TechStuff Classic: How Napster Worked

high seas. When I was in college, there was a totally different type of piracy that was running rampant across the networks, and that was the theft of intellectual property. So today we're taking a classic look at how Napster worked. Now, this episode originally published on April third, two thirteen. So let's listen to this classic episode of tech Stuff. Napster and Napster's Um, it's got a bad rap. It's kind of becomes synonymous with, at least the old Napster. The

original Napster becomes synonymous with things like piracy. Although in the lawless days of the Internet when everyone just stole from Lars Ulric, Yes, in fact, he ended up delivering a lawsuit by hand too, so full of ire he was, Yes, he took this. I think I don't know. I don't know that I don't know that even a number of Metallica can carry a sixty thousand page maybe by hand truck, I'm not sure. I'm not sure by hand, but sure

series of CDs. Yeah. So anyway, let's talk about Napster and what it was and what it is today, because it's it's definitely changed quite a bit. So it's a it's it's all about really it's all about music. It's technically it's about file sharing, but those files are were essentially music files MP three files. Napster limited itself to MP three files. Lots whether peer to peer sharing networks used, you know, you could you could get movies on there

are all kinds of stuff, games, everything, any kind of file. Well, Napster was all about all about m P three's and and you have to understand, like the the days when we first start looking at this idea, that's way back in the late nineties. Back then, music was not something that you could easily get on the internet. And it was first of all, anything that was on a web page was MIDI based or whatever it was, or mod based. It was just it was not anywhere close to CD quality.

We didn't have an iTunes store that kind of thing. Yeah, there wasn't, you know, but there were people who they were then did I just say completely, I just said that when iTunes was founded, that's a different show. So anyway, there's a whole you know. iTunes for a long time was just a jukebox type of program where you would manage the music that you already had. It wasn't a store where you would buy new music. It was it

was a management system. So really, at this time, the way you would get if you were someone who wanted to get a music file, you would essentially have to search around for someone who was hosting music files on a website somewhere and then download them. And these these websites were very much unreliable, and uh, this is what got a certain guy thinking about different ways of going about it. The guy's name was Shan Fanning. Yeah, and as he got his first computer and very shortly after

that created napstairs. So that was yeah, it was within two years he had gone from getting his first computer to creating one of the most influential and notorious web services and programs of all time. Yeah. He got his computer from his uncle John Fanning, who ended up being Yeah, yeah, he he provided the seed money for for Napster in

a couple of years. Yet he was also not just interested in programming right off the bat, but also interesting it an Internet Relay Chat i r S, which is, you know, one of many different protocols that allow you to communicate over the Internet and um in an instant instant messages. Yeah, exactly as opposed to like email or something along those lines. And he got interested in the field of Internet security. And uh. He described to himself at the time as a white hat, not a hacker.

So the idea being that he was interested in finding ways to make internet security more robust, so in helping people, not not stealing from people, right like not like he might look at a system and say, oh, you have a vulnerability here, you need to patch it, as opposed to, oh, you have a vulnerability here, give me all your things. Um. That was kind of his his at least that's what

he said, and I have no reason to doubt him. Um. But he met virtually a fellow named Sean Parker online in those days, and Sean Parker also becomes important in the Napster story. So in ninety eight, he was starting to think about this thing that music files. And by the way, this kid is a teenager. I mean, you know, if I'm using the word kid, it's not just because I use that word for everybody. It's because he was literally like seventeen to nineteen at the time. Yeah, he was.

He was, well, that was when he was eighteen turning nineteen. Uh, and he he was a freshman at Northeastern University in Boston, and he knew that there were a lot of kids his age really interested in music and they really wanted to find more music. But again, it was really tricky to find it online because these websites that would host files,

they wouldn't last very long. Maybe someone stops, stops monitoring it or maintaining it and the links are all dead, or because of high traffic, you know, everyone finds out that this is where this one file is, everyone goes there, and then it crashes the site. It was really really tricky to find a way to reliably get those music files. Also important to note in that was when the Digital

