In 1998 Napster was born out of a pent up demand for people to listen to and share the music they loved. Napster was a perfect storm of the right technology that gave people exactly what they wanted just when the internet was starting to take off. Unfortunately for Napster, there were those pesky copyright laws - the service was blatantly illegal. Legal battles eventually ruined Napster and nearly ruined the music industry until Apple's visionary leader Steve Jobs forged a legal way to give consumers what they wanted - a legal way to download music. Every side in this debate claimed the high moral ground, but who really had it right?
Many people can remember going to K-Mart and purchasing their favorite album for $5. You couldn't wait to get it on the turntable and play that song you'd been hearing on the radio. The radio song sounded great, but the rest of the album not so much. Then the album would get scratched up from many plays on the turntable with the needle that really should have been replaced. Alternatives to records were available too - 8 track tapes and cassette tapes. You could even make your own copies of records on a cassette tape and play it in the car if you were lucky enough to have a tape player. The music industry had no problem with the copies being made, as all of the re-recordings were analog and each generation of a copy lost quality.
Along came compact discs (CDs) in the 1980s, and a whole new world was opened. Wow! This music sounded great. You'd heard a song 100 times but never heard the nuances of sound that the band put into it until hearing it the digital sound on CD. You had clear sounding music on a much more durable media. Music lovers might have abandoned their record collections in favor of CDs almost immediately except for the steep price tag - about $15 for a single disc and hundreds for a player. The music industry controlled the prices carefully to maximize their profits. For the consumer, you still paid a premium price for the whole album even if there was only one song you liked. Anyone who remembers record albums and CDs would have been ecstatic to be able to purchase only their favorite songs and to be able to listen to just the songs they liked without the filler material they were forced to buy and listen to.
Fast forward to 1999, and two things happened in technology that changed the world of digital music. The first was the internet. For the first time, users of personal computers could access data on the World Wide Web. The second was the MP3 format for digital audio files. A compact disc is made up of digital audio files that are very large. If music were downloaded in the original CD format, it would take all day to download a single song. However, music when stored in the MP3 format could be shrunk down to 1/10 of their original size. When played back on a player that understood the MP3 format, the sound was nearly the same high quality as CDs. Suddenly music could be stored in MP3 files and downloaded from the internet by anyone with a personal computer and an internet connection without taking all day.
Enter Napster. A couple of young guys named Shawn - Fanning and Parker, came up with the technology that opened up music sharing for all. Shawn Fanning was a freshman at Northeastern University when he went about solving the problem of how to find music on the internet to download. He created a program that could search and index sites on the internet that had music to share. Fanning got together with Parker (who spelled his name Sean) and together they launched the music sharing program Napster in 1999. Suddenly anyone could search for and download a digital version of any song they wanted. For free! Napster became the killer app almost immediately. Fanning's Uncle John Fanning raised some money and the trio moved to California to launch the company. They had millions of registered users because of the pent-up demand for digital music. It was like the whole younger generation was suddenly able to thumb its collective nose at the greedy record industry. The problem was - millions of happy users downloading their favorite songs - were stealing. Downloading copyrighted music is illegal, pure and simple.
Well, you don't think the music industry was going to take this lying down. What does a big powerful industry do when their profits are in trouble? They get lawyers and sue. Armies of lawyers would solve their problem, but who could they sue? Musicians were also getting their pockets picked and they weren't going to stand by idly either. On Dec. 7, 1999 the Recording Industry Association of America (RIAA), a group that represents the largest music industry giants, sued Napster for enabling millions of users to download copyrighted music. On April 13, 2000 the heavy metal band Metallica sued Napster as well. Technically, Napster's technology was not criminal. It was a file sharing service that could be used to share any type of file. It was the act of downloading copyrighted material that was illegal. No matter, the giants of the industry wanted Napster shut down and used the full weight of the legal system to do it. On July 26, 2000 US District Judge Marilyn Patel ordered Napster to shut down. This essentially killed Napster, as they could no longer exist as a free file sharing service.
