The Noisy War Over Napster

Meet the Napster Generation. Rachel is 14, an eight grader in Potomac, Md., who loves lacrosse, basketball and guitar. Listens to 'N Sync. Like millions of her peers with a computer and a clue, she's been using a program called Napster to download free music from the Internet, "because teenagers don't have that much money," she says. She doesn't think it's wrong to use Napster. "People don't think it's anything bad," she says. "Or think about it at all." Smitha, a high-school student in Falls Church, Va., credits Napster, which gives her almost unlimited musical choices with a mouseclick, for expanding her musical horizons and "definitely" changing her buying habits. "I haven't purchased a CD in quite some time," she says.

Nor has Alejandro, a student at Stuyvesant High School in New York City, who downloads music while he sleeps. "Napster's the best thing ever created," he says. "I don't have to spend any money." Daniel, a Stanford comp-sci major, agrees: "I think almost all college students use it right now." The ethics issues of Napster don't bug him. "The main thing," he says, "is convenience."

Steve Bass does feel guilty about using the software. But then, he's 50, way past the age of senior citizenship in the Napster Generation. A Pasadena, Calif., writer and musician, he gets jazz tunes from Napster. "Morally, I've gotta stop," he says. "I've got a real conflict."

But conflict is what Napster, a deceptively simple computer program that's turned the Internet upside down, is all about. Conflicts between listeners and record labels, labels and dot-coms, even artists against their audiences. According to one's point of view, Napster is a terrific way to acquire digital files that play tunes or a satanic jukebox that enables piracy on a scale not seen since Jean Lafitte cruised the seas. And sure enough, the popularity of Napster, the fastest-growing program in the highly incendiary history of the Internet, is tied to getting something for nothing. Napster allows you to search for almost any song you can think of, finds the song on a fellow enthusiast's hard drive and then permits you to get the song for yourself, right now. For the unbeatable cost of free, nada, gratis, bupkes, zero.

That's right. When you use Napster you simply download the program into your computer, make up a weird name for yourself and look for whatever song you want. Obscure Dylan tunes. "These Boots Are Made for Walkin'." "American Pie," by Madonna or Don McLean. Within seconds you'll probably see a number of other users who have the song in the MP3 digital format. One click of the mouse and your computer hooks up with the one you choose, sucking up the bits that will allow you to play back the song on your computer, on a Walkman-like MP3 player or even on a CD that you might "burn" yourself. Fee to you: nothing. Royalties to artist, record company, songwriter: nothing. Guilt: optional.

The record companies are apoplectic. "The people who are on the board of directors and in the upper-level management of Napster all belong in prison," says Howie Klein, the president of Reprise Records. The Napster people, however, are not in prison: they're Silicon Valley heroes who have gotten $15 million in venture-capital funds. The downside is that they have no business model and are targets of several lawsuits charging them with copyright infringement and racketeering, including one by chest-baring heavy-metal rockers Metallica.

But that hardly matters. The fight over Napster has taken on a larger dimension, involving the future of music publishing, copyright law, 21st-century ethics and the relationship of artists to their audience. Pamela Samuelson, codirector of the Berkeley Center for Law and Technology, fears a "civil war" between artists, technology companies and desperate "copyright holders who want to control it all." For a few years now, the emergence of friction-free Internet pathways has raised a raft of questions about the future of entertainment and media, with no shortage of Chicken Little cyberpundits predicting an intellectual-property apocalypse—for music and everything else. But it took Napster to actually bring down the sky. And though there's hope that things will ultimately work out, right now no one is quite sure how to pick up the pieces.

Sitting at the center of all this controversy is Napster's creator: a slouchy, bullet-headed 19-year-old college dropout who suddenly finds himself the hottest star in the world's hottest industry. One evening last week Shawn Fanning steps out on the roof of his company's building in San Mateo—a drab, five-floor structure with a drive-through ATM and a red Union Bank sign on the facade—and squints at the sun while being interviewed by NEWSWEEK and photographed by Rolling Stone. At that very moment, a 30-minute MTV special on Napster is being shown to all of America, but he decides not to watch. "The media attention doesn't seem real," he says. As the photographer shoots, college-age Napster employees toss bean bags at him. It's just another night in Silicon Valley.

Only a year ago, Fanning was an obscure freshman at Northeastern University in Boston. After surviving a difficult childhood—his family was on welfare during his early years, and at one point he and his siblings were briefly shipped out to a foster home—he was a determined kid, according to his uncle John Fanning. The uncle had suffered a similarly rocky beginning and took an interest in his nephew, letting him work at his computer-game company near Cape Cod and purchasing a PC for him. According to Uncle John, Shawn applied to only two schools because he didn't have the $40 application fee—he was too proud to ask his uncle for the money—and one, Carnegie Mellon, turned him down.