Millennium Copyright Act went into effect. Yes, very important. That's a Congress enacted that and uh, that was that was essentially Congress's way of saying, we understand that intellectual property is important, that copyright is important, and that the Internet age has dramatically changed how easy it is to distribute material that is under copyright. So here are some rules to guide how we can how we can legislate this sort of stuff, and essentially criminalized the circumvention of any

kind of digital rights management right measures. It also, however, created something called safe harbor, which was very important and would become extremely important in Napster's case. Safe harbor is a concept whereby it says, if your site or service is not actively engaged in copyright infringement, but the users are using your service in order to conduct copyright infringement, you yourself are not at fault. You cannot be held at fault for the behavior of your users because the

users are behaving however they want to behave. You're providing a service. As long as your service is not actively meant to circumvent copyright protection or to distribute copyright right materials illegally, then you should be in the clear because you cannot be held responsible for what other people do. And that's an important concept. It's also one that ultimately you could argue was not held up in the case

of naps. Yeah yeah, uh yeah. Other, while we're on the subject, other concept that became important in this argument was the Audio Home Recording Act of which said that you are allowed to make unlimited copies essentially of any CDs and cassettes that you own for personal use and for your friends, as long as you're not receiving compensation. Right. So again the idea being that if I own something, I can make a copy of it. Usually it's considered

a copy for backup purposes. So for example, let's say I own a c D and I want to be able to make a second CD in case something happens that first one, because I mean I bought that c D I feel sets mine. Uh. And this this is this is something ye, something that the music industry was

not so pleased about. I mean every industry. Whenever any sort of uh invention has come up that allows people to copy material some way, for instance, VCRs and DVRs, the various industries get very nervous about it because they're afraid that well for multiple reasons, but one of the reasons is they are afraid that that's going to impact sales.

That means that you're going to end up distributing stuff, and then you cut out the person or entity that is in charge of distributing that, and then they lose the copyright and that you know, and that that paid to make this thing happen essentially, and that they're going to lose money. Yeah, it's a huge, huge thing. When VCRs came out in the in the early eightiest, not that I remember, But why are you looking at me, Lauren?

Is it only because I'm your co host? Or is it because you actually know that I remember when VCRs came out. I'm gonna smile on her face, tells me the answer. All I need to know, folks, holl I need to know anyway. Um. But yeah, so so that

that's kind of the state of digital copyright. So meanwhile, Sean Fanning is saying, maybe there's a better way of being able to find and get the music files that you really want, and he starts to come up with this idea where the idea would be to create a centralized server and that server's job would be to search for an index music files and uh, and the way

it would work is that you would subscribe to the service. UH, you would essentially register yourself as a user with the service, and then as a registered user, you would get a folder that you would put on your hard drive, and that folder would be a share double folder. Anything you put in that folder could be seen by this service. The server, the the centralized server could see whatever you put in there. Now, in the case of Napster, we're

talking MP three files. So if you put if you had MP three files already on your machine and you put them in this folder, it would mean that those would be discoverable by that centralized server. So someone else who registers with it wasn't called Napster yet, But when they register with the service and they search for a particular music file and you happen to have that music

file in your folder, you're a link to. Essentially, your machine would pop up and the server would facilitate a connection between the person searching and your computer so that the file transfer could complete. So, Lauren, let's let's use We'll use ourselves as an example. Lauren. Let's say that you've heard about this band called Common Rotation. All right. Common Rotation fronted by Adam Bush, former actor in the

Buffy the Vampire Slayer series. Right, he was Warren nerd of Doom So, Lauren, you've heard of common rotation, and you're thinking, I really want to hear this one song I've heard about that common Rotation does. It's called sit Down before I Fall Down. But uh, you know, I don't have access to a way of finding this this song. Otherwise I go in to Napster. It turns out that I Jonathan happened to have that song, and I have

it in the share folder for Napster. And when you do the search, it put points a link towards my direction, towards my computer. You hit the download button. My computer uploads the file and your computer downloads the file, and it's a direct transfer between the two computers. The centralized server just acts as kind of a traffic monitor. Um. And the cool thing about this is that when my file gets to you, by default, it's going into your

share folder. You can change those settings, or you could have changed those settings back in the day because the service doesn't exist anymore, right, Or you can pull it out of that share folder if you wanted to write,

but you you don't. You don't have to share everything you get, but if you did, that would mean that now there's another instance of that file that there's two locations, so that if you can't if you have trouble accessing the first location, or if out yeah, or if I'm not even online, like if if my computer is off, you cannot connect my computer. But if Lauren is on and she still has that file on her folder, that means person number three could come in and get the

file from Lauren. So every time that someone used Napster, they were actually increasing its utility. So it was a service that got stronger the more people used it, and the more the larger the numbers joined, the more powerful this service became, right right, and so so early Fanning was was developing this this program and coding everything along with Sean Parker. I think, yeah, And there's a story that he did sixty straight hours of coding without sleep.

That sounds like one of those terrific Internet myths. Although with you know, with energy drinks which were which were new and the the red Bull was brand new and they were downing them in cases they where they were. But so they uploaded this beta to a website called download dot com and and it it hit really big.