Unfortunately for the RIAA and the Metallica's of the world, the proverbial cat was out of the bag. Free file sharing services had already started showing up with names like Gnutella, Scour, Grokster, and Kazaa. The music industry could not sue to shut them all down, and they couldn't sue the millions of users. Meanwhile, no one was buying CDs anymore. The music industry had to adapt to the digital world somehow. Legal services PressPlay and MusicNet were launched, which charged monthly fees for a combination of downloads (buy the music) and streams (rent the music). They were not well received as they simply didn't provide music lovers the delight and instant gratification that Napster and the other file sharing services did. To make matters worse, PressPlay and MusicNet signed up different musical groups and would not share them with the other service. You could subscribe to one service and only get access to half the music that was available.
Enter Steve Jobs. By 2002 Apple's great visionary leader had already begun to transition Apple from a computer company to a consumer electronics company. They'd launched the iPod, not the first but the easiest to use handheld device for listening to music. They launched iTunes, which provided a way to manage your music on your computer, as long as you owned the music. However, to obtain new music, people were still choosing to download illegally rather than to buy CDs or to use the clunky and awkward services PressPlay or MusicNet. A number of music executives thought Jobs could help solve the problem and held a meeting with Jobs in January, 2002 at Apple's Cupertino office. The executives had planned to carefully lay out the problem of the music buying public, but Steve Jobs in typical fashion stopped them at the start of the meeting and declared "You have your heads up your asses!"
Steve Jobs could have continued to insult the music executives until they left the meeting in Cupertino. He could have done nothing, and allowed the music pirating to continue. Apple would just sell more iPods. But Jobs felt strongly that music pirating was wrong. He felt that music lovers didn't want to be stealing music, but there was no good inexpensive alternative. Apple could provide that alternative. He proposed an online store where consumers could find the music they liked, preview 30 second clips of each song, and purchase individual songs for 99 cents. Each digital file would be protected so it could only play on a device owned by the buyer. Apple would be a big winner as the files would only play on Apple devices, so more iPods would be sold. The music executives and the artists weren't comfortable at first. They didn't like breaking up albums and allowing consumers to pick and choose the songs they liked. They didn't like their fat profits from physical CDs being cut down to size. However, Jobs had a way of cajoling and convincing and he eventually got all the major players on board. On April 28, 2003 Steve Jobs unveiled the iTunes Store. He explained to his enthusiastic audience that Napster had demonstrated that music should be downloaded from the internet, but the free services were stealing and they were wrong. The iTunes Store would give consumers what they wanted at 99 cents a pop. Wild predictions were that the iTunes Store would sell a million songs in the first 6 months. They sold a million songs in 6 days!
The iTunes Store set the standard for legal, non-copyright-infringing downloads of music. Now there's plenty of competition from other online stores and from streaming services like Pandora and Spotify. The music industry and musical artists have accepted lower profits and accepted unbundling of albums as a nice compromise with consumers who now by and large purchase music legally. But do they? I'd like to say that music consumers did the right thing and evolved and stopped illegally downloading music because there are good, legal alternatives. But that would be wrong! According to various sources, anywhere from 75% - 95% of music downloads in 2013 are still illegal! Napster's stepchildren peer-to-peer networks are still doing a booming business. That is, free download services are still getting thousands of downloads while they bring in revenue from advertising on their busy sites. Apparently, consumers still prefer free and illegal to inexpensive and legal, given the odds of ever getting caught and punished for illegal downloads is miniscule. The music industry has adjusted their financial models. They are making money and no longer in danger of disappearing. Well-known artists are going to make money on sales, concerts, and the rest of the trinkets they sell. It's the unknown artists that are losing money on illegal downloads. Or is it? Would these people buy music if illegal downloads were not available? Some studies say no, and claim that illegal downloads actually provide another promotional vehicle for struggling musicians to get their music heard.
Do you buy your music legally? Do you subscribe to services like Pandora or Spotify? How much of your music collection is legal, free and clear?
