Lani Wong

Hist 471 Termpaper

The Rise and Demise of Napster

           When the Internet was first introduced during the Cold War period around the 70s, it was mainly used for distributing research and military data through the computer networks. In the 90s, computer and technology kept growing, and they helped to improve the Internet system. With the introduction of World Wide Web and Internet browser in the early 90s, the Internet became the lively multimedia portals, ready to open on command on the screens of the workforce, student body, and swelling ranks of home users who were just getting comfortable with their PCs. On the other hand, the number of Internet users kept growing at the same time. In 1993, less than 3 percent of American classrooms accessed to Internet, but more than half in 2000.[1]

           Internet is a tool for people to exchange information, and it allows people to share computer files as well. In the early days of the Internet, the most popular file sharing system was the file transfer protocol (FTP).[2] With the emergence of the Peer-to-Peer (P2P), a same-level relationship with another user, it eventually replaced the FTP system. In P2P, one computer can function as both client/server. From this, P2P will let two computers have an equal relationship between each other, and it makes file sharing easier among the Internet users. For example, around 1997, Hotline, or ICQ messenger became the major ways to share files. Messenger is a communication tool on internet which allows people to have chat. And in messenger service, there is a category for file sharing.[3]

           MP3is a standard technology and format for compressing a sound sequence into a very small file about one-twelfth the size of the original CD audio file while preserving the original level of sound quality when it is played.[4] MP3 is the computer file that many people like to download from the Internet nowadays. The popularity of MP3 file downloading grew in the late 90s, and at the same time, Napster, a teenager named Shawn Fanning created a computer software known as Napster in 1999, which allowed Internet users to connect with each other through the P2P system to share MP3 music files stored on their individual computer hard drives. Because of Napster, many people could get the music they wanted for free through this computer software conveniently. However, Napster was very unfavaroable to the recording labels and some musicians. As a result, they filed lawsuit to sue Napster. When Napster lost the lawsuit since it had violated the copyright laws, Shawn Fanning was ordered to block all the MP3 files for people to share through Napster in 2000.

           This essay will describe the emergence of Napster and its growth of popularity. Also, it will talk about the reasons why recording labels and musicians disliked Napster and filed a lawsuit against Shawn Fanning and his Napster company in 1999. At the end, the paper will elaborate some benefits brought by Napster although many artists regarded it as a bad thing.

The Birth and Rise of Napster

           The story of Napster began in 1996 when Shawn Fanning got his first computer and Internet connection from his Uncle John Fanning. Since that time, Shawn Fanning spent most of his spare time learning about computer programming. During the summers in high school, Shawn worked at his uncle company, NetGames, as an intern, where he learned a lot about programming from computer science students at Carnegie Mellon University. At the same time, Shawn became a regular visitor to Internet chat rooms, where he picked up a lot of advices and information from other experienced programmers and developers. Shawn Fanning went to Northeastern University in Boston in 1998 and decided to major in computer science, he was ambitious to create a Windows based program of his own. At the same time, one of Fanning’s roommates was interested in MP3s and Internet music sites. However, his roommate always complaint those FTP sites and music websites unreliable, and the indices were often out of date. [5]

When Shawn Fanning realized the inconvenience and instability of the current music download system, it inspired him to create a better system for people to share their own MP3 files conveniently through a piece of software, which was known as Napster, a name that Shawn Fanning used as a nickname in chatrooms. The first step Shawn Fanning needed to create Napster was to write a small design for his new search engine. He pursued two ways to bring this plan to reality. First of all, he wrote the server software. Then, he started work on writing the software that the individual user would require to share MP3 files with other Internet users. Napster became a P2P software when it offered a sort of Internet network that allowed a group of computer users with the same networking program to connect with each other to share MP3 files stored on their individual hard drives. By using Napster, it allowed users to search the MP3 files from other Napster users that were online at the same time. The number of song files available at any given time depended on the number of song files that active users chose to share from their hard drives. By May 1999, when Shawn Fanning’s uncle John Fanning saw what his nephew did had a serious commercial potential, he incoporated Napster into a company and went about raising money from investor, and Napster began its full operation, allowing people to swap MP3 files in June 1999.[6]

