What's up man? I'm with MTV news, I was wondering if you had
any MP3s on your computer? Yeah. So how many MP3s you
have on your computer? About 600. Six or 7,000. Come again? Six or 7,000. Find like 300. For real? Where'd you get them from? Truthfully most of them from Napster. The first time I heard about digital music was through Napster. And I didn't really understand what it was but I knew I can get any song I wanted. How many of you download
music from the internet? Okay. When I feel like there is an opportunity to just download everything we want and not really pay for
it, I started to use it. 19 year old Shawn Fanning developed the Napster computer program. Today at BYU he was
treated like a rock star. It's strange, it's awkward. I'm not used to this. He's an awesome guy. And he's so young too. So you don't think this is stealing? Not at all, cause you're
just getting a few songs that you find interesting. And seeing what's up. There was this era of discovery that felt like the virtual
version of a record store. I remember you were saying to myself shortly after downloading my first MP3, I'm never going to buy music again. No stealing music! No stealing music! No stealing music! No stealing music! No stealing music! No stealing music! No stealing music! If people leap drop the system for free, the creators of copyright
will not get compensated and the movies and
music will not get made, it's as simple as that. When it became possible for
people to get music for free, there was a lot of outcry and a lot of concern about, why do people think it's free? Why is that right? If you make something and somebody takes it
without compensating you, you're hurt by that. Everyone would like to
have everything for free. That's not how we work and it's not fair, it's not right. When you got a technology that gives away what you do free, how do you compete with free? I mean... When Napster hit, it wasn't just any issue
for the music industry. Young teenagers, teenagers, mind you, are coming up with ways
we can get DVD movies on our computers for free. Anything that was reducible to a one or a zero was potentially available
freely to consumers. All of this was, from a
music industry executive, perspective terrifying. On the flip side, for the independent artists Napster was probably a good thing. It made it so much easier to get exposure. Probably 96, 97. I started making my first
songs on the computer and putting them on the internet. Then the Napster came out. Yeah it was pretty, it was massive, you know. I'll look on my songs on Napster and like see, see on it
like a lot, you know. if a lot of search results came up, it was like a lot of people had it. So you could kind of tell
like that, like, wow. So this stuff's really
spreading, you know. ♪ Making them seize freeze ♪ ♪ Interrupted and ease
like it ain't cross ♪ ♪ Smoking the kids to
cook heavy and seize ♪ ♪ At ease ♪ I think Napster did a lot
for independent artists at that time. It was the beginning
of an independent path to find your following, such
that you can sustain yourself, have a career without having
a major label or contract. Benefit was and is an awesome MC. But way ahead of his time. The major labels weren't paying attention to what was happening in the MP3 world to their laws, because the MP3 world
was like a minor leagues. And if somebody floats
to arise to the top, then they could, you know, swim off to that other level. The old paradigm from the last century, all he was good for that last century. The new century, I look at Napster as being new radio and people are finding ways that now you're going to
have a million artists, in a million labels, now
all in the record game. ♪ I got the destiny for hearing this ♪ ♪ Flying people seeing this ♪ ♪ Fellow lies from the neck ♪ ♪ Down still feeling this ♪ But then the flip side, to making a living off
of music as a musician and suddenly your revenue streams, like cut off from under you, like, yeah, I totally understand. ♪ Spell lies from the neck ♪ ♪ Down neck ♪ ♪ Down neck ♪ ♪ Down ♪ I remember Lars from
Metallica was like, you know, he was really mad about it. Napster hijacked our music without asking. They never sought our permission. Our catalog of music simply
became available for free downloads on the Napster system. The argument I hear a lot that music should be free, must then mean the musicians
should work for free. Nobody else works for
free, Why should musicians? Drummer Lars Ulrich and
his band mates saying, Napster is illegal and filed suit against its creator for copyright infringement. Most artists weren't really too thrilled with being on the other side of the kind of the hip
hot new young thing. But Lars was frankly unafraid to get out there. If they want to steal Metallica's music instead of hiding behind their computers in their bedrooms and dorm rooms and just go down to Tower records and grabbed them off the shelves instead. When I saw Lars Ulrich
going on that campaign, I just remember thinking
that was the lamest thing I'd ever seen. Like Metallica, you're all millionaires. So, what are you complaining about? What's your beef with Metallica then? Why not let the people listen to music? As far as I'm concerned, Metallica is off my best album. There was definitely a lot of
hate and a lot of backlash. My friend definitely said, yeah, F Metallica, I'm done. I'm only listening to Nirvana now. I've removed all the
Metallica files from my, from my hard drive, I don't want anything to
do with Metallica anymore. This mattered to a lot of people. Napster was like this symbol of freedom. And so when you have
guys like Lars Ulrich, trying to shut Napster down, you're going to have a hell of a backlash. The largest argument was
the one that I supported and others in the industry did as well. But this was an incredibly
disruptive force in the music industries. No matter what side of the
argument you came down on. And the industry had to
shut all of this down. Using a PC to download music is one of the hottest of
today's computer trends. And that has the recording
companies up in arms and heading to court. At the center of their dispute, a music sharing internet
service known as Napster. The litigation against
Napster was fairly monumental. They were fighting us
in court, aggressively. Napster's point of view is like, we don't personally share any files, Okay? We just facilitate
