Thursday, Aug 21, 2008
The tiny Napster is shaking the music industry to its foundation.
Feb 3, 2000 | Shawn Fanning looks like your typical 19-year-old kid -- in a long-sleeved T-shirt and a University of Michigan baseball hat, he's unassuming and soft-spoken and a bit reluctant to make eye contact with the journalist grilling him across the table. Just last summer he was a college freshman at Northeastern University majoring in computer science, and hanging out on IRC in his free time. Napster was the very first Windows program he ever wrote: He had to buy a book to figure out how to code it.
Today, Fanning is surrounded by the chaos and bustle of his new start-up, also called Napster; he's dropped out of school to work full time on it and he's been suddenly enveloped by a seasoned CEO and layers of vice presidents and managers who are scurrying about trying to invent business models and marketing strategies and revenue streams for his barely-in-beta product. Napster the software program -- a downloadable application that lets users temporarily turn their computers into servers for the purpose of swapping MP3 files -- is growing faster than anyone could have imagined. To add to the excitement, Napster the company is now embroiled in a lawsuit with the notorious Recording Industry Association of America.
Being the founder of the controversial music start-up of the year has to beat freshman English.
Despite its rather humble beginnings as a college freshman's software project, Napster represents a new paradigm in online music distribution -- much like its predecessor MP3.com, which is also embroiled in a lawsuit with the RIAA. Barely six months since conception, the quirky Napster, built by two music-loving teenagers and their energetic CEO, is already causing a ruckus in the online music space. If the company manages to survive both its growing pains and its lawsuit, Napster could well turn the entire music industry on its head.
"Everyone looks at Napster and goes, 'Holy shit!'" enthuses CEO Eileen Richardson, a vivacious former club diva with burgundy-tinted curls. "The implications of it are tremendous and far-reaching. The recording industry has been a highly controlling industry -- it controls distribution, and it even used to control production. They now see a loss of control, they don't understand the Net or technology, and so when someone is fearful or scared the thing to do is say, 'We are going to sue you.'"
The Napster world headquarters is scattered about the top two floors of a concrete box of a building in sleepy San Mateo, Calif., 20 minutes south of San Francisco. "Headquarters" is a rather grand term for what is really a handful of tiny offices squeezed between the Palo Alto Coffee Company and a financial advisory firm with a pretentious name and leather decor. Napster, which has grown from two people to nearly 30 in the last few months, is taking over offices as they become open in the building.
The decor is pure start-up chic: Blank whitewall adorned by a few Christmas cards, hand-scrawled notes and a desiccated floral bouquet. There are maps on the wall with little flags pinned to cities across the United States. "What do the flags represent?" I ask Brandon Barber, a senior product manager at Napster. He gazes at the map blankly -- it's probably the first time he's seen it -- and laughs. "They are still here from the last tenants." The conference room also houses the office microwave; while I'm chatting with Barber, the vice president of finance wanders in and starts eating her Lean Cuisine TV dinner.
Napster has been in these offices for just a few months. Fanning and co-founder Sean Parker, another college student whom he met on IRC, developed the concept of Napster last summer. Then, at the encouragement of Fanning's uncle John, the two began coaxing money out of their friends and family. They eventually met Richardson, a Boston venture capitalist with 10 years of experience in the tech industry, who, seeing the growth potential of the project, came on as CEO and immediately moved the two students out to San Mateo -- on the edge of Silicon Valley, where the big money is. The teenage founders are now buried in mid-level engineering and biz dev positions, while the "adults" Richardson has since hired officially run the show.
The fact that Napster is still in beta hasn't prevented the product from spreading quickly. "Our real significant metrics aren't public yet, but I can say that our user base is approaching being the fastest growing community in the history of the Net, including Hotmail," says Barber. Guesstimates of Napster's user base range from the thousands to the hundreds of thousands and on up into the millions; a more accurate gauge of the site's buzz is probably the sheer number of people who are talking about it, and the fact that everyone who uses the program seems to love it.
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