People were so excited about it. Yeah, it was very quickly became clear that this this thing that they had come up with was going really resonated, really because there are a lot of people who are really interested in music, and there's also there was also this rowing attitude of if I like one song, but I don't like the rest of the album, why should I the whole album

for one song? And the problem at that time was that there was no real way to buy a song by song unless the band had released specifically a single CD right. Other than that, you were pretty much out of luck. You had to buy the entire album. And so that was why a lot of people were turning. One of the reasons why a lot of people were turning to piracy because it allowed them the freedom to get what they wanted without getting all the other stuff.

And one of the big arguments people have put forward about, you know, the piracy thing, is that if the music industry had moved faster to make it more of a accessible yeah, Yeah, If the music industry had been moving ahead of the population at the time, or thinking ahead, or even just looking at the Internet at that time, which they really weren't, yeah, then they could have they could have headed off the whole piracy issue to a

large extent. Like if you make it easy for people to get your stuff, and then people will come and pay for your stuff. If, however, it's way easier for people to steal your stuff, don't be surprised when it gets stolen. Yeah, I have I have ideas about HBOS content, like like this cable cable television in general, and yeah, that's one of those things where you know you'd be like, oh, HBO, go, I'm gonna get that, and then you realize, wait a minute,

if I don't have the HBO subscription, I can. It's only if I already have it. If I already have it, why do I need anyway, it's a whole different show. Hey guys, it's time for me to interrupt this classic episode so that we can take a quick break to thank our sponsor. So, so, back in back, so he had this cool idea. His uncle John, who had gotten him that first computer, gave him some seed money and

I think maybe facilitated an introduction to Eileen Richardson. Right, And this is also around the time Sean Fanning has decided to call it Napster, which was based off a nickname he had in junior high school based on his hairstyle. Wow, that's amazing. Yeah, that's just I was like, I have to get this fact out there, and if I don't

say it now, it's not gonna happen. So Eileen Richardson was a venture capitalist, une very funky one all you know, all the punked out hair right right, all the reports about her like, yeah, she goes to Amsterdam to listen to bands and just got pink hair. It's really cool. Yeah, but clearly she's hardcore. She she invested in the company and signed on as the interim CEO. In exactly she she was someone who had had a lot of experience

in investing in internet companies. And you know, keep in mind, this is ninety nine, so we're still talking before the big bubble crash. It's the heady days of the Internet, when everyone's trying to figure out, like, there's this incredible resource, how can we use it to our best advantage? And she was one of those people who was right there on the bleeding edge looking at the possibilities, and she

got really excited. She was very much a passionate music fan, and so she was a music fan and a venture catalyst. Napster fell right into her wheelhouse, so she jumped in she ended up making a very substantial investment, and then like like you said, Lauren, she became the interim CEO. By by September, there were forty registered Napster users um and it was connecting a few hundred people at a

time at any given time. Right and by this time, Sean Parker has gone from being an I r C buddy to a real life buddy and is working with Fanning on this project. Uh. And and it was also right around the same time that the Recording Industry Association of America also known as the r I double A, which represents five of the major music labels like we're talking like the Wind, the big big ones, the ones that own everything else, essentially started to really tackle websites

that were hosting music files that were under copyright. So the r I double A was actually actively seeking uh these sites being taken down. Now keep in mind napsters circumventing all this. It's no longer looking at websites that are hosting files. It's looking directly at people's hard drives where there's the shared folder. So well, our I double A is going after all these websites. Napster's doing, you know, business like Gangbusters. And when I say business, it's not

really business because they weren't making money. Yeah, they had no revenue generating scheme at all. There was no way for Napster to make money. It just that wasn't part of what was going on. In fact, I'm not sure there was ever really part of their their their original plan. Yeah, Originally it was all just about sharing and that you know, they knew that the service had value, but not in

a way that they could actually monetize. And although you know, they were they were looking even in the early days, they were looking at ways to to to get licenses from various music labels where they be able to do things like sell music files through naps Um, as well as kind of you know, diffuse the growing problem of the r I double a looking out for or even later on, they were talking about, you know, trying to find a way to count count these hits, count these

downloads and and tally them up and pay the recording artists and the labels and all of that right for the music. So you know, it's it's I think it's really important to mention that because these these kids really weren't out there going like we're going to steal all the music right. In fact, they were just thinking like this is a way to share stuff and it's a tool for music discovery, which was a that was a big deal too, was the idea, like it's it's getting