Napster enabled people to share their MP3 files with other Internet users, but the friends of Shawn Fanning thought his idea was not workable, because they believed that it is a selfish world and nobody would want to share their files. However, Shawn Fanning looked at this issue in another way, because he realized that as long as Napster would not harm the users and enabled them to download free music from other users, people would just like to show each other their amazing MP3 collections. Shawn Fanning was right, because the popularity of Napster grew quickly in a short period of time. The “sheer power of word of mouth” was probably the biggest reason behind the growth of Napster. When Napster impressed many people, they would tell their friends how amazing the software was. Besides that, Napster was featured on the world-wide popular website Download.com in the autumn 1999. Because of that, more people around the world could know the existence of Napster. Again, when they could use the software and realized the product was good, “the sheer power of word of mouth” would be in action again when the users told their friends about Napster. Hence, the number of Napster users kept growing when more and more people knew the existence of Napster.[7] By February 2001, just before Napster was shut down, the number of Napster users reached 58 million, and 30% of the users were not Americans.[8]

The creation of Napster made Shawn Fanning an entrepreneur, because an entrepreneur is the man who gets new things done and not necessarily the man who invents.[9] Shawn Fanning did not invent computer, MP3, Internet, or the P2P system, but he was able to combine these things together to create a new software known as Napster. Therefore, Shawn Fanning should be considered as an entrepreneur.

Reaction of Recording Labels and Musicians

           Historically, technology could help to improve the music development, for example, it helped to make the sound quality of the music better and helped to bring new music genres to the whole music scene, but on the other hand, the rise of technology could also be a threat to some musicians and businessmen. From the 20s to 40s, musicians worried the rise of radio and jukebox would be harmful to their jobs when people would no longer spend money on recording music and live music. In the 21^st century, Napster represented the newest technology that would create a threat to the musicians and recording labels, because the existence of Napster could probably damage the benefits and profits of the recording labels and musicians. 

Set against Napster, the five major recording labels, Universal, Sony, BMG, EMI, and Warner Music, had their reasons for feeling disturbed by the phenomenal success of Napster, because they believed that Napster enabled piracy of music on an unprecedented scale and had totally violated the copyright laws. Both Universial and Warner Music were outspoken on the issue of copyright. They stated that copyrights of the music should be protected from online pirates, and copyright owners and artists needed to be properly compensated for use of their work.[10] Albhy Galuten, the vice president of interactive programming at Unversial, blamed Napster ignored the rights of artists to the fruits of their talent and labor and disregarded the meaning of intellectual property, which was immoral and illegal.[11]

Copyright was an issue the recording lables care about, but they also concerned their profits could be taken away by Napster when it let people share music for free. Sony was very aggressive in its pursuit of Napster, and it directly stated that music industry should take whatever steps it needed to protect its revenue streams.[12] From the statement of Sony, we realized that the recording labels actually concerned their profits very much, because they were afraid that people would no longer purchase their products when they could get the free music through Napster. Therefore, the recording labels believed that Napster must stop its operation in order to protect their benefits.

Many artists also expressed their discontent toward Napster. Among the artists, Metallica was the most radical artist to fight against Napster, because the band filed lawsuit to sue Napster for copyright infringement in 2000. Metallica was not the only big name group to speak out against Napster, but somehow Ulrich Lars, the drummer of Metallica, had become known as a sort of figurehead in the pop industry against the phenomenal spread of Napster. He actually spoke out the mind of other famous artists like Eminem, Dr. Dre, and Lou Reed. In Ulrich Lars view, he believed that the primary source of income for most songwriters was from the sale of record. However, when people downloaded a song from Napster and ripped the MP3 files into CD-R by a CD burner, it simply took money away from the creativity of musicians, and it was ridiculous to tell the musicians to work for free, because artists, just like anyone else, should be paid for their work. Also, Lars stressed that when music was free for downloading, the music industry was not viable, and jobs would be lost and the diverse voices of the artists would disappear.[13]

When many artists were afraid that Napster could take away their revenues, some artists felt that Napster disrespected them, because Napster leaked out many of their previous unreleased songs, incompleted songs, and demo for people to download that they would not like to let people listen to those songs. Canadian singer/songwriter Alanis Morissette believed that musicians should control their own decisions. She said, “the artists should be the person who’s ultimately in a position to decide when, where, and how something should be shared with whomever they choose to share it with.”[14]

From the early days of Napster, the five major recording labels, both individually and collectively, through the Recording Industry Association of America (RIAA), alongside famous artists such as Metallica and Dr Dre, grew in their hostility to what they saw as Napster violated the copyright laws and it was actually building its own business empire on their back by stealing their intellectual properties and creativities. Finally, facing the threat created by Napster, the major recording labels, represented by RIAA, filed a lawsuit against Napster in late 1999, when Metallica sued Napster for copyright infringement individually in April 2000.

