The Life and Death of Napster, the Genie in a Bottle

Like the birth of any great music movement, Napster rebelled against the norm. It started as a tiny startup in Hull, Massachusetts in early 1999, and instantaneously caught the world’s attention. 18-year-old Shawn Fanning brought his brainchild to the mainstream – so-called peer-to-peer technology — that gave anyone with a computer the ability to send files over a network.

What it also did was throw the Internet into a frenzy, which only proves just how powerful the web really is, in both creating and destroying things. Napster isn’t just a story of two teenagers who changed the music industry and Internet as we know it. It’s also a story of the birth of a movement and the death of the record industry. This is the story of how it all went down.

Who Created Napster?

It all began with the birth of an idea in the spring of 1999. Shawn Fanning, a teenager at the time, was on the web messaging service Internet Relay Chat (IRC). He was surfing on a channel called w00w00, which was a hacker network. He was going by the username “Napster,” a nickname he earned from some trash talking guy on the basketball court who was making fun of his hair.

He told his Internet group about this program he was working on that would make it really easy for people to send and receive music files, like MP3s. He turned to a guy named Jordan Ritter, a 20-year-old security programmer, for help. Ritter, who went by the username “Nocarrier,” would be the founding architect of Napster.

Remember Life Before Napster?

Before we get to the story of Napster, it helps to remember what life was like before it in order to set the scene. Remember the good ol’ days when we would go to stores to buy the music we like? As recent as the ‘90s, digital music was mostly available in the form of CDs, which stored enough space for a full-length album (about 700MB of audio tracks).

But back then, the bandwidth and speed of the Internet were nothing like they are today. A four-minute song would take about three and a half hours to download. Luckily for all the music fiends, the MP3 came along in 1993, and, wow, did things become a hell of a lot easier.

Off to the Races

People were now able to rip music from CDs, store them on hard drives, and distribute them online. That four-minute song went from 42 MB to a mere 3.84 MB. After that, we were off to the races. It was only a matter of time until someone had the right idea at the right time.

The roots of Napster originated in the computer security world – the “underground” as Ritter put it. He, Fanning, and other hackers founded the group on IRC, despite never having really talked to each other much before that. Once Fanning turned to Ritter for help on his new project, he was all in. At the time, Fanning called it Music Net.

“Man, This Sucks”

In those days, sharing content – especially music – was a “pain in the a$$,” as Ritter recalled, and Fanning had nice and refreshing idea. He basically said: “Man, this sucks. I’m bored, and I want to make something that makes this easier.”

Ali Aydar, Napster’s senior director of technology, admitted that he didn’t really “get” Napster at first. Fanning had to describe it to Aydar for about 20 minutes. Only after that did it dawn on him how big this thing could really be. And that, as Aydar recalled, was what got him interested in helping him. The idea was there, the technology was available; all they needed next was to make it a company.

The Birth of Napster Inc.

Fanning’s software became the centerpiece of Napster Inc., a company operating out of its headquarters in Hull, Massachusetts. And from the very beginning there was a war over ownership stakes. According to Ritter, by the end of the summer of ’99, Fanning came online and wrote, “Dude, my uncle just incorporated the company.”

The company started looking for a CEO, and landed on Eileen Richardson, a venture capitalist who wanted to leave the investment world. On the night she was offered the position (in which they spoke about whether this was even legal or not), she went home and downloaded the software. “And holy sh*t,” she thought in that moment.

“Oh My God, Oh My God”

She explained that in those days, people were saying that they didn’t want to download stuff onto their computers anymore, because everything was becoming web based. “But anybody would download that, easily,” she said. “I just remember shaking, thinking: Oh my god, oh my god.”

Now that they had a CEO, the team (except for Fanning) flew from New England to Silicon Valley. Ritter moved to California a few months later. The night he got there, Fanning, Aydar and Sean Parker picked him up from the airport, and they drove directly to their very first company meeting.

Getting Rid of Uncle John

During that car ride, Ritter remembers the “most important thing” about that conversation – that Parker and Fanning were discussing the idea of reincorporating the company so they could get rid of “Uncle John.” From the beginning, Napster was built as a business.

