Before we had smartphones and things like Spotify, and before the internet was popularized, the music industry was very different. Without getting into too much detail, the artists and record labels would make the large majority of their money through one revenue stream: physical sales of music. A label would sign a promising artists, cover the costs to record their album, and then make their money back through the sales of records, CD’s, or cassettes. The artist would also make a large portion of their earnings through physical sales as well. This model was in place, and successfully working for the longest time. If you wanted to listen to your favorite band, you’d buy their album. Then the internet was pioneered in the 1990’s, and suddenly people had the means to interact with each other wirelessly. It wasn’t long until people began using the internet to listen to music, but the industry still was thriving on physical album sales. Then in 1999, three teenagers changed everything.
Napster was developed and co-founded by Sean Parker, Shawn Fanning, and John Fanning. The three wanted to create a platform that allowed people to access music for free, no strings attached. They developed their site as one of the first peer-to-peer file sharing services, and it was an instant hit. The site launched on July 1st of 1999 and it allowed people to easily download and distribute music for free. A year later they had 20 million users across the world, and at their peak, Napster had 80 million users. The internet was still very young, and there weren’t really any specifics regarding laws and trademarks relating to music distribution through the internet. Suddenly people stopped purchasing albums, and downloaded their music for free. Obviously artists and the RIAA didn’t like this at all. It started with Metallica finding a demo of an unreleased song on the site. Soon other artists like Dr. Dre, Madonna, and Radiohead discovered unreleased tracks on the site. As the site blew up, record labels took notice and after a few cease-and-desist letters and a couple lawsuits, Napster eventually closed down in 2001. While it’s been rebranded a few times and still exists today, the original site made a massive impact on the world in those two short years. In fact, there are a few companies that were heavily influenced by Napster. So let’s look at some companies that probably wouldn’t exist today if it weren’t for Napster.
BitTorrent Inc.
BitTorrent Inc. is the first company that comes to mind that most likely wouldn’t exist if it weren’t for Napster. They are an American company that was founded in 2004 and oversee the continuing development for the BitTorrent peer-to-peer protocol and the P2P client known as uTorrent. Napster was basically the first company to popularize P2P file transfers, and BitTorrent definitely was influenced by them. P2P file transfers are still probably some of the fastest, and uTorrent is the most popular torrent client currently. While torrenting can be used for good, it is still largely used by people to pirate movies, music, and computer programs from sites like The Pirate Bay.
Spotify Ltd.
Most of you are probably familiar with Spotify by now; one of the most popular music streaming sites around. The company was launched in Sweden in 2008, and they were one of the first major streaming companies to properly negotiate legal contracts with the major record labels. You can join Spotify easily and are granted access to millions of songs to listen to for free, however advertisements will be played periodically throughout the listening experience. Additionally you can pay $9.99 per month for an ad-free experience in addition to gaining access to some other features. Napster really was the company that pioneered digital music distribution via the internet, and you can easily argue that not only Spotify, but all major music-streaming sites were influenced by Napster in some form or another. Interesting enough, this year Spotify has around 60 million users with 15 million being paid users, which is still behind Napster when it was at its peak.
Escape Media Group
Escape Media Group was a company that was respnsible for creating the now-defunct music streaming service known as Grooveshark. Unlike Spotify and other competitors, Grooveshark allowed users to listen to music through their website for free without any ads. Essentially the company/site left the music in the hands of their users, as you would have to upload music yourself to the website. They bet on the fact that users would populate the site with content, and it worked out. I used Grooveshark back when it was running and it certainly was awesome. They took Napsters dream and brought it into the future. However like Napster, record labels and artists didn’t see any money from this. The major record labels filed copyright infringement lawsuits against Escape Media Group and eventually Grooveshark was taken down.
iTunes
While iTunes is not a company, rather a service provided by Apple, I’d make the case that it was also heavily influenced by Napster. iTunes initially launched in 2001 and a media player and music managing client that allowed users to sync music files to their iPods. Eventually Apple would work with the major record labels to secure the rights to use their music for the iTunes Store which was launched in the 4th version of iTunes. Napster showed the world that users would accesses their music via the internet through downloads, and the iTunes Store was one the first legal services that allowed users to download music just as easy. However they would obviously have to pay for their downloads. Napster started the music internet revolution, and iTunes solidified that this is how people will listen to their music. Now Apple is planning on launching their own subscription-based streaming service, and I’d argue that Napster started this movement as a whole.
Photo by Bruno Vincent/Getty Images