At the center of the prosecution against Napster was Hilary Rosen, the CEO of the RIAA. Hilary Rosen and her attorney, Russell Frackman, on behalf the recording labels and musicians, said they sued Napster because it launched a service that enabled piracy of music on an unprecdented scale. Although Napster did not house the recordings, Hilary Rosen said that the copyright laws has claimed clearly that someone who materially contributes to infringing activity, with knowledge of that activity, was liable for copyright infringement as if that person did the copying him or herself. If a consumer were permitted to share with millions of annoymous strangers copyrighted music, or anything else just because he or she had bought a single copy of it, then copyright law would be turned upside down.[15]

To defend itself, Napster and its attorney, David Boies, argued that copyright was just a tool of public policy. David Boies said, “copyright is an incentive that we as a society grant so that we may have better access to more original expression. In the end, the copyright laws are for the benefit of the public as a whole, not the individual copyright owners.” Besides that, Napster and David Boies realized that recording labels were afraid of losing profit due to the existence of Napster, but studies showed that Napster users shared songs as a way to sample music before purchasing it, including music that the user would not normally consider to buy, so it was unnecessary for the major recording labels and artists to worry Napster would destroy their revenue streams.[16]

The decision of the lawsuit was made on July 26, 2000 in Federal District Court of San Francisco, the victory went to the side of music industry. After that, Napster filed an immediate appeal, but Napster lost the appeal. Napster lost the lawsuit because Judge Marilyn Patel was not impressed by the argument of Napster and David Boies, as she felt their arguments strayed from common sense. She said if Napster offered so many compelling uses outside of trading copyrighted songs, why would an order to suspend the trading of those songs force the company out of business.[17] On the other hand, the judge agreed the recording labels had presented a convincing case of direct copyright infringement by Napster users, and Napster could be liable for two types of copyright infringement under two doctrines: contricutory copyright infringement and vicarious copyright infringement. Napster had broken the copyright law through its technology by allowing the transfer of exact copies of music files from one computer to another via Internet. After the ruling of The Ninth Circuit judges on February 12, 2001, Napster was finally ordered to stop all the MP3 files transfering through its software immediately, and victorious Hilary Rosen said that the recording labels and the artists would continue to create the most expressive, passionate, diverse, and exciting music to the world. [18]

Is Napster a threat to the recording labels and musicians ?

Besides the issue of copyright infringement, the recording labels and musicians feared that their revenue from their record sale would drop when people no longer purchased their music anymore once they could download free music from the Internet. However, there were lots of evidences showing Napster did not really take away the revenue of the musicians. Moreover, Napster actually promoted the sale of recording music, and Napster was especially thankful for the indie labels and artists around the world.

First of all, although Napster could offer Internet users free music, the quality of the MP3 files just could not compare with a CD. Despite the sound quality of MP3 files is said to be near CD quality, it is “near” only, so it still cannot compare with the superior sound provided by an audio CD. Therefore, people would still buy a CD after sampling the music from the MP3 files. An annoymous user on the Internet proved this assumption correct, he said, “I experimented with Napster and found defects in many records such as premature endings and extraneous sounds. My time spent reviewing and editing to burn a quality CD is worth more than the cost of a new commercial CD. So I say leave Napster alone. It’s good for samplings only.”[19]

Some lawyers also believed that Napster would not hurt the revenues of the recording labels. Ken Hertz, a music attorney, believed that Napster was a huge promotional tool for the musicians. He espoused the theory that Napster was actually helping propel their success, possibly with the complicity of the marketing departments at their respective labels. In order to prove Napster could promote the record sale, he stated when Napster was in operation, N’Sync, Britney Spears, and Eminem were the three most heavily trafficked artists at Napster the week before their records came out, and those records were the fastest selling records of all time. Therefore, the existence of Napster actually helped to promote the artists and would not hurt their profits, because Napster made listeners more confindent to buy more CDs rather than less.[20] 

Not every musicians hated Napster, because some mainstream artists such as Chuck D, Moby, Courtney Love, Green Day, Radiohead, and Dave Matthew Bands actually supported Napster. They realized Napster could let more people around the world listen to their music, and they belived that when people loved their music, they would purchase their products after sampling from Napster, so they did not see Napster could do their any harm. Also, according to Chuck D , the Internet could also save the fading group, artists, and songwriter. He said that artists like Prince, who was so prolific that his record company would not release his music as often as he would have liked, Napster actually provided a mode of distribution that could keep up with his own pace of creativity.[21] Furthermore, some artists just wanted their music be heard by the audiences. Without having to rely on a recording label, Napster allowed the artists to reach their audience directly and easily. Like Courtney Love, she would rather have 100 million people hear her songs than 1 million dollar.[22]

RIAA represented the recording labels and artists to speak out their discontent toward Napster, but it only spoke for the mainstream recording labels and artists, when the voice of many small indie labels and artists were not heard by the public. In fact, many indie labels and artists supported the existence of Napster, because they believed Napster was a very good way for them to promote themselves.