Fanning had witnessed his uncle, John Fanning, try to get rich a few years earlier, in 1997, when he was peddling chess.net, the former online chess service. Eventually, John convinced his nephew to give him 70% of Napster to help him make it a success. At that point, the company had been incorporated as Napster Inc. They were trying to reincorporate as Napster.com Inc., or something like that.

Like a Kid in a Candy Store

Four months after its launch in June 1999, 150,000 people had already signed up. By February 2001, there were a verified 26.4 million users, with some estimates reaching 80 million. Remember, these were just kids in their late teens, and they were making very real decisions.

Despite the complications involved, the sense of excitement was palpable. Ritter was like a kid in a candy store when he landed in California, and he recalled himself with his “tongue hanging out the window” as they drove through the hills that day to their first company meeting, which took place at 11 p.m.

The 40-Year-Old Joins the Teens

They were young, single, and super excited. They understood the impact of what they had in their hands. And so, they started mapping out the rest of the management team. Their next hire was Eddie Kessler, a 40-year-old engineer who had worked at Infoseek and Quote.com.

Kessler remembers the interview in San Mateo, where he sat down with Fanning, Parker and Aydar at “a small table in this crappy office building.” Kessler figured that since they were so young, they didn’t really know how to write software, so he would just give them some “pointers on how to do things.” Still, he signed on as vice president of engineering.

Is This Even Legal?

Meanwhile, the team was worried about Napster’s legality. Kessler spoke with Uncle John, who told him that he was sure that it was going to be a 10-billion-dollar business. John had commissioned a report from a constitutional lawyer which proved that Napster had a “strong and defensible” legal position.

Richardson, the CEO, admitted that she thought it was illegal – it was actually the first thing she thought. “This is too good to be true. You can’t be able to do this,” she said at the time. But her friend Yosi Amram did some legal work and had a legal opinion.

What About All the Music Artists?

We know now that Napster – and what came after it – essentially killed the record industry. But it wasn’t so predictable at the time. According to Aydar, Fanning felt strongly that if he built something “really good and really cool,” music artists and record labels would appreciate such a distribution system and the sheer amount of data that could be pulled from it.

He figured that the industry people would thus be given a new and useful understanding of who’s listening to what. “He wasn’t focused on the legality,” Aydar recalled. “He felt like once he built something really good, any issues would solve themselves.” Sounds naïve, yes, but he was only a teenager.

The Face of the Company

It was the era of the “dotcom boom,” and Napster was creating a buzz. As the user numbers were skyrocketing, the Internet was looking toward one shy hero: Shawn Fanning. He was getting constant requests to be interviewed and photographed on the front page of magazines and newspapers.

But the 19-year-old always rejected the requests, saying he didn’t – and couldn’t – do it. But his team kept insisting that he needed to be the face of the company, “Because it’s Napster, and it’s your story about your hair. That’s your story,” Eileen Richardson told him.

A Measly Little Office in San Mateo

The company that was swiftly taking over the Internet set up shop in a measly, little office in San Mateo, in a converted bank building. Napster eventually became a vintage Silicon Valley startup story: young guys working day and night, coding, and struggling to deal with their growth. At least they had a good view, Ritter noted.

The office was tiny – so much so that if you pushed someone’s chair back, you would hit someone else’s. In the beginning, the engineers were earning the same as the senior management – everyone was making the exact same salary… in the beginning.

I See You, Baby

According to Laurence Pulgram, Napster’s eventual attorney, the team’s energy was powered by Red Bull — another budding company. It came to a point where they outgrew the little office and they almost relocated to a paintball arena. But it was painted all black and there weren’t enough windows, so keeping the team’s sanity in mind, they chose not to.

The growing company moved to only a slightly bigger office in Redwood City, California, and the vibe was fun. As the young members were singing the then-popular Groove Armada song, I See You Baby, sporadically in the office, Kessler was the “adult supervision” as he referred to it.

A Happy Problem

User numbers continued to mushroom, and Napster was feeling the growing pains as they tried to scale up. Billions of songs a month were being uploaded and transferred on Napster, which made them realize that they were truly in a game-changing moment.

