Napster was a peer-to-peer (P2P) music sharing application first developed in 1999 by Shawn Fanning at Northeastern University. The original program was available for three years before being shut down by a court order for copyright violations. The company’s brand and other assets was subsequently acquired at a bankruptcy proceeding by Roxio, maker of CD burning software. In its second incarnation Napster became an online music store until it was bought by music streaming site Rhapsody in late 2011.

Fanning lead the original company along with his uncle John Fanning and entrepreneur Sean Parker (who would go on to make billions as an early employee of Facebook). Later companies and projects successfully followed its P2P file sharing example such as Gnutella, Freenet, and many others. Some services, like LimeWire, Grokster, Madster and the original eDonkey network, were brought down or changed due to similar circumstances.

Although there were already networks that facilitated the distribution of files across the Internet, such as IRC, Hotline, and USENET, Napster specialized in MP3 files of music and was known for a user-friendly interface. At its peak the service had about 80 million registered users. The ease of downloading individual songs facilitated by it and later P2P networks is often credited with ushering in the end of the Album Era in popular music. Napster also made it easier for music enthusiasts to find copies of songs that were otherwise difficult to obtain, like older songs, unreleased recordings, and songs from concert bootleg recordings.

Some users felt justified in downloading digital copies of recordings they had already purchased in other formats, like LP and cassette tape, before the compact disc emerged as the dominant format for music recordings. These reasons aside, many other users simply enjoyed trading and downloading music for free. They created a username and password and were able to make their own compilation albums on recordable CDs, without paying any royalties to the record label. High-speed networks in college dormitories became overloaded, with as much as 61% of external network traffic consisting of MP3 file transfers. Many colleges blocked its use for this reason, even before liability for facilitating copyright violations was raised as issue.

The service and software program were initially Windows-only, but in 2000 Black Hole Media wrote a Macintosh client called Macster. The program was later bought by Napster and designated the official Mac Napster client (‘Napster for the Mac”‘). Even before the acquisition of Macster, the Macintosh community had a variety of independently developed Napster clients. Most notable was the open source client called MacStar, released by Squirrel Software in early 2000 and Rapster, released by Overcaster Family in Brazil. The release of MacStar’s source code paved the way for third-party Napster clients across all computing platforms, which gave users advertisement-free music distribution options.

One of Napster’s earliest and most vocal critics was heavy metal band Metallica, who first heard of the file sharing when they discovered that a demo of their song ‘I Disappear’ had been circulating online even before it was released. This eventually led to the song being played on several radio stations across the US and brought to Metallica’s attention that their entire back catalog of studio material was also available. The band responded in 2000 by filing a lawsuit against Napster. A month later, rapper and producer Dr. Dre, who shared a litigator and legal firm with Metallica, filed a similar lawsuit after Napster would not remove his works from their service, even after he issued a written request. Separately, both Metallica and Dr. Dre later delivered thousands of usernames to Napster who they believed were pirating their songs. One year later, Napster settled both suits, but this came after being shut down by the Ninth Circuit Court of Appeals in a separate lawsuit from several major record labels.

Also in 2000, Madonna’s single ‘Music’ leaked to the web and Napster prior to its commercial release, causing widespread media coverage. The lawsuit that shuttered Napster was brought by A&M Records along with several other recording companies, through the RIAA (Recording Industry Association of America, a music industry trade group). Napster was found liable for violations of the Digital Millennium Copyright Act (DMCA)

Napster sparked a debate about the effects of file sharing on the music business. Industry figures claimed it was responsible for shrinking sales, while opponents claimed it was neutral or even stimulated sales. Some evidence may have come in 2000 when tracks from English rock band Radiohead’s album ‘Kid A’ found their way to Napster three months before the CD’s release. Unlike Madonna, Dr. Dre or Metallica, Radiohead had never hit the top 20 in the US. Furthermore, ‘Kid A’ was an experimental album without any singles, and received relatively little radio airplay. By the time of the record’s release, the album was estimated to have been downloaded for free by millions of people worldwide, and in October 2000 Kid A captured the number one spot on the Billboard 200 sales chart in its debut week. According to Richard Menta of ‘MP3 Newswire,’ the effect of Napster in this instance was isolated from other elements that could be credited for driving sales, and the album’s unexpected success suggested that Napster was a good promotional tool for music.

One of the most successful bands to owe its success to Napster was Dispatch. As an independent band, it had no formal promotion or radio play, yet it was able to tour to cities they had never played and sell out concerts, thanks to the spread of their music on Napster. In 2007, the band became the first independent band to ever headline New York City’s Madison Square Garden, selling it out for three consecutive nights. They were avid supporters of Napster, promoting it at their shows, playing a Napster show around the time of the Congressional hearings, and attending the hearings themselves. Shawn Fanning, the founder of Napster, is a known Dispatch fan.

Since 2000, many artists, particularly those not signed to major labels and without access to traditional mass media outlets such as radio and television, have said that Napster and successive Internet file-sharing networks have helped get their music heard, spread word of mouth, and may have improved their sales in the long term. One such musician to publicly defend Napster as a promotional tool for independent artists was DJ Xealot, who became directly involved in the 2000 A&M Records Lawsuit. Chuck D from Public Enemy also came out and publicly supported file sharing.

In July 2001, Napster shut down its entire network in order to comply with the injunction against it. Napster agreed to pay music creators and copyright owners a $26 million settlement for past, unauthorized uses of music, as well as an advance against future licensing royalties of $10 million. In order to pay those fees, Napster attempted to convert their free service to a subscription system. Thus traffic to Napster was reduced. A prototype solution was tested in the spring of 2002: the Napster 3.0 Alpha, using the ‘.nap’ secure file format from PlayMedia Systems and audio fingerprinting technology licensed from Relatable. Napster 3.0 was, according to many former Napster employees, ready to deploy, but it had significant trouble obtaining licenses to distribute major-label music.

Initially, Napster struck a deal to sell its brand and logos to German media firm Bertelsmann for $85 million. However, that sale was blocked in bankruptcy court and the company was forced to liquidate. After a $2.43 million takeover offer by the Private Media Group, an adult entertainment company, Napster’s assets were acquired at bankruptcy auction by Roxio which used them to rebrand the Pressplay music service as Napster 2.0. In 2008, Napster was purchased by electronics retailer Best Buy for US $121 million. In 2011, pursuant to a deal with Best Buy, Napster merged with Rhapsody.

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