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What happened to Napster? The wild story behind the startup that revolutionized music.

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WASHINGTON (CIRCA) — Imagine, for a moment, a world in which there was no Spotify. No Apple Music. Not even Pandora or iTunes.

A world in which your only access to new music came from the whims of a radio station DJ and frequent visits to a local record store. Now, imagine that world was completely flipped on its head in an instant, and every person with a stable internet connection could have access to hundreds of thousands of songs. All for free.

This was the world briefly created by Napster, the brainchild of a teenage computer whiz named Shawn Fanning and his friend, Sean Parker. At a time when the music recording industry had an iron grip on music sales, Napster was the ultimate disruptive technology. And while it only lasted for about two years, its impact was monumental.

So, whatever happened to Napster?

To answer that question, we must journey back to the turn of the new millennium.

The year was 1999. The world was worried the Y2K bug was about to bring about Armageddon, fans were wondering if Ross and Rachel would get back together on "Friends," and Fanning and Parker were preparing to release Napster to the world.

FANNING BARRY
Napster co-founder Shawn Fanning, center, talks with the media while Napster CEO Hank Barry, right, looks on at the company's headquarters in San Mateo, Calif., on July 28, 2000.

The inspiration behind it was simple. The then-18-year-old Fanning wanted to find an easy way to share music with friends over the internet. Creating mix tapes on audio cassettes and compact discs had been the established way to share music with friends for some time, but it was inherently time consuming and limited to personal exchanges. Perhaps there was a way to do it over the World Wide Web?

In retrospect, this may seem like an obvious solution, but it was revolutionary thinking at the time. In 1999, most Americans were still on dial-up, if they were on the internet at all. Connections were slow and unreliable. Sure, we'd mastered sending and receiving email, but music files? That was like going from little league to Major League Baseball.

Fortunately for Fanning, he wasn't alone. He partnered with Parker, another computer wunderkind, whom he had met several years earlier over internet chat. Parker was only a year older than Fanning, but he had already earned his stripes as a hacker by age 16 when the FBI caught him trying to penetrate the network of a major company. After working on Napster part-time as a student, Fanning eventually dropped out of Northeastern University, Parker raised some start-up cash, and Napster was released to the world on June 1, 1999.

Sean Parker
FILE - In this Jan. 9, 2016 file photo, Sean Parker, one of the co-founders of Napster, arrives at the 5th Annual Sean Penn &amp; Friends HELP HAITI HOME Gala in Beverly Hills, Calif. After Napster, Parker was briefly the president of Facebook and later was an investor in Spotify.

Napster used peer-to-peer (P2P) technology in order to facilitate the sharing of music files on its network. The program essentially opened up the hard drives of each user, allowing other users to copy and download the files over Napster's network ... for free.

"It was like the floodgates had opened up, and this world of music was suddenly available at our fingertips," said Will Youmans, a media and public affairs professor at George Washington University.

Youmans, aka the Iron Sheik, was an aspiring rapper and college student when the Napster craze began.

"I had a roommate in my dorm who almost day and night was downloading music on Napster or a similar type of service and creating these massive libraries of all the music he could ever want," said Youmans. "And he downloaded so much music. I mean, there's no way he could possibly listen to all of it in a lifetime."

By February 2001, Napster's user base peaked at 26.4 million people spread across the globe, each sharing and downloading a seemingly unlimited amount of music files.

Your music habits will reveal your deepest desire.

Timing and opportunity

The company's timing was nearly perfect. The MP3 file format, which had been introduced just years earlier, allowed for music to be stored digitally with minimal loss in quality. College students were gaining access to high-speed internet for the first time on college campuses nationwide, drastically cutting down the time it took to download MP3s. Because of Napster's massive popularity, file sharing reportedly clogged up more than 50 percent of the internet traffic on many college campuses. Some had to ban file sharing just to keep their networks from crashing.

There was also ample opportunity for P2P file sharing to disrupt the music industry.

You may not believe it, but there was once a time when music purchasing was relegated to brick-and-mortar stores. You know, those things made of brick and mortar where your mom buys her Ann Taylor Loft pants. If you wanted some new songs back then, you had to go to a record store and buy an entire album for as much as $20.

(By the way, an album is like 12 singles except 10 of them are mediocre. That used to be called "filler," back in the day.)

Did you just want that one song you heard on the radio? Sorry pal, you're buying all 12. Oh, the store doesn't have any more copies? Tough luck, looks like you're coming back later!

The whole process was super inconvenient, but it was the reality for the better part of a century.

"The industry was too slow to give consumers what they wanted, and these online illegal services popped up because they were so readily able to give consumers one-stop shopping for any song they wanted immediately when they wanted it," said Julie Ross, a law professor at Georgetown University.

NAPSTER
A CD recorder is pictured in front of a screen displaying the Napster homepage in this photo taken in Frankfurt, Germany, on Feb. 22, 2001.

This is not to say the recording industry was completely out of touch. Major labels had experimented with digital marketplaces, but they were unable to make them work by the time Napster came around. They also faced backlash from the government, according to Ross.

"What slowed them down was they were unable to combine and offer one-stop shopping to consumers," said Ross. "As soon as a bunch of record labels got together and wanted to combine what they owned and offer it over the internet for some price, they got letters from the [Department of Justice] antitrust division saying, you can't combine to set prices."