While the numbers were climbing dramatically, it was still very frantic. “Any direction you looked at, there were problems,” Kessler recalled. “From not enough hardware to not enough space and racks in data centers to the software crashing, servers crashing, the client software not working properly.” You could call it a happy problem – that they would buy twice as many servers and three hours later they were over capacity again.

“Let’s Change It to Rapster!”

There was a point when the team wanted to change the name of the company because they figured no one was ever going to understand the name Napster. So, they said, “Let’s change it to Rapster!” It was at that point that Richardson “pulled the CEO card” and stated that they’re not going to change the name.

Her reasoning: “If you put your head down and get to work, everyone will know who we are.” And, oh boy, did they get to work. Kessler said there were times when they had hundreds of servers – stacks of servers – that they had to drive down, at high speeds, to their data center in San Jose.

Someone’s Gotta Get Paid

Time was of the essence, so they would race them down, equipped with screwdrivers in the back of the car. It was a mad, frenzied rush to stay afloat among the masses of subscribers. And while the users were flocking to Napster, the team was trying to partner with the music labels and major entertainment organizations.

They met with Jay Samit, an EMI executive who was trying to develop a way to monetize musical distribution on the Internet. But, according to Samit, the boys didn’t have a model. He told them, “Come back, and tell me how someone is going to get paid.” They never came back.

The Genie’s Out of the Bottle

Their meetings with record execs didn’t go well. The message was pretty frank: There was no way they were going to scare off traditional retail. If they did a deal with Napster, they wouldn’t be able to distribute to record companies anymore.

There was one meeting with Jeff Berg, then the head of ICM (International Creative Management) and Mo Ostin, then the head of DreamWorks records. Their pitch: “We’ve got 100,000 downloads here. We need to work together to commercialize this business, because the genie’s outside of the bottle.”

There were definitely frustrations, but there was also overnight success, and with that came a newfound celebrity status.

Napster Mania and the Start of the Lawsuits

Elizabeth Brooks, the VP of marketing, coined the company’s phrase “Thanks for sharing,” and made a bunch of Napster t-shirts. When one of the young engineers went to a bar in Silicon Valley, wearing the shirt, it was basically a way to pick up girls. Fanning was becoming the talk of the town.

By December 1999, it was Napster mania. And soon enough, the lawsuits began. The Recording Industry Association of America (RIAA) was frustrated and brought on a man name Russell Frackman, the music industry’s “go-to litigator.” He had already won a copyright infringement case five years prior that made selling pirated music at swap meets illegal.

The Claim: Infringing on Copyrights

Frackman’s contact at the RIAA said to him, “This case is going to be very important on the Internet.” But Frackman admitted that he didn’t “have a clue what he meant” at the time. Hilary Rosen, then the chair of the RIAA, had a meeting with Richardson in the latter’s car. “That was fun,” Richardson recalled sarcastically.

First, Rosen said, “You’re letting people download…” but Richardson rebutted: “You don’t understand the technology. That is not what we’re doing.” Rosen then said, “You’re infringing on copyrights.” Richardson said, “Well, I’d like to know which ones. Who, what, when, where, how?” Rosen’s reponse: “Open up Billboard magazine! The top 200 are right there!” Richardson then says, “I’m sorry. I don’t subscribe to Billboard magazine.”

The First Lawsuit

On December 6, 1999, the RIAA filed a lawsuit against Napster on behalf of the five major music labels. As Rosen put it, it was at a time when the “guys who were in the digital music space” – the ones who were trying to do it the legitimate way with licenses, royalties, and all that jazz — were resenting the volume of attention Napster was getting.

She then realized that it wasn’t just about the creative community, but also the startup community. The only way they would have a shot is if they could level the playing field.

The Lawyers From the Milli Vanilli Case

Jeff Knowles was the attorney representing the song publishers whose first case (along with Frackman) was the Milli Vanilli lip-synching scandal of the early ‘90s. As the two lawyers reunited for the Napster case, the Napster team received word of the lawsuit. And they were pretty much stunned at first.

But they had so much work to do that they just had to get back at it. Management relayed to the guys that it was a more a negotiation tactic than any major threat. Aydar remembers sticking to Fanning’s (naïve) original vision of “Let’s build a really good product that would be valuable to everybody” and the issues will naturally go away.

