Business Wars

It’s 2000, and the record industry is just waking up to a major threat to its business model: an online file-sharing system created by a 17-year-old kid from Massachusetts. With Napster — so called after the nickname its founder earned on the basketball court — users can download music for free. Why would anyone pay 18 or 20 bucks for a CD ever again? Musicians like the Offspring greet the technology with open arms. Some bands see Napster as a way to make more money on each song while breaking the control of the record labels over their music. But not so fast. The record industry isn’t just going to give up its $15 billion in annual profits. And the music execs are convinced: the courts will be on their side.

Naysayers tell Shawn Fanning that only an experienced Silicon Valley software engineer solve all the technological challenges to get Napster working. But Shawn thinks he’s got the answers and asks himself, ‘’why not me?” And he gets to work, turning to an online chat group of hackers who are eager to help so they can take the fight right to the doorstep of the record labels.

Napster co-founders Shawn Fanning and Sean Parker finally get to Silicon Valley, where their dream for music sharing is supposed to take off. When word gets out about what Napster is doing, software programmers are literally banging on the doors, begging to work for Napster for free. Their idea is solid, but the finances are weak. It’s time to incorporate and find investors. Shawn turns to draw up papers. To Shawn’s shock, his uncle takes 70 percent of the company for the effort. And, as it turns out, it costs a lot of money to bring the world free music.

As the game of cat and mouse heats up with the record labels. The labels know that unless Napster is stopped, it’ll destroy the record labels. That doesn’t stop Napster co-founder Sean Parker from feeling the vice grips closing in. By early 2000, Napster has 10 million users and a landmark copyright case from the RIAA and a court date with Metallica. It’s survival of the fittest, and both sides are playing with fire.

Some of the biggest names in music have gathered to duke it out over the future of Napster. The Senate Judiciary Committee’s intellectual property hearing finally brings the pioneers of the peer-to-peer revolution face to face with the record labels. Napster is feeling good about its chances. But the judge overseeing the whole affair isn’t going to just swallow whatever arguments Napster’s high-priced lawyer dishes up. And buried somewhere in the mountains of evidence is one message that could destroy everything.

Napster is approaching its death throes. The file sharing company has one shot left: Bertelsmann, the record label that’s confident it has come up with a foolproof plan to profit from its former foe. But Bertelsmann forgot about one thing. It needs the buy-in of other labels to make its rescue plan work. And the other music bosses are still livid that Bertelsmann went behind their backs to partner with Napster. They won’t be stepping up to help either company. Napster is running out of options. There’s only one thing that might still work: it’s got to go legitimate.

Host David Brown sits down with L.A. Times pop music critic Mikael Wood to talk about how Napster changed not only the music business, but music itself. It turns out digital music downloads paved the way for a lot of trends we see in music today… Justin Bieber joining the remix of Despacito? Beyoncé’s surprise album drops? The countless list of songs featuring Nicki Minaj? It all started here. Plus: after all is said and done, was Napster good for music or not? The answer might not be that simple.