Early History of Napster

by Moya K. Mason

While finishing his freshman year at Northeastern, Shawn Fanning decided to create a piece of software that would allow people to search for the MP3 files they had trouble finding. He then founded a company, Napster, Inc. in May of 1999, dropped out of school, and moved to northern California. Napster quickly became the world's largest community for sharing music files because it allowed easy searching, had a user-friendly interface, let the users communicate with each other through various forums (i.e. IM, chat rooms) and to share each others' bookmarks.

Due to the recording industry's efforts to close Napster down, many of the music sharing enthusiasts who made it such a popular phenomenon have moved on to use other services, such as Gnutella, AudioGalaxy, and Freenet. This is more problematic for those concerned with copyright issues because they don't have centralized servers or organizational structures to shut down, with files and searches shared peer-to-peer.

Legal Timeline

"In August of 1999, RIAA contacted the management of a new company called Napster. We told them that we thought they had developed an interesting technology but that their business model was a violation of our member's copyrights. At the time they had a few thousand users. We suggested that they suspend the service and seek licenses in the same manner that all businesses that want to use copyrighted material are required to do when they start up."

"When they did not respond favorably we filed a lawsuit in December 1999." -- RIAA's Hilary Rosen's Press Conference Statement after the Ninth Circuit Decision in the Napster Case

• Dec. 7, 1999: Napster's legal battles began on December 7 of 1999 with a suit filed by the Recording Industry Association of America (RIAA) for infringing upon copyright.
• April 13, 2000: Metallica, a heavy-metal band, having learned that their music was being shared using the platform without their endorsement, filed their own suit against the company. They alleged that it was violating the Racketeering Influenced & Corrupt Organizations Act (RICO). In addition, they went after some of the universities whose students were sharing the files, suing the University of Southern California, Indiana University, and Yale for not banning their students from using the software. Rap star Dr. Dre filed suit two weeks later.
• May 3, 2000: Metallica, having collected the names of over 300,000 participants which had downloaded the band's material, presented them to Napster with the demands that their handles be terminated from the system.
• May 5, 2000: U.S. District Judge Marilyn Hall Patel ruled that Napster is not entitled to "safe harbor" under the provisions of the Digital Millennium Copyright Act (DMCA).
• July 26, 2000: Patel granted a preliminary injunction on the RIAA's behalf, which ordered Napster shut down. Usage spiked 71% the next day as users tried to download as much material as possible before this happened.
• July 28, 2000: The 9th U.S. Circuit Court of Appeals accepted Napster's appeal and stayed the lower court injunction, saying "substantial questions" were raised about the merits of the injunction.
• Oct. 2, 2000: Oral arguments were made to the Appeals court.
• Oct. 31, 2000: Napster announced a partnership with Bertelsmann AG to develop a membership-based distribution system that would guarantee payments to the artists. Bertelsmann agreed to drop its lawsuit against Napster and make its music catalog available to Napster, while gaining the right to buy into the service.
• Feb. 12, 2001: The 9th U.S. Circuit Court of Appeals ruled that Napster had to stop allowing the trade of copyrighted material.
• Feb. 20, 2001: Napster announced a $1 billion settlement offer to the record companies to drop their copyright suits. The offer was mockingly rejected two days later.
• March 2, 2001: Napster's lawyers told a federal district court that they will begin to implement their plans to prevent the songs from being traded, filtering 1 million copyrighted files from the system.
• June 25, 2001: Napster signed a worldwide licensing agreement with the United Kingdom's Association of Independent Music and the Independent Music Companies Association to provide music for its new subscription service.
• July 12, 2001: Judge Patel ordered that Napster must remain offline until it had shown that it could effectively block the trading of any copyrighted work. Metallica and Dr. Dre settle their legal disputes with Napster, ending all legal actions between the parties. Both of the suits were settled, with the artists having final say over which of their songs could be shared on the platform, with the provision that they agreed "to make certain of material available from time to time".
• September 2001: A proposed settlement is announced between Napster and the National Music Publishers' Association (NMPA) in which Napster will turn into a fee-based service with the music being licensed by the publishers to the users. Napster will also pay 26 million dollars for all previous music traded, plus 10 million as down payment for future royalties. Napster will be unable to begin operations until several other lawsuits involving performing rights, rather than publishing rights, are settled.

"We've won the revolution. It's all over but the litigation. While that drags on, it's time to start building the new economic models that will replace what came before. We don't know exactly what they'll look like, but we do know that we have a profound responsibility to be better ancestors: What we do now will likely determine the productivity and freedom of 20 generations of artists yet unborn. So it's time to stop speculating about when the new economy of ideas will arrive. It's here. Now comes the hard part, which also happens to be the fun part: making it work."-- The Next Economy Of Ideas: Will Copyright Survive the Napster Bomb? by John Perry Barlow

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