A file-trading ship of fools

The most stunning thing about any of these characters, though, is not in the various missteps of their past but the thing they had in common during their time at Napster: everyone at the company ignored any suggestion that the product they were pushing ran afoul of federal copyright laws, and that it would certainly raise the ire of the recording industry. Early in Napster's life, the venture firm Draper Atlantic, which had expressed some interest in buying into Napster, did a round of "due diligence" on the company's model -- and Jason Grosfield, a hedge-fund investor, uncovered serious legal liabilities, finding that Napster could be ruled illegal under all existing copyright precedents.

Napster's executives ignored that assessment. John Fanning commissioned his own study of the system, and his attorney, Seth Greenstein of the firm McDermott, Will & Emory, delivered a rosier outlook. Greenstein wrote that because there's no way to tell whether an MP3 file is a legitimate copy or not, Napster could always plead ignorance regarding the files on its system. But Greenstein also allowed that the combination of new technologies and new copyright laws made for the "grayest of the gray areas in the law," and that there was a 98 percent chance that Napster would get sued. The directors of the company shrugged that off. Richardson made no attempts to contact the recording industry, and when the industry tried to get in touch with Napster after the system started experiencing huge growth rates late in 1999, employees stalled them.

In November 1999, the Recording Industry Association of America filed suit against Napster. "We made several attempts over the last few weeks to communicate," a RIAA spokeswoman said at the time. "Our urgent requests for a meeting were not taken seriously. We really had no other option but to file litigation."

For all their pronouncements during the copyright case that Napster had a variety of legitimate, "noninfringing" uses, it's clear from "All the Rave" that everyone at the company believed that Napster's best use, and perhaps its only real use, was to trade copyrighted popular songs. When attorneys for the recording industry inspected the employees' personal computers as part of the lawsuit, they found hard drives littered with stolen songs. Worse, industry attorneys had full access to the company's internal e-mail messages, and they found employees discussing piracy on Napster in a most casual manner. "Users will understand that they are improving their experience by providing information about their tastes without linking that information to a name or address or other sensitive data that might endanger them (especially since they are exchanging pirated music)," wrote Sean Parker, a Napster co-founder, in a message that turned out to be extremely damaging to Napster's chances at prevailing in court.

The company's first business plan, which was discovered during the lawsuit but had not been made public before Menn's account, called for bullying record labels into accepting Napster. "We use the hook of our existing approach to grow our user base, and then use this user base coupled with advanced technology to leverage the record companies into a deal. The fact that we grow to 4 or 5 million simultaneous users with millions of songs (through the inherently viral nature of the Napster concept) can hardly be ignored by Sony or EMI." In the event, such tremendous growth was not ignored by the labels; they used the huge numbers to bolster their claim that Napster was nothing more than a technology to enable theft on an unprecedented scale, an argument that the courts agreed with.

Even after the company was sued and began saying that it would like to transform itself into some sort of legitimate, subscription-based service, employees at the company still hung on to the notion that they were spearheading "a revolution," not a mere business. While it's become common to blame the recording industry for its hard line on copyright issues and its paroxysms of litigation, Napster, buoyed as it was by its tens of millions of fans, was every bit as inflexible; it's hard to see how anyone at the RIAA might ever have trusted anyone at Napster in negotiations. Only until they were forced to do so by a court did Napster's directors begin thinking seriously about building a legitimate system, and by that time it was too late. Music fans considered it their right to get free music online, and free rivals to Napster took its place.

The story of Napster has to be seen, in the end, as a tragedy of wasted potential. Here was a system that improved everything about the way we listened to music, but nobody it touched was better off for it. The recording industry suffered losses not only to piracy but also to its image; in order to defeat Napster and the dozens of clones it spawned, the industry had to make enemies of its customers. The industry certainly didn't have to behave the way it chose to, but given its experience with Napster, one can't blame them; in fact, one of the best things about Menn's book is that, compared to the file-trading executives, it makes the music industry look reasonable. Music fans are not well-served by the current state of things, either. Had Napster come up with a compromise system in time, fans might today enjoy a host of subscription file-trading systems online; today, however, the industry, having seen its worst nightmare in Napster, gives us only the most bare-bones systems. And fans, after experiencing the thrill of Napster, now must use a host of ad-clogged second-rate systems, a scenario that leaves them personally liable for copyright claims.

By the end of "All the Rave" a reader is left wondering what might have been. Had Napster been run by Shawn Fanning or Jordan Ritter -- the two at the firm who seemed the least greedy, the most in touch with the fans who loved the system -- instead of John Fanning, perhaps things would have been different. Had Shawn dropped his uncle from the start, as everyone around him had urged him to do, perhaps the company would have found better management, people who might, in time, have seen the folly of their ways. Would the record industry have still sued? Probably; but a less contentious firm might have made out better in the end.

Napster may have sparked a revolution, but the revolution was cut short. We saw the future, and then we were denied it. Now we need another Shawn Fanning.

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