harder and harder to discover music. Radio stations might play the same like yeahs technically obligated to pay this play the same like forty tracks by their contracts. So that's so, how do you discover new stuff If you don't have the luxury of flying off to Amsterdam every few months to listen to a band play, then how do you discover new music If you're not you know, you may not live in a city that has a vibe written

music community. It makes it really difficult. And so you know, although the record industry was doing fine, its profits raised eight for the previous year um by by the end of the year UM the r I A filed a lawsuit against Napster. Right right around that same time, Napster hired its first non founding member named ali idar Uh and then right a right, well that was going on. R I Double A was really looking at Napster as a true threat, like this was if the websites hosting

a few music files were bad. Napster was Darth Mader coming out to kill all the Jedi, and so R I double A really started to concentrate on him. In fact, called Napster a giant online pirate bazaar. That's bizarre, b a z A R not bizarre, strange, isn't strange um.

And so the thing was that as the R I double A began to focus on Napster and all this news broke about coming after Napster, that just made Napster's profile go up even more, which means more people discovered the service, which meant that it actually got more popular than ever before. I Meanwhile, the R I double A was specifically looking at charging Napster one hundred thousand dollars for every copyrighted work that was infringed, which which is

a bunch, and that's a lot. And remember this is a service that grows incredibly every time someone new joins in, especially if that person has files on their computer that wasn't already spread across the entire uh Napster landscape. So if you know, if I join on and I happen to have my Tibetan throat singing magical CD that nobody else in the whole world owns, and it happens to be on my computer. Then suddenly I am of more value to Napster because there's new stuff that no one

had new else has yet. If I happen to have Dave Matthew's greatest hits, there's a chance that was already covered on Napster, I would think, so, um, I don't have that album. By the way, I'm very proud of you. I don't either. I'm not nothing. I'm not passing any judgment. I'm just saying so, uh, yeah, that was fun. But yeah.

Here's something that Eileen Richardson specifically had to say about Napster, and this comes from an interview she did with Salon where this was after Metallica, after after Lars Alric himself, it came by and dropped off this this huge lawsuit because it wasn't just r I double A that came after Napster. Individual labels and bands also came after Napster.

And uh and so she said, I think, and then in brackets because this is not exactly what she said, but Metallica and the recording industries actions are based on a lack of knowledge and fear. When you're afraid of something that you don't understand, you react, usually with the lawsuit. But over time, and we see this absolutely every single day, everybody's learning. We're learning about the music industry, they're learning about the Internet. I'm confident that we'll get there together now.

As it turns out, her words were not quite prophetic. She was giving a little too much credit, I think to all sides on this issue. I don't mean to paint our I double A as being this evil uh entity. They were looking out for their interests in a very very passionate way. I meanwhile, Mabster was looking out for their interest in a very passionate way. I think that everyone involved was being a little bit shortsighted about exactly

what needed to happen. Yeah. No, but there is no doubt that the music industry had not really figured out the internet yet, in fact, because no one had a music store that was really of any true utility at this point. And so that's why when you have a service that allows people to get what they want, they go to it. Whether that's piracy service or if it's one that's legitimate, doesn't matter. If you give the people

what they want, that's where they're gonna go. And the music industry had not yet figured out how to give the people what they wanted, and so that was the problem. By the way, I still remember the days when I would actually want to buy an album because I like the album experience. But even at this point in the nineties, I was one of these people. I was one of the people saying I don't want to buy an entire album.

I just like this one song, and um, you know, and I can't think of the last time besides like a soundtrack to a musical because jazz hands, I can't think of the last time I sat down and listened to an album from start to finish. That's that's actually how I kind of usually do it myself. If if I have like an artist well enough, I'll buy the

album and sit down and listen to it several times through. Actually, but it's been a long time I've done that with They might be giants, I've done that with them, But it's Jonathan Colton but and Marian call but beyond like a few artists, I just don't like fun No. I I just went out and bought the one, the one

that everyone listens to. But anyway, getting back to to Napster, and around two thousand and they secured around of funding from Hummer Winbald which installed a man named Hank Berry as the CEO of Napster again another interim CEO, So hank Berry takes over for Eileen Richardson in two thousand and His main concern was to try and resolve the legal issues that had popped up between Napster and the r I double A and other people on his management team took over the day to day executive decisions of

keeping the company going. So really, uh, hank Berry was just looking at the legal issues, not not how to operate the company. Yeah, yeah, sure, but yeah, you know it's when you've got people like Dr Dre talking directly to you about lawsuits, then you start yeah. Well, and there were some there were some artists who were coming out in defense limp Biscuit Offspring. I think Chuck d was, Yes,