connections between users and we're not responsible for policing the contents of our network. Pure and simple. It was theft of intellectual property. And I just can't get past
that, that fundamental reality. I still get agitated even at this point years later. Gentlemen, gentlemen. CNN covered the court decision live. So there was a lot of pressure. You know, 25 million
people were using Napster every single day and really
invested in the outcome. In the end, the judge ruled that, it was obvious to everyone at Napster that they knew what was going on. Napster appealed that and lost again. In a 68 page opinion, the appeals court said, Napster knew its users were violating copyright infringement laws. To song swapping service this weekend will begin blocking access to millions of musical files on Napster. We stopped the sharing. We basically took the servers offline. Over a period of time the obligations to the creditors just
overwhelmed the company and there didn't seem to be
any way to get revenue in and so the board determined at that point, the best thing to do would
be to go into bankruptcy. The days of free music with
Napster folks are over. It felt like it was
really dark horrible day in San Francisco. I was depressed, lots of
people were depressed. Technology had lost. But then of course, the mole started popping
all over the place. There are already dozens of alternatives to Napster, with names such as My Napster, Napigator, and Cute MX. We had other file sharing services crop up that were in many ways more insidious. There was no centralized server that the files passed through. And that was much more
difficult to address. Even if they cracked down
on one program like Kazaa or something, I think there's going
to be another program coming out in the next week or two, that's going to be doing the same thing. The huge, huge problem
at the time is that, it was very hard to tell people not to use peer-to-peer methods and they'll say, well, what should we use? And the answer was, go to a
record store and buy a CD. That's not what they wanted to hear. The record companies have to wake up and I think they will, to the fact that they're
no longer in the business of hiring trucks and having big warehouses and shipping CDs around. People want their music via the internet. The answer to the piracy
was to give people what they otherwise wanted,
in a legitimate way, at a fair and reasonable price. We needed to have a
legitimate online music store. The labels tried in their own lame ways to debut digital music
stores of their own, which were total failures. I remember trying to use these things and on these special players and it was just, it was really pretty antediluvian and nobody really signed
up for these things. For the longest time, there is such a divide
between Silicon Valley and the music industry. You know, it was just a big war. It was not in the software
industry's interest to help the music industry. They sold a lot of computers because people wanted to get their music and other content for free. The music companies, they said, you know, you guys are all promoting piracy and the tech guys are like, Oh, you guys are a bunch of Luddites, you don't understand you have
to change your business model. And the one guy who was
able to bridge that divide, was Steve Jobs. I've been back about, eight to 10 weeks and we've been working really hard. And what we're trying to do, is not something really highfalutin. We're trying to get back to the basics. Steve Jobs had been fired at Apple and then been brought back. And at the time, he, Apple was in some ways, a bit player in the computer space. The Mac products, represented about 3% market share. This company is absolutely
going to turn around. As a matter of fact, I think the question now is not, can we turn around Apple? I think that's the booby prize. I think it's, can we make Apple really great again? In 2001, he introduced the iPod. There it is, right there. So, Steve saw a great opportunity in the music space for Apple. Music has been around for a long time. You know, it's a real tangible market. And, I think if we can bring
some value to that market, then we'll succeed. In late 2002, Steve Jobs called and said that he was going to create
an online music store. And I saw that as the perfect
opportunity to at least say, all right, we've got something out there. We came up to Cupertino and went into a conference room and Steve walks in. I don't think we even knew
that that was going to happen. But he walks in and says, I want to show you the iTunes store. And then he sits there for two, himself with the mouse, showing how the store would work. He was like a little kid in a candy store. Absolutely, you know, fascinated with this thing
that I remember thinking, it's so simple. And in fact it was, but
that's what made it brilliant. It worked better than anything
we'd ever seen before. And it became obvious this, this was a good thing to go with. The one thing of course
about the iTunes music store, he wanted every song to be a buck. Steve Jobs wanted to sell singles, off of every album that was on iTunes. He did not want a single
album on the store that you could not breakdown in singles. That had, you know, really
serious ramifications. You know, for the music industry, there would be unbundling the album. A CD is a bundle. It's a bundle of songs, if you want one song,
you the entire package. Bundles inflate the total revenue because people are kind
of forced to pay up a bit. So let's take a canonical example, which would be Vanilla Ice. I would be surprised if most people can't name more than one Vanilla Ice song. But Vanilla Ice sold something
like 10 million albums on the basis of just one hit song. So 150, $160 million in revenue. Once you liberated that
single from the album, now excess income from the compact disc would go away forever. You would only earn a small fraction of what you previously earned. They knew this was going to hurt them. It's , say it as a music fan, but it seems like music
is almost disposable now. You would put out an album,
what, every six years, tour for those six years,
off of that one album, but now having to put out a
single and then three singles and then all of a sudden, it's just a string of singles with no cohesion like an album. And, really the songs