All of a Sudden, Boom

Those issues didn’t go away. In fact, they got sued several times. The songwriters sued Napster, too. They sued Richardson personally, by sending a subpoena to her home address. “And that scared the sh*t out of me. I had finally made enough money to buy a really nice home in Palo Alto, and, all of a sudden, boom. All of it could be gone.”

Their main task was to keep Napster open. The RIAA was trying to get a temporary restraining order – to get the judge to shut down them down immediately. But Napster needed some “breathing room” to prepare a defense and get some funding.

Just Say “Free Music” and Print the URL.

Napster managed to get the hearing postponed until the summer of 2000, at which point they were going to have to fight against the halting of Napster’s service. And they were pretty much saved by a company called Hummer Winbald (led by John Hummer, a former NBA center for the Seattle SuperSonics).

If it weren’t for Winbald, Napster would have gone out of business that weekend. But Winblad didn’t know just how desperate the company was at the time. Regardless, the Napster case was high profile. Brooks said that the media could say anything they wanted about them. They figured, “just say ‘free music’ and print the URL.”

Lars Ulrich vs. Chuck D

Richardson remembers that on one hand, they would be getting calls from Howard Stern, looking to talk with Fanning. They would also hear that the CIA was coming, to confiscate all their laptops. “And I’m just like, “What? This is insane.” In one hour, they would get both of those calls.

Meanwhile, musical artists were divided over Napster. There were two camps: the anti-Napsters, led by Lars Ulrich, the drummer for the band Metallica (who also sued Napster separately) and the pro-Napsters, led by Chuck D, the frontman of the hip hop group Public Enemy. The two artists even debated the topic, face-to-face, on Charlie Rose’s show in May 2000.

A “One-Man Beatles”

Chuck D said he “applauded what Shawn Fanning was doing 185%.” The way he saw it, it was “a cause” and that Fanning was like a “one-man Beatles.” According to Chuck, what Fanning did was “one of the most revolutionary things ever done in music, period,” and he wanted to support that.

Chuck also noted that at the time, artists “had no clue what the f**k was going on.” He said that Lars knew what was going on, but many others didn’t even care to find out. “They were in a haze.” For Richardson, it was “really cool” meeting the artists who got it.

Sitting Across From Jimmy Page

On the other hand, it was tough, like when she had to sit across from Led Zeppelin’s Jimmy Page “who hated my guts” on a stage at a conference in New York City. It was Robinson, Jimmy Page, Chris Robinson (of the Black Crowes), and another Internet CEO. Then the organizers came into the green room and said, “Internet CEOs, get out. The stars are coming in.”

Richardson remembers having to sit outside in a hallway on boxes. It seemed as though many artists were on the fence. According to RIAA’s Rosen, she would get compliments and “thank yous” from artists — even the ones that said “Oh yeah, I think Napster is so cool” to the press.

A New Kind of Radio

For instance, Tom Petty had his people calling to get his music offline, but then he was quoted in Billboard saying how great he thought Napster was. On May 24, 2000, Chuck D was one artist who spoke in support of Napster at the House Small Business Committee. He even wrote an op-ed in The New York Times declaring Napster “a new kind of radio.”

Chuck D said that his job was to keep their name out there because he wanted them to be a major part of the industry – the “new industry.” As that was going on, Eileen Richardson (who said it was only her intention to serve as CEO for a few months) resigned.

An Unfriendly Switchover

Hank Barry, a partner at Winbald and a lawyer by trade, became the new interim CEO. And when he came on board, the management style was much more hands off, and he didn’t really take the time to get to know his team. All in all, it wasn’t a friendly switchover.

People in the team started to feel out of touch and disenfranchised, as well as scared, because they did not know what was going to happen. People were saying, “Wow, all I know about what’s going on in the lawsuit is all I read in the news.”

The Confession Email

During the case’s discovery process, where both sides gather evidence, an early internal email sent by Sean Parker caught the eyes of attorneys. It read: “Users will understand that they are improving their experience by providing information about their tastes without linking that information to a name or address or other sensitive data that might endanger them, especially since they are exchanging pirated music.”

