. A number of other artists, such as Dr. Dre, also joined the fray in support of artists' rights soon after.
In a move that was frankly surprising, late in 2000 the German media conglomerate Bertelsmann (BMG) announced that it was forming a partnership with it's rival Napster to create a payment and membership based distribution system to "allow" users to pay for the music they download and share. Both parties would receive much criticism for this: Napster for selling out and BMG for attempting to "legitimize" electronic music trading.
Big things started in February of 2001 when a Federal smack-down was issued that stated, without exception, that Napster must inhibit the trading of any copyrighted material on it's system or they would be held liable for it. This is a monumental decision because it reverses the commonly heald view that Napster was, in the eyes of the law, a Common Carrier like the telephone company or the postal service. This would establish that Napster was responsible for the actions of it's users, a precedent that has since been bitterly scrutinized.
However, Judge Patel did issue a bit of breathing room in March when it was decided that the duty of notification was to be placed on the Distribution companies and not Napster: The injunction required that the record companies provide Napster with information about infringing files, in essence creating an opt-out system. This would be appealed by the record companies later on however.
The appeal didn't matter, though, because in that same month, Napster put in it's filtering system which effectively killed their own once thriving system. Distribution companies were not shy about opting out their music from the system, going so far as to submit seemingly random filenames to Napster for addition to their filter.
This was still not enough, though, in the eyes of the law. The courts demanded that the Napster filering and distribution model have a zero-percent chance of failure and that no copyrighted material should be allowed through, regardless of encoding or name. In response, Napster adopted a proprietary ".nap" file format, utilizing secure playback control licenses from Playmedia. The service would only allow sharing of this type of file and such files had to be specially signed and approved before sharing.
After many months of restructuring and redesign, Napster relaunched in mid-to-late 2001 as a pay-for music swapping service under the management of BMG. Users would pay a monthly charge and be allowed to trade music under the BMG labels and any other company that agreed to allow distribution.
It was a complete, total and utter failure.
Some industry analysts gave the figures that BMG/Napster reclaimed less than 5% of the development cost of this new service. The reasons were simple: limited selection and you still had to deal with badly encoded files and broken downloads -- and you had to pay for it to boot!
Things started getting tenuous in the first of 2002. Key management resigned in May, Fanning himself soon after. BMG decided to pull the plug on the pay service and it's 3 remaining users after Napster rejected BMG's repeated buy-out offers.
Comeupance came when Napster, Inc. filed Chapter 11 in June of 2002, and BMG began negotiations to buy its assets soon after at a fraction of their previous buy-out offers.
So Napster is dead and Capitalists rejoice, right? But is it really dead as much as just sleeping?
After all, people still associate the name with any kind of file sharing and it's has served as a model and a warning to everything that came after it. It wasn't the first, or the best, but it was the most important.
In my opinion, the biggest contribution was not that Napster let you trade music or even that it was a peer-based system. It was the realization that some kid from the midwest hacking code when he should be writting his term paper could make something that made the most powerful organizations in the world shake to the core. Shawn Fanning, a kid who had trouble coralling together beer money had made a record label like Sony Music, worth over 20 billion dollars, literally scared.