Napster wasn't a recording label, so they did not face the same restrictions. In fact, it wasn't entirely clear where Napster fit into the paradigm. One thing was clear, however: the major labels that owned the copyrights to the songs being shared on Napster were losing money, and they were livid.

"It really was a huge alarm for the recording industry, which had so much profit being made," said Youmans. "So much investment in the longstanding system where there were multiple levels of interested parties."

Napster wasn't just allowing users to share music on the internet, it was threatening the bottom line of record labels, music chains and artists — every link in the music recording industry chain. Music sales peaked at $14.6 billion with Napster's release in 1999, and continued to fall drastically until 2009.

Can we guess your favorite music genre?

The lawsuits

Fanning and Parker faced lawsuits almost immediately, starting with the Recording Industry Association of America (RIAA) in late December 1999. The RIAA argued that Napster was nothing more than a hub for piracy, and it wanted compensation. With approximately 200,000 songs on the Napster network, it demanded $100,000 for each one — a total of $20 billion. It wasn't long until big-name artists joined in with their own litigation, including rap legend Dr. Dre and Metallica. Lars Ulrich, Metallica's drummer, was particularly critical of Napster and its users, which led to backlash.

"I mean, it was like the least rock star thing you could possibly do, to show up in a limo with ... a bunch of documents and say, 'Hey kids, stop listening to my music for free,'" said Joseph Menn, author of "All the Rave: The Rise and Fall of Shawn Fanning's Napster."

While some big names felt threatened, others embraced the new technology. Motley Crue referred to the whole controversy as "bullshit," Chuck D of Public Enemy defended the company, and the Offspring sold Napster gear on its website. Some lesser-known acts smelled opportunity.

"The up-and-coming bands that really wanted to be discovered were in favor of it," said Menn. "There's always been sort of promos in the record business where they distribute some free music so you can hear it and find out if you like it, and if you like, you can go buy it."

Regardless of the support, Napster faced a monumental legal challenge, and the only chance Fanning and Parker had was to battle it out in court. But the lawsuit became much more than just a fight over copyright claims; it called into question the idea of the internet as a forum for the free sharing of ideas and information.

"We love the idea of using technology to build artist communities, but that's not what Napster is all about," said Cary Sherman, then senior executive vice president and general counsel of RIAA. "Napster is about facilitating piracy and trying to build a business on the backs of artists and copyright owners."

FANNING NAPSTER
Shawn Fanning, the 19-year-old founder of Napster, listens to his company's attorney speak at a media conference at an appeals courthouse in San Francisco, on Oct. 2, 2000. A three-judge panel of a federal appeals court appeared troubled by a lower court's order that would have temporarily shut down music-swapping service Napster. The 9th U.S. Circuit Court of Appeals hinted that it might allow Napster to operate while litigation continued with the Recording Industry Association of America, which alleged that Napster allowed millions of users to download copyrighted material.

Napster's lawyer, David Boies, argued users weren't engaged in piracy at all. He argued that Napster users were protected by the Home Recording Act, which allows users who legally purchased a CD to make copies of that CD for personal use — but it wasn't clear at the time if that included the sharing of MP3 files over the internet.

"[Napster is] the kind of new technology that can threaten the economic control of a dominant trade association based on the existing technology, and the RIAA is trying very fast to catch up and shut down Napster until they can dominate," said Boies in July 2000.

Napster argued it was no different than an internet service provider simply providing users a tool. Surely it wasn't responsible for what those users did with it?

But there was a major flaw in Napster's business model that proved to be its Achilles' heel.

"The way Napster was set up was they had a centralized server," said Ross. "And when you did a search and wanted a particular song, it would go through Napster's centralized server, which means they had the ability to control what was happening."

That made Napster liable, according to the court. While Napster users were the ones directly infringing on music copyrights, Napster was a secondary infringer, explained Ross, because it was able to control the network, and made money while doing so. After more than a year of court battles, a federal judge ordered the company to prevent the sharing of copyright music on its network on March 6, 2001.

It was, in effect, a death sentence.

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The fallout

Napster designed a technology that blocked the transfer of 99.4 percent of copyrighted material, according to Lawrence Lessig, author of Free Culture, but that was apparently not enough for the court. Fanning and Parker were forced to declare bankruptcy in June and shut the network down by July.

Napster's free music party was over. In its ashes, other P2P services like Limewire, Gnutella and Bear Share temporarily rose. ITunes grew in popularity in the early 2000s with the rise of the iPod and offered a legitimate market for users to buy individual songs. Today, music streaming services such as Spotify, Pandora and Apple Music dominate the market.

Fanning went on to work on a series of technology startup projects, with mixed success. Parker joined Mark Zuckerberg at Facebook, where he served as president until he was forced to resign in 2005. He became an investor in Spotify in 2009 and sat on its board until 2017.

Through it all, Napster continued to exist as a shell of its former self. Roxio acquired its assets at auction in 2002 and sold it to Best Buy in 2008. In 2016, digital music store Rhapsody breathed new life into Napster's husk by merging with it and adopting its name. Today, Napster exists as a legitimate music streaming service, competing with the major brands it influenced.

The original dream Fanning and Parker had for Napster may have had a brief existence, but its impact on the music industry lives on today ... along with perhaps some old iPods chock-full of pirated MP3s.

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