Before finishing his freshman year, Shawn was bored and "partied out" at Northeastern, and spent much of his time on IRC, an Internet chat system. One IRC friend, Sean Parker, 20, lived in Virginia; another, Jordan Ritter, 23, was also in Boston. Fanning had noticed that his college roommates were into trading digital tunes on the MP3 format with each other but had difficulty finding files they wanted. He suggested the trio create a way for people to search for files and talk to each other, "to build communities around different types of music." File-sharing was almost an afterthought.

While writing the program—dubbed after his childhood nickname, from hairier days—Fanning spent "all waking moments on software." At first, he says, "we were just thinking of this as a cool project"—but they needed money for equipment and high-speed connections. Parker and Fanning's uncle convinced him it should be a business. The program went up in September 1999, and people instantly took to it, quickly creating a critical mass of tunes. As the audience grew—"we were doubling in users every five to six weeks," says John Fanning—the company found an angel investor, an interim CEO and a new home in Silicon Valley.

Fanning's program came at a pivotal moment. Ever since the VCR, the march of technology has created controversy over the way people make copies of artistic works. Film and TV studios hated the device, and tried to litigate it out of existence—an effort that ended with a Supreme Court ruling that consumers were allowed to copy television shows for personal use. (Now, of course, those same studios make the bulk of their profits from the device they tried to kill.) The use of the audiocassette was viewed with similar panic. But piracy from those media was limited by the difficulty of making multiple copies. The Internet changed that—it allows fast, unlimited file distribution, especially with high-speed connections. Still, anyone who tried to use the Net to sell illegal digital copies of songs or films was clearly breaking the law.

But because Napster simply allowed users to share their personal files with each other, Fanning and this new company claimed they were kosher. It's the digital equivalent of the piano player in the brothel: hey, we don't know what goes on up-stairs. But that excuse went only so far, especially as the record companies began to notice that the Napster Generation had commenced swapping files en masse. Whereas most start-ups get changed by the arrival of the suits, Napster had to face the arrival of the lawsuits.

First came a filing from the Recording Industry Association of America (RIAA) for copyright infringement. Then the heavy-metal Metallica crew found their music downloaded on Napster and were furious—they had their lawyer file another suit. For good measure they sued some of the universities whose students used Napster, including Yale and the University of Southern California. Further, the band took the drastic step of collecting the handles of 300,000 users who had allegedly downloaded Metallica songs, demanding they be removed from the system. Drummer Lars Ulrich personally delivered the names. Another suit was filed, by rapper Dr. Dre. (All are currently pending.)

Meanwhile, Napster's popularity kept increasing. At one point the program became so widespread that some colleges banned it—users were gobbling up more than half the computer resources of some schools, just swapping tunes on Napster. Log on at a given moment, and you could find about a million songs available for instant downloading.

And now Fanning is sort of a rock star himself, albeit of the Silicon Valley variety. Instead of a villa in the south of France, he lives with Parker in a dormlike apartment a couple of blocks from the office. Two other Napster employees sleep on the floor every night. Fanning spends what little time he has outside work lifting weights at 24 Hour Fitness, every night between 11 and 2. He doesn't go out much. "San Francisco would be OK if I had a fake ID," he says. Fanning and his partners did make a trip to Berkeley last week to see the Smashing Pumpkinsand ran into lead singer Billy Corgan backstage. They talked for an hour. "He was a huge supporter—he totally understands how it evolves," Fanning gushed to a friend.

Indeed, how Napster evolves is the big question for Fanning and partners. That's why the recent $15 million investment by the big-shot Silicon Valley venture-capitalist firm Hummer Winblad was so important. Other firms, nervous about the lawsuits, had demurred, a startling occurrence in an atmosphere where a few million bucks of VC money can be obtained by some nerd's vigorous sneeze. Hummer Winblad installed one of its VC's, Hank Barry—a former copyright lawyer—as the new CEO. "We're trying to build a bridge to everybody involved in Napster," he says. "From music educators and users to record companies." Especially the latter. Barry's already been active in trying to reach a truce with the music industry, calling RIAA president Hilary Rosen and even Metallica. "He asked for a dialogue," says Ulrich. "It's a weird situation, though, because we're in the middle of putting him out of business."

Many observers think that Napster's outlaw rep has permanently tainted the company. Some of the preliminary rulings have gone against it, more than 120 universities have banned it for legal reasons (including those sued by Metallica, which dropped them from the suit) and more bad news have come with a recent survey. Napster supporters had insisted that its users might actually buy more CDs after risk-free sampling of downloaded tunes. But a recent study, using the definitive SoundScan music-sales-measurement system, concluded that while overall CD sales have been significantly up, purchases have tanked at stores near college campuses—Napster country.