he was. He was also a big supporter of Napster. Um. Yeah, yeah, that was so, so there were artists on either side of the issue. Obviously. Two thousand was also when this was another thing that got Napster a ton of publicity when colleges started to ban napster. Yeah, something I think that I read a figure that's something like colleges. It was around the US. It was around in March of two thousand. By March of two thousand, it was about a hundred thirty universities, but more would join. Uh. And

it was also their biggest period of activity. They had upwards of seventy million registered users, yeah, and around two and a half million people connected at any one time. So it was to keep in mind these servers could only handle a certain number of connections. They had more than one server, but in the early days, if you wanted to use the service, you would connect to the server, and then about up to around four thousand, nine hundred and ninety nine other people could connect to that same

server at the same time. Uh. Some of the service could handle larger loads than others, but you know, the more you would put in there, the slower the whole service would go. So you would you would be connected to a server along with thousands of other people, which meant that you were limited to whatever those other people had in their share folders. Right, So not every music file in the world is available at any given time. It all depends upon who is connected to the service

at that moment. Uh. And originally each server was kind of its own independent little world and independent on you know, just when you signed in with what server you would hit N and who else would be on there, you know. But at this time they were running about a hundred and forty servers, I think it's the estimate. And ultimately whether their goal was was to link all the servers together so that way, if I linked to server A and Lauren linked to server B, they would we would

still be able to exchange files. Now, in the early days, that was impossible. We would both need to be on server A or both be on server B for that to work. Uh So anyway, Uh, the universities and colleges also began to notice that that uploads were the upload spees were really dying on campus because people people were using the service, and that I think I think that by it might have been in two thousand one of January, Indiana University noticed that up to of its network resources

were being used by Napster. Yeah. Yeah, And Oxford University really suffered because here's the thing about Oxford University. They had to pay for any data transferrals that were transatlantic, So any files that were passing over the cables that go underneath the ocean that connected the Europe to North America charged per bite. Yeah, so they had to pay

per bite a certain amount per bite for that. So people on the Oxford campus who were using Napster and we're downloading files directly from computers in the USA, we're really driving that up. Yeah. Yeah. They joked that it would have been less expensive to have just bought the students the CDs, right if if if the college had gone out to the music store and just filled up four hundred carts with CDs and brought it back to the campus, it would have been less expensive. Um. Yeah.

And and so this was also around the time when uh, this was mainly Eileen Richardson's influence here, where they were looking at incorporating more social tools in Napster, things like instant messenger chat rooms. Yeah, that that could old IRC stuff that that they were also found out. Yeah. And again this was an idea to kind of help users discover new music and learn more about the stuff that they're interested in. Uh. And so it was really becoming a social platform at the same time as it was

under fire from the industry. Um, and so we're getting now to the point where we need to take a quick break. But before I say that, I remember, even at this point where Napster's going crazy with huge amounts of traffic. Remember it, at this stage, it's the most popular web service that has ever existed. It would be dwarfed by things like Facebook in the future, but this, this is before Facebook at the time, connecting you know, a few million people simultaneously. That was a big deal. Yeah,

so so huge deal. Still not any way to generate revenue. But let's take a quick break, all right, and now let's get back to naps here. Alright, So, so two thousand's coming gone. We're into two thousand and one, and Napster receives an order to shut down. Uh, this is an order court order to shut down its services because the r I double A has said that napster is complicit in copyright infringement suits. It's not just that it

is a service, it is actively helping people copyright. That's essentially what it would have to be for it to get around this whole d m C a safe harbor issue, and that's a debatable thing. But the judge kind of sided with the music industry. Uh. There was a stay in the order to two days later. In fact, I think a stay was enacted, right, so they didn't have to shut down a media lee. However, not that much longer they would get another order to shut down and

they actually would have to do it. Uh. And they received right around the same time during that stay, they received like sixty million dollars investment money from Burman Bertlesman, of course, being a giant multimedia company that in fact owned a bunch of the companies that were participating in

a lawsuit against Napster. Yeah, so you have to understand, Okay, So Burlsman is this mega multimedia company based out of Germany, all right, and it owns lots and lots of stuff, lots of different divisions, and these different divisions don't necessarily talk to each other. So one division sits there and sees Napster and sees lots of potential in it as

turning it into a revenue generating service. Another division that has nothing to do with that first division is seeing Napster as the pirate that is killing its business and it needs to go after it. Well, I think that really. I mean, I think it was extremely savvy of Burtlsman to be investing in them at the time, because they were looking at it and they were going, this is potentially the future. This is how they if you know,