don't have as much meaning to you as they did back then. The pitch that Jobs
made to the majors was, we will save you. It was like a siren song. There was no choice. Really, about anyone
who's thought about it, there was no choice. Today, we've got 200,000 tracks and all of this music
with all of these rights, you can buy, for 99 cents per song. It's called, iTunes. iTunes online music store. The iTunes music store. They've really just created, you know, what we've all been waiting for, which is a purely digital
music marketplace. iTunes did spectacularly well. You had that great growth of downloads. iTunes, recently sold
its 50 millionth song. But the deal the industry made with Apple to me was a huge mistake. The unbundling of albums meant, that the revenue that came in
was significantly diminished. We were hopeful that the physical product was hold on longer than that. As it turned out, it didn't. CD sales, have dropped almost one quarter in just three years. That's an awful lot of lost business. Buyers got very fed up with spending $18 when there's only one
or two songs they like. This change with iTunes
made people so upset that people actually start taking the products off the platform. Estelle had an album that had come out and the label found out that
about 90% of the purchases were just a one song, American boy. They pulled the entire album
off of platform for three weeks before caving in and putting it back on. Really, they were desperate. And they decided what they would do, was go after the end users
of the peer-to-peer sites. The average file sharer, John and Jane download. This was extremely controversial
within the record industry. Hilary Rosen, the head of the RIAA, actually resigned in protest. I didn't want us to go
against individuals, even though they were the source of a huge amount of illegal activity, I felt like ultimately
they were still music fans. But essentially I was kind of overruled. My last day at the RIAA was the day before the litigation against
individuals started. Yesterday, the music
industry took another step for the first time, going after people downloading
and swapping music online. We want people to stop
engaging in the theft of music. So that people can go on making it. I don't remember if I got
it, via letter or email. But I basically got
what looked like a scam from the RIAA saying, you owe us for having downloaded music. I honestly ignored it, cause
I didn't care and I got, they sent another letter saying, I could be sued for up
to $30,000 per song, of which there were thousands. I didn't have that much money. I don't think anyone did. I wasn't ever really
worried about getting fined for downloading MP3s mainly because I was using my mom's computer and I was kind of an , so I was like, Oh my mom's
going to get fined, not me. Like, you can't take a
13 year old's income, when he doesn't have any income. They filed something like 17,000 lawsuits. Rather than going after the big infringer, they ended up suing
children and grandmothers and people who were dead and you know, moms. Bonnie Bassett was shocked to be slapped with a lawsuit
for the hundreds of songs, her teens downloaded off
the internet for free. My kids go to Catholic school, we pray, we brought them up right, no one in our family has
been arrested, I mean, we don't steal, We don't steal. It's just rid..., It was absurd. It was absurd. I'm not downloading anything ever again. I mean, not even screensavers. Almost everybody was forced to settle, often for a relatively
small amount of money, like three or $4,000. But in the end, this just
made people hate them. They don't create a deterrent effect, it just made them loathed. You know, I've been an
avid record collector for over 40 years. Right. I've got nearly 10,000 records. And you turned a music fan into an enemy. In fact, more people
probably went to piracy as a result of this than anything else. I ended up having to pay like, I think close to a thousand
dollars to the RIAA. But in the end I ended
up recouping my losses by downloading overtime and doubling down. Between the piracy and the unbundling, the industry recognized
that it was on a decline. And over the course of, you know, 15 years, shrank significantly. Industry revenue, I think in 99 was worldwide 34 billion and it fell to something like 16 billion. The industry was just
destroyed, annihilated. A simple dynamic in business, when an industry is under threat, you consolidate. which is a fancier word for cutting costs. You put two big music
enterprises together, you can eliminate a whole bunch of Jobs. I'm currently standing in
front of what used to be the Virgin Mega store union square, closed in June of 2009. And is now Duane Reade and a Citibank. This building formerly
used to be tower records. It was the first tower
records in New York. That window right there
where the light is, that floor I worked on, was the, oldie section. CD sales were dipping since I think like 2000, 2001. That's where the decline really kicked in. I can't even remember the
last time I physically went and bought a CD. What 2006 happened, was all over for me. That was the end of it. It was much I could do. Tower records may be toppling, the music chain is preparing to file for bankruptcy next week. When tower was bought out, a lot of us, the employee that worked there, we fell into like a depression. We were like, wow, this, this is it. Tower is going to be gone for good. How do I feel about it? Crappy.
Nice find.
As someone who was exposed to this side of the internet in the mid-to-late 90's, this explorative video series serves as a general reminder of just how remarkable of a transition we were all going through, whether we knew it at the time or not (and most of us were witnessing it as what I'd term a revolutionary norm; To us, it was all we knew, therefore the absolute only path to seek. To those who were only introduced to the revolution later, begrudgingly or otherwise, or for those in contempt of it at the time, it was technological anarchy, of which us participants' tunnel vision had no light upon to shine. What a time it was, really. The internet has changed our course a great deal, and this was a single direction in which it did. This almost feels now like a mere miniature atom of our digital history. Thanks for sharing.