The "civil war" Samuelson referred to may have already begun. Not only the business people are taking sides, but the artists themselves. Napsterites like Limp Bizkit's frontman Fred Durst, whose free summer tour will be funded by the start-up, are excoriated by industry types. "Is [Durst] saying only kids with computers should get [his music] for free?" jokes Val Azzoli, co-CEO of the Atlantic Group. "He should give his music away for free at every retail store in America! The schmuck!"

While so far only Metallica and Dr. Dre have taken the step of moving against their fans, their lawyer Howard King says that at least five other artists have contacted him. Meanwhile, Ron Stone, manager of artists like Tracy Chapman and Bonnie Raitt, insists that the entire Napster movement is little better than thuggery. "Basically they're saying our art is worthless, it's free for the taking," he says. "Music used to be a collectible, now it's a disposable." With a few other artists and managers, he's starting an ad-hoc committee called Artists Against Piracy. Somehow it doesn't have the ring of Save the Rain Forest.

But even if the music industry succeeds in killing Napster, it is faced with a series of imitators, some of whom are even scarier from an industry point of view. In a way, Napster is a fat target for attackers: it uses a centralized database, which allows the company some control over its users. (And keeps a list of transfers handy for potential litigants.) But with some newer systems, the searching is done in a distributed manner that can't be shut down or modulated. One of these systems is Gnutella (pronounced New-tella). Unlike Napster, Gnutella could be used to exchange not just music files but any files, including movies, text and photos—a copyright holder's nightmare.

Amazingly, the program was written by Justin Frankel, a well-known programmer at Nullsoft, a company owned by America Online—which is in the process of purchasing Time Warner, the world's biggest collection of music labels. Within hours after Gnutella was posted on the Nullsoft site, AOL executives had it withdrawn. But the code circulated through the Net and now hundreds of programmers are supporting an active Gnutella community. If Napster is shut down, says Gene Kan, one of these pro bono developers, "the postapocalyptic pirates are going to be using Gnutella."

Even more radical is Freenet, created by 23-year-old Ian Clarke, an Irish computer scientist living in London. His program is not only decentralized but has safeguards to protect the privacy and identity of users. The actual files to be downloaded will be encrypted and then randomly distributed among the community of Freenetters, who won't even know what information is stored on their own disks. (Could be songs, could be kiddie porn.) File transfers will be untraceable. Clarke's motives are political—his dream is to liberate intellectual property. "My opinion is that people who rely on copyright probably need to change their business model," he says.

Most observers, however, are more sanguine about the eventual outcome of the Napster Wars. Even the most virulent opponents of the software can recognize the popularity of Shawn Fanning's creation. "Despite all their scary characteristics, people love this stuff," says Samuelson. And just about everybody agrees that eventually the labels should muzzle the lawyers and view the Web experiments as potential partners. "How many industries try to kill off their biggest distribution channel on the Internet?" asks Gnutella developer Kan.

In fact, a number of Napster spinoffs intend to work within the system, getting licensing deals from record companies. One of these is, whose key investor is superagent Mike Ovitz, who first heard of the company, founded by UCLA students, by reading the college paper. Ovitz notes that as a talent representative, his interest is in helping artists make the most of the new technologies. He thinks that eventually money will flow to those artists from models other than direct payments. "I'm looking at radio, sponsored shows, advertising-driven models, subscriptions," he says.

Rob Glaser, CEO of streaming-audio leader, thinks that when the record companies come to their senses and figure out ways to work with the Internet (expect some efforts by the year-end), the worst problems will fade. "All the illegal activity ends when prohibition ends," he says. "When there's a legal way for people to get what they want, mass bootlegging will recede."

The expectation is that music will become cheaper, and there will be more of it around, and it will be easier to find. But before that happens, the wars have to quiet down. The lawsuits have to be dropped. And the file-swappers have to come to grips with the fact that free isn't forever.

Meanwhile, the Napster Generation keeps searching for tunes, keeps downloading them and doesn't bother with concepts like intellectual property. "I sympathize [with bands, labels and music publishers] in the capitalist sense, but the technology isn't stoppable," says Rizwan Kassim, a 19-year-old sophomore at UCLA. Kassim's own experience is instructive. As one of the alleged violators identified by Metallica, his account was shut down by Napster. But Kassim simply began a new one under another name, and kept on downloading. He also stopped listening to the band, in any format, deleting all his Metallica tracks from CDs he burned using Napster.

In a final flourish, he took the one legit Metallica CD he owned and auctioned it on eBay. "I think I got a couple dollars for it," he says.

At least someone is paying for music in the Age of Napster.