what they're doing right now is crappy for us. But if people people are excited about music, and that's great, I think, and if we can monetize that. I think Bertlesman would argue that retroactively it was not a savvy move at all. Okay, well sure, but but you know, they saw that where the future was going. Unfortunately was the wrong time to implement it, because it just turned out that the the hornets Nest that had been stirred up was so great as to totally derail any efforts

in turning Napster into a quote unquote legitimate revenue generator service. Right, yeah, Well, they installed Conrad Hilbert's ass the new CEO, hank Berry steps aside, and meanwhile, like just just as Conrad Hilber's was taking over, hank Berry had just gone before Congress and asked Congress to to form some sort of industry wide license agreement for internet broadcast similar to what radio has, and his His argument was that really we're just another

distribution platform just like radio, so really we should we should have the same opportunity to license music the way radio does. The problem with the problem with establishing a license for every single file is that it's impossible to do because take take a take a typical album, that album might have multiple producers on it, and each producer has some level of ownership of the tracks that are

on that album. Then you have the artists and they also have some ownership on the tracks on that album, the composition and of actual performance. Right, So securing a license from every single cop you know, like everyone who

owns part of that content, it's impossible, you know. He was saying that for one album, you might have to secure hundreds of licenses just to be able to have that one album, and then you multiplay that across the hundreds of thousands of albums that have always existed in the new ones that are coming out every year, and you have an impossible situation. There's no way to legally follow that rule. So what needs to happen is a new legal way. He wasn't arguing, he wasn't arguing for

for piracy. He was just arguing for a new legal means to license music, and that was getting really bogged down in Congress. So then he ends up stepping aside and uh and Conrad Hilbert takes over. Um. Conrad didn't have a whole long time to operate Napster before it got shut down. That was on June eleven, two thous one.

That's when Napster shut off its service. It still existed as a corporate entity, and it started to really concentrate on finding a way to create a legal music distribution service. And I say legal with air quotes around it, because Napster again would be arguing that what they did, they were harbor, they were only connecting people to do illegal things, right,

and that that wasn't even the purpose of Napster. The purpose of Napster was sharing music, and that that, you know, it's the fact that people were using it to share music illegally. That wasn't Napster's fault. And you can argue whether or not that's naive or sincere. That's not really

our place to do that. I mean, you could certainly, you certainly could have used Napster in a perfectly legal means if an artist had given full full permission, like I want this, you can distribute this any way you like. I have no I release all claim to it. Otherwise I just want my music out there. Then it would have been perfectly legal to to distribute that across napster. It was the problem. The problem was there were people doing that with stuff where that what they didn't have

that they have that permission. And now you could ask, how is this different from taking my copy of a CD that I've bought, making a copy and giving it to law. Yeah, all I've done is just changed the way that Lauren has has received that music. And is it my fault that Lauren and maybe two point four million people I don't know got that music check I don't know. Um, so it got really complex. Yeah. Yeah.

So then the next note that I have is in two thousand two when UM the you know, the company was was still shuttered but but working um and they entered into a beta test of a secure file trading network that January. Yeah, and uh, and that was it was something they were really seriously working on at the same time as trying to figure out a way to stave off the growing financial problems they were facing as

a result of these lawsuits. Yeah, yeah, they were so serious that as a February Burtlesman just kind of offered to buy the company I think for for like like twenty million, like not not a whole lot, it was. It was, yeah, in addition comparative. It was addition, in addition to the money they had already invested into the company, which was I think I could be, I could be. You know, there are a lot of interesting reports on this, so it's kind of hard to follow. It's a little

bit timmy wymy, but yeah, exactly whibbly wobbly. In May two thousand two, Sean Fanning and Conrad Hilbert's both resigned. Right. This was John Fanning, you know, kind of tried to organize a coup. From the way that I read it, he was he was trying to oust uh Hummer and Hank Berry and all the venture capitalists and and there was all of this in fighting within the company going on. Fanning eventually filed a lawsuit to have Barry and Hummer

dismissed from the board of directors. Suit was thrown out of court. But but but yeah, as of many things had gotten so bad that um that Sean Fanning he quits. Yeah. Yeah. And another interesting note is that Sean Fanning apparently never drew more than just a regular like paycheck. Yeah yeah. His paycheck was just it was like a middle of the company type of paycheck. After after founding it, he worked as he worked as a grant as a coder. Yeah.