Indie labels owners and artists usually struggle to release music in a market when it is absolutely dominated by the major recording labels. Unlike the major recording labels that have enough fund to create a strong tie with radio and TV stations, indie labels just cannot not afford to promote their music through radio programming and MTV. Therefore, many indie labels and artists saw Napster allowed them for promoting and distributing their music in an inexpensive manner. Lawrence W. Railey is an independent techno artists. According to him, before Napster, only a few people were interested in his mixes. Although he posted some tracks on MP3.com and some people paid to download his music, neither the income nor the traffic to the site was substantial. However, when he made his tracks available on Napster in November 1999, he also provided a link to his MP3.com site. Within two weeks, the traffic arriving his sites improved by 50%, and revenue from the sale of his tracks picked up as fans flooded to his site. More importantly, Napster made Railey famous, because after his songs were available on Napster, he received e-mails informing him that his music was being played in dance clubs, university radio stations and Webcasts worldwide, and various independent labels showed their interest to offer Railey a contract.[23]

Some people also said that Napster allowed them to listen to some indie music that they just could not listen from the mainstream radio program and TV program such as MTV or VH1. However, when they had a chance to listen to the indie music from Napster, they were impressed, so they would come out to purchase the CD of the indie labels that they would not consider to purchase in the past, and the number of CD they purchaed was larger than before. Therefore, Napster really helped to increase the record sale of the indie labels.[24]

Epilogue - Who Won?

           Although Napster lost the lawsuit and was order to stop allowing people to enagage in MP3 swapping activities, and recording labels and musicians finally got what they wanted, it was not really a total victory for them, because the shut down of Napster actually brought them more harms than goods. Besides that, there were lots of alternative MP3 files softwares emerged after Napster completely ended its operation in 2001.  

During the lawsuit against Napster, individuals tended to be less concerned about copyright laws than businesses have to be. Because of that, they only saw the recording labels and musicians greedy when they showed so much concern that Napster would take away their profits from the record sales.[25] The demise of Napster did not revive the record sales at all, because it only provoked the anger of many music fans, and they carried out actions to boycott mainstream recording labels and musicians to express their grievances. Although Napster ended its operation in 2001, this year was still proved to be one of the worst in recent history for CD sales when International Federation of the Phonographic Industry (IFPI) announced that global music sales declined by 5 percent this year.[26]

The music fans also showed their anger toward artists such as Metallica and the RIAA through the Internet. Hence, lots of anti-artists and anti-RIAA web pages emerged after the music industry had won the lawsuit and forced Napster to stop its operation. Many artists might have lost their good image in this issue. Many people saw Metallica had lost its soul already, believing Metallica was not really a band that would bring them sincere music anymore, and what the band only cared about was money. Therefore, many fans, some of them were ex-Metallica fans, built up different web pages to attack Metcallica. For example, “Kill Metallica – the death of an old metal band”, http://www.killmetallica.com/, is an example of anti-Metallica web page built by the fans, and this web page also provides the links of other anti-Metallica web pages as well. On the other hand, many people regarded RIAA only protected the benefits of the major labels and artists, and totally ignored the wills of many indie artists. Therefore, some people created their anti-RIAA web page to show their disdain on RIAA. Like  http://www.boycott-riaa.com/, it is a web page showing why people should boycott the mainstream labels and musicians, and it also provides a discussion board for people to speak out their anger toward the mainstream music industry.

No matter what happened in the lawsuit against Napster, the P2P system would survive, and people would still innovate other MP3 file sharing softwares based on the P2P system. Napster was just a pioneer of this technology.[27] After Napster, software for sharing MP3 files such as Audio Galaxy, Kazza, WinMx, Soulseek provided the same functions of Napster, and they became the alternative software for the Internet users to share and download MP3 files for free on the Internet.[28] Therefore, these P2P MP3 file sharing softwares just kept the spirit of Napster alive, and they kept bothering the recording labels and musicians.

Bibliography

Alderman, John. Sonic Boom Napster, MP3, And The New Pioneers of Music.

Cambridge, MA: Perseus Books Group, 2001

Kelly, Norman. R&B Rhythm And Business The Political Economy of Black Music.

New York: Akashic Books, 2002

Merriden, Trevor. Irresistible Forces the business legacy of Napster & the growth of the Underground Internet. Oxford: Capstone Publishing Limited, 2001

Schumpeter, Joseph A. Essays On Entrepreneur, Innovations, Business Cycles, and the Evolution of Capitalism. New Brunswick: Transaction Publishers, 1989

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