According to RIAA’s lawyer Frackman, it was the email they blew up for the hearing and provided to the case’s judge. It was essentially a confession email. Napster’s lawyer Pulgram remembers that being an “awfully dark day.”

What Happens When 18-Year-Olds Write About Software

Pulgram recognized that this is what happens when 18-year-olds are writing about software – that it was going to be scraped off the page and put on the record. “No good could come out of those statements no matter how early and anticipatory they were,” Pulgram recalled.

These were “19, 20, 21-year-olds, carrying the torch and being scrutinized for what they said in dorm room write ups,” he said. As the court date was approaching, Napster’s team was preparing their statements, including out of court testimonies from each witness, including former employees.

An All-Too-Quick Ruling

Sean Parker ended up leaving the company soon after his court statement. Soon, Napster raised the bar by bringing on star litigator David Boies (who was famous for pummeling Microsoft in an antitrust case) as their lead attorney.

On June 26, 2000, the case was placed in a San Francisco district court, and it was like a circus in the courthouse. Judge Patel ruled in favor of the record companies, and Napster was forced to take down all copyright infringing material from its service. It came as a surprise to everyone, but not because of the decision itself, but by how quickly the judge came to it.

Someone Fired a Bullet and Missed

As Napster started to work on an appeal with the Supreme Court, the company started talking about next steps. Kessler remembers discussing with some of his fellow employees the idea of going into used CD swapping, building an online market for used CDs.

Then, someone ran into the office with a copy of a court order that granted a “stay,” allowing the company to stay alive. It was an ecstatic and relief-filled moment for everyone. But it turned out to be a fleeting moment. For Ritter, it was as though “someone fired a bullet at us and missed. They still had ammunition. They were still accumulating guns, metaphorically speaking.”

Taking a Toll on Both Sides

The successful appeal meant Napster had another six months to keep operating. Meanwhile, user numbers were ballooning as media attention reached a fever pitch. In July 2000, Napster threw a free concert tour with Limp Bizkit as headliner, which was a rare occurrence of a successful deal within the music industry.

But the lawsuit was still looming above their heads, and it took a toll on both Napster and the record industry. Napster was becoming a company of litigation rather that an innovative technology company. Every day that Kessler drove 45 minutes to the office, he would hear about Napster the whole way up.

Shutting Down in 2001

And every other day, there was an article about the company on the front page of The New York Times. Morale was waning at the company, and the longer it went, the more it became apparent that it wasn’t likely going to work out.

As reality sunk in, the team realized another unsettling outcome: What if they actually won the lawsuit? If that happened, the plan was to turn the business into a paid subscription model. But that plan never came to fruition as Napster was forced to shut down its network in 2001.

The Birth of Napster 2.0

Napster was forced to liquidate its remaining assets, after which Roxio (a digital media company) put in a bid for $5.3 million to buy the rights for Napster’s technology, brand name, and trademarks. The purchase was approved in 2002 and the event marked a new chapter in the history of Napster.

Roxio used the Napster name to rebrand its own music store, PressPlay, and called it Napster 2.0. The entire Napster brand saw many changes over the years. The first was Best Buy’s deal, where they took over and made it worth $121 million.

The Evolution of Napster

At that time, Napster reportedly had 700,000 subscribing customers. By 2011, the streaming music service Rhapsody singed a deal with Best Buy to acquire Napster’s subscribers and “certain other assets.” The iconic Napster name disappeared from American media, but the service was still available under the same name in the UK and Germany.

Since acquiring Napster, Rhapsody has been developing the product and reinforcing the brand in Europe. In 2016, Rhapsody rebranded internationally as Napster. As of 2019, Napster has expanded as a source for music-on-demand for services like iHeartRadio.

The Digital Revolution

Napster was the beginning of the digital revolution, but by no means was it the end. The music industry’s litigation really only worked on paper. Other providers like Gnutella, Limewire, Kazaa and Grokster took Napster’s model and went with it. Of course, record sales tumbled as result.

Napster anticipated what eventually happened – Apple/iTunes, YouTube, Spotify and social media – the platforms that dominate how we discover and consume music today. According to Rolling Stone Journalist Steve Knopper, “The music industry eventually figured out how to profit from these things, but it took some 10 or 15 years.”