In fact, he apparently started getting into trouble because he was getting so many requests for interviews back when naps Or was really in the news for all this this legal battle stuff. He was getting so many requests for interviews, he wasn't able to meet his his coding uh responsibilities, and he started getting in trouble from his boss. Keeping in mind, he's the guy who built the tool. Yeah, he's the guy who kind of technically hired his boss. So and now his boss is like, you kind of

need to um, you kinda need to get back to work, buddy. Yeah, but but so so um Napster denied this sale to Bertlesman and it kind of just sort of dies from there, collapsed like a flawn in a cupboard and nice and that it was trapped like a moth in a bath. At that point, there were also the major labels were trying to launch their own services. One of them was called press Play, which was launched in I think around two thousand two and it ended in two thousand three.

Another one was called music Net, which was also a failure. And the problem was that buying music from these services was often more ble than what people thought it was worth. Again it was not. It became easier to pirate music than it was to buy it, and if it's easier, people will do it. And and other other companies like a kaza and things like that were popping up. Yeah, so so you had new Tela as well, you had

other file sharing uh services out there. They were picking up where Napster had dropped off, and so there were there were a lot of casualties in this whole rise and fall of Napster. And you'll keep in mind this is just two thousand two, and um, yeah, yeah, it happened. I had no idea when we started doing this had happened that fast. Because of such a huge name, right, you just expect that it had at least a decade worth of life. And of course we'll get into what

Napster is now in just a minute. But besides the fact that you had Fanning who never drew anything more than just a regular salary. Eileen Richardson had a huge career setback. Business Week ran an article that essentially said that all of the legal problems were mainly due to the way Richardson was running the company, which was not entirely accurate. I'm not very fair to her how she was running the company and how she was marketing everything, because she was she was very like like free love

about the music. And but yeah, apparently that that that hit her pretty hard. And also the Bertelsman CEO, Thomas Milhoff was was replaced. He was replaced by another CEO when that Napster deal was went so sour, and plus the economy itself, but you had to really crumble because keep in mind, this is post dot com crash, and the ramifications of that are still unfolding in two thousand two.

So you've got the the company just completely languishing. There's there's very little of it left and ends up going into Chapter eleven bankruptcy. And then there's a a bankruptcy auction held in two thousand two. This is still happening like right after another, and a company called Rock CEO purchases the assets of Napster in an auction in two

thousand two. They also that same company purchased that failed music service called press Play in two thousand three, and so they decided to use the the kind of the cashet of Napster's name and the foundation of the press Play service and combined them together to form Voltron. Except by Voltron, I mean a legal music service that everyone knows the name of because everyone's heard the name Napster. Yes, So they take some time to develop this, and the reason why it took so long is that they had

to establish those licenses that Napster never could get hold of. Now, Uh, they had been Napster been trying to do that for especially the last two years of its existence and and failed. And so yeah, and meanwhile, companies like rhapsody Um, which was another it wasn't a file sharing thing that it was a music music subscription plan. Yeah, we're starting text you started to see some early examples of other music subscription services. Uh, Rock CEO would take years to develop this.

It would actually not be until two thousand and six. So this is four years after they bought the assets of Napster that they launched the free Napster service. They place Chris go Rog as the chairman and CEO of Napster, and in that time, what Napster did was it used ads to support a free web based streaming experience. Now you could stream any song that was in Napster's catalog a maximum of three times. After that, you had to either purchase the song or never listen to it again,

at least not on Napster. Yeah, you had to. You had to purchase the song. Now. Nice thing about is that you could purchase a DRM free version of the MP three of whatever song it was, so you didn't have to worry about Okay, well you can buy this song, but you can only play it on three machines and after that that's it, because that was one of the big problems of early DRM music is that you could it would limit how many machines you could put it on.

And you know, here's the thing about technology, folks. Our stuff gets out of date and we want to replace it occasionally. So if you tell me that I can only load this on three machines, I'm like, well that's I'm not gonna last like five years. Yeah, then I have to buy the song again. What's what's the deal.

