The Origins of Napster
Shawn Fanning and Sean Parker starter Napster in 1999 and provided a free application for download that allowed users to download and share music files with others.
What Napster Provided and It’s Popularity
It was one of the first peer-to-peer applications where a user could search, find and download music for free that lead to many other similar types of applications that followed.
Within 4 months of launch, Napster had 150,000 users and by February 2001 that had increased to 26.4 million users.
Napster was different from other file sharing applications as it provided a logical and clear user interface to search and download music including unreleased songs rather than other types of files.
The Demise of Napster and Legal Action
A&M Records sued Napster in 2000 under the US Digital Millennium Copyright Act who alleged that users were directly violating plaintiff’s copyrights and that Napster was responsible for that. The publicity provided to Napster during the trial meant that the number of its users grew significantly.
The court was heard in the District Court who found against Napster. Napster then appealed to the US Court of Appeals who upheld the lower Court’s decision.
The District Court then ordered Napster to maintain records of its network and restrict access to any infringing material when it was informed of its location.
Napster was only able to restrict 99.4% of such activity, however, the Court ordered that it had to comply with 100% of the activity.
As it was not able to comply with this order leading them to close the service in July 2001.
Partial settlement was made in September 2001 when Napster agreed to pay copyright owners $26 million for the unauthorised use of music and against future licensing royalties of $10 million.
Napster changed the service from free to subscription in order to pay the settlement, however, it then faced difficulty in securing licenses to distribute music owned by major labels.
In 2002 Napster’s assets were sold to Bertelsmann for $85 million and the following month Napster filed for bankruptcy, however, a US bankruptcy Judge blocked the sake to Bertelsmann and Napster was then forced to liquidate its assets.
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