And this is where you bring into questions like, all right, do you you don't Obviously you don't own the song because you didn't make it, but you you own the opportunity to experience that song within the realm of a specific kind of license licensed for home use. And then your their argument might might be, well, I want to use it at home, but none of the things I have will play it. Now. It's complicated. Uh and in fact, we could probably do a full episode about that we've

talked about in previous ones. Well. Uh, So two thousand sicks they launch, Chris Gore is the chairman and CEO. Uh and uh. They try to get it moving, but it doesn't really catch on. For one thing, at this point, they're starting to to really come into a competition with iTunes. By now iTunes is really a thing. And so from two thousand and six to two thousand and ten that was Napster's existence. But in two thousand and ten, Gorg ends up stepping down and the president of Napster also

steps down, and best Buy purchases Napster. So the Napster CEO, Christopher Allen, becomes the general manager of Napster. Because now it's owned by best Buy. It's no longer a thing that ROXYO has, and his reporting relationship is to a best Buy senior executive. So there's a new new sheriff in town in a sense. And from two thousand and ten to two thousand eleven it's run as a best

Buy company. And in two thousand eleven, Rhapsody, which Lauren mentioned just a minute ago, acquires Napster and folds it into its own streaming music service. So now Rahapsty and Napster are buddy buddy. Yeah. I think that I think that Rapsody had been in close affiliation with best Buy at the time. Anyway, I think that that was the official service for the best Buy line of MP three players back when that was a thing. Yeah, and uh and and Napster still exists now. Granted, keep in mind

the Napster we're talking about now. Really it has very little connection to the Napster that was in the first half of this podcast. Yeah, it's a it's a purely subscription service. Um. You can use it to download or stream music UM two different devicesferent devices mobile. You know, it's got a sleek looking interface. Yeah, and you can listen to it like you if you have a compatible home entertainment system, you can listen to it on that.

You can listen to it on you know, like I said, like a MP three players on the line of something like like Pandora or or Spotify. Although you have you have far more control than you would on Pandora right right. And when you subscribe to it, you um cut out all the ads and all that fans right. In fact, you have to subscribe to it. You can have a free fourteen day trials I recalled in the United States.

I can't speak for everywhere in the world. In the United States, the current subscription rate as of the recording of this podcast is nine dollars and cents per month. And um and yeah, they have apps for Android iOS, BlackBerry,

Windows phone seven. Uh. They have extra features like tailored playlists have been formed by various either you know, sometimes their bands or an artist or sometimes it's like a like a music critic for a magazine will make a playlist and then they make it available on this so that way you can listen to the music that people cooler than you are listening to. That, by the way, for me, that's everybody. I'm not I'm not saying like you are cooler than I am. I know you knew

that already. I'm just let you know that I also know that. So that's especially music wise, I will let myself into that category as well. Yeah, I mean that I was not aware of Neutral Milk Hotel until years after they were a thing. That's that's the kind of guy I am. But I was. I was on board with mom It and Sons before any of you folks

knew who they were. Besides, unless Mumford and Sons is listening to this podcast, in which case they probably knew about it before I did, probably, But anyway, but yeah, they also had the rapsy radio stations, so that's more like Pandora, you know. And they have their own kind of discovery algorithms as well, so that you can find music that if you already like a certain kind of music,

you can talk about. But it is interesting if you go back all the way back to the beginning days of Napster and you look at some of the things that Eileen Richardson said, it's the very basis for music discovery and things like Pandora. Yeah, the idea she actually says in that interview in Salon that if you like a certain artist, you should be able to find other music that's similar to that artist, which is exactly what

Pandora is all about, that the Musical Genome project. So it's interesting that she was looking ahead and she was seeing a future that wouldn't really come to maturity for almost a decade. Yeah. I think in a lot of ways Napster was was you know, it just was approaching the industry in in an aggressively incorrect way. Um yeah, well, and and and the industry was reacting in a very uh like knee jerk way. So the combination of the two meant that you were going to have nothing but

a collision. But also, yeah, just the internet infrastructure was not quite there yet to provide monetization for this kind of thing, and so you know, all of the ideas that they had were really sound and just But really, what I think it is is that the interesting thing to me is that it really created the whole peer

to peer approach. I mean, there were other peer to peer protocols that were coming into being right around the same time as Napster, but Napster was the one that thrust it into the spotlight and you know, peer to peer is is is a completely legitimate way to get information from one computer to another computer. It doesn't have to be for nefarious purposes or piracy or whatever. And so I'm very thankful that Napster existed as a way to kind of get that as as an as as

a thing. I mean, without it, we might have gone a few more years before anyone really realized the potential for appear to pear transmissions. So that was something very important in this whole Napster business. Alright, guys, that wraps up this classic episode of tech Stuff. Hope you enjoyed it. And if you have any suggestions for future topics something that I have not covered or maybe I need to revisit, let me know, send me a message on Facebook or Twitter.

The handle we use at both of those is text stuff H s W. And I'll talk to you again really soon. Y. Text Stuff is a production of I Heart Radio's How Stuff Works. For more podcasts from my heart Radio, visit the I heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows.