All language subtitles for Downloaded.2013.720p.WEB-DL.XviD.AC3-MAJESTiC-English

♪

[digital beeping,
electronic tones]

[static hum]
[keyboard clacking]

I released an early Beta version

during the summer
and it spread quickly

by word of mouth.

[John Stewart] Napster users
can download musical selections

in - in MP3 format.

MP3 is what's called
a variable loss compression
algorithm.

Here's how it works.

Napster and
downloading distribution

is the biggest excitement

since Disco,
Rap and the Beatles.

Its like new radio.

The majority of usage
of the MP3 format, um,

is for unauthorized [WORD].

Yeah, I would like a CD player,

but I can't spend $16 on a CD.

Napster is an evil, evil,
evil, evil place to go.

...standing by live in San Mateo
with more details on this story.

This last fall semester wore on

hundreds quickly
turned to millions.

With the program spreading

across college campuses
like wildfire.

I have never seen the industry

under siege like this

in the 30 years
I've been in this business.

It's very important
that the internet

go the legitimate route
instead of becoming

a haven for pirates.

You don't think
this is stealing?

Not at all.

'Cause you're just getting
a few songs

that you find interesting.

The "N" word you know, appeared.

And we had to defend ourselves.

[Don Henley]
Whether we like it or not,

Napster has changed everything.

And the record companies
are sadly behind the curve.

At its peak,

nearly 60 million people
used the site

to swap music files
from each other's computers

for free.

The whole Internet
could be re-architected

by Napster-like technology.

Now sure
is the tip of the iceberg.

I think you're talking about
the proverbial finger

in the dyke.

Fuck Napster!

30 years ago,
the San Francisco Symphony

released its music on LPs.

Then came cassettes.

And now of course, CDs.

But in the very near future,

you may be able
to download their music

from the internet.

We met over the internet
and we knew each other

for like three or four years
or something.

before we ever met in person.

Mm-hmm. We met the first time
as a result of Napster.

Shawn flew down
from Boston to Virginia

to meet with some investors

that I set up
a meeting with.

The doorbell rang,
I was nervous
for a brief second.

Kind of like going on a,
like a first date.

Uh, with someone
you're starting a company with.

And uh, and the door opened,
it was Fanning.

He looked at me
and he said,

'you look exactly
like I thought you'd look'.

And I said, 'you look exactly

like I thought you'd look'.

And he said, 'okay great,

let's go over the presentation'.

So we jumped into the Powerpoint

and went through all the slides,

and then got in
my parents' minivan

and my dad drove us
to our first investor pitch.

I take issue
with people who say,

'Ah, the moment I saw it,

I knew it was gonna be
fucking huge

and take over the universe'.

They're all lying.
There's no possible way.

No one had that
conceptualization

in the beginning.

I don't even believe
Fanning did.

You're saying that people

are gonna download a client,

put a client on their computers

and they're going to
allow stuff on their hard drive

to be shared.

Most of the development
of the web,

up until Napster,

was basically about

information storage
and information retrieval.

It wasn't about connecting
people to people.

We're gonna, like,
download stuff

from each other?

Like, I was like,

nobody's gonna open up
their hard drive like that.

Nobody's gonna allow

their bandwidth to be used.

This sort of comes
onto my radar.

And its really interesting.

No one is going to share an MP3.

That, that was my quote.

No one's gonna share an MP3.

And...
Boy was I wrong.

I was so wrong.

Our system has been bilked,

this time sharing system
for, for about

six months now.
Its been working
and in that time,

we've gone from
getting one console

to getting about
six working now

with six more due
the rest of spring.

What is internet anyway?

Internet is uh,

that massive computer network.

The one that's becoming
really big now.

[off-camera]
It's a giant
computer network

made up, made up of uh,
started it from...

Oh I thought
you were gonna tell us

what this was?

It's like a computer billboard.

[off-camera]
It's not, it's not a,

it's, it's
a computer billboard,

but its nation-wide
and it's it's several uh,

universities and everything
all joined together...

And others can access it?

[off-camera]
And it's getting
bigger and bigger

all the time.

I wrote a piece back in 1990,

that, that it would
shortly be the case that, that

everybody under 20,

at that point, would become
native to a place

where everybody over 20
at that point,

would always be an immigrant.

So I was a young teenager
and I ran,

I was running a uh,
Running a BBS,

which was um, somewhat
sophomorically titled,

'Realm of Darkness'.

But online in the BBS era, meant

connected to potentially one,

maybe a hundred other people.

Maximum.

And that, that's what was
so profoundly different

about the explosion
of the internet.

Was that it was one network.

So suddenly,
you could be connected

to everyone.

There are now,
a very large number of people

that are online,
that are young.

And you know, they have
a completely different sense

of how the world works.

And what power is and what,

what authority ought to be.

I mean its a profound shift.

It's the difference between
vertical authority, you know,

God-given physically
enforceable authority

and horizontal authority.

I've joked in the past,
and Fanning and I would be like,

where did you guys meet?

And we were,
we were part of the, you know,

Fanning and I were part
of the same underground network

of elite cyber criminals.

And it, it's basically true.

We met through IRC,

um, as we both got drawn
into IRC,

we became more and more
addicted to it

and more and more
fascinated by it.

Which made us fight much harder

to retain access to it and then,

you know, over time,

it became our lives.
It took over our lives.

You're talking about
revolutionizing

the way we use computers.

And how we use the internet.

Oh absolutely. Absolute...
I mean it, this is, this is the,

what's most interesting
about it,

is you're interacting
with peers.

You're exchanging information
with you know,

the person down the street.

And we're just beginning?

Oh, absolutely.

Sean Fanning's one of
the smartest people

I've ever met.

He was teaching himself
how to program

and he saw this really simple
way to find music

that he could listen to
on the internet.

Here was a guy with no clout,
no connections,

19 years old and he really
changed the way
we think about the internet.

It's hard to explain
where things were at back then.

I mean I was 18,
I didn't really,

I hadn't really seen
much of the world.

You know, I didn't really...

Um, I think it was,
I mean the best way to say it

is it kind of came from
a very pure place.

[music]

I was excited
'cause he was my first.

So I thought, you know,

I really did think
he was gonna conquer the world.

Everybody does
with their first kid, right?

I was born in Brockton and uh...

didn't have
the most stable family.

Uh, you know,
they made their best effort,

but I grew up with a stepdad

and we ended up
in foster care a couple times.

Brockton was just a, uh,
Brockton was just no good .

[laughs]

But uh, huh, yeah.

I mean, I don't want to,

I don't want to
talk to much about like

money situation,
but like you know,

we, we grew up

like, not too well off you know.

And my mom and dad,
there's five kids

and my dad was
a delivery driver, you know

and they did the best
they could, but...

That's when, he got into sports
when we moved down to the Cape.

Being into sports,
I think it got his mind

Um, so that life
was a little easier for him.

I think music helped him too,
like sports.

Every time he was
on the computer,

he had the radio there.

See what I mean,
like he was always
listening to music.

So uh, there's really no
surprise there

that he-he-he ended up,

in, you know,
thinking of something

that made sense to him

as far as um,

the music and
the computer combined.

I was fortunate to have an uncle

who was into technology

and gave me my first computer.

There's a,
there's a lot of insecurity

that comes around being

uh, dependent on others.

You know, to get by
and so as a kid,

it sort of influenced

my social uh,
confidence at school.

We moved around a lot.

Um, there was also kind of a,

I didn't feel as connected
to my family, intellectually.

And so, um, I didn't really have

many others at school either
on that front.

So I was sort of,
feeling a little bit uh, lost.

And displaced at times.

Going online and finding people

who had the same interests

or I could learn from
and where there was no,

your reputation
was your own.

It was not about like,
you know the,

how well off
your family was,

or how well
you dressed.

Um, or how well you spoke
or body language.

It was about the merit
of what you were saying

and I think that...

for me, was just intoxicating.

In the early days of the web,
you know

the first time I ever saw music

that was down-loadable

was a song that I put up
on my homepage

on campus internet.
It was an MP2 file.

I guess that would
have been '93,

around that time.

And there were very few
people out there

Because you're changing
it into another file format

or have a special card t
o play it.

For anyone who had been
downloading stuff

it was such
a colossal pain in the ass.

It's not funny.

Uh, even for technical people,

it was uh, a process.

And, and a constant,

like trying to get
bits and pieces of files

and reconnect them all together.

And that was kind of
a pain in the ass.

You know, 1998,
was when it really felt like

okay, this is real.

This is the way I'm going
to listen to music.

It became clear
that the computer

was going to be the place

that we would store our music.

Then you started looking
for tools to get the music

into the computer,
tools to play it back,

tools to manage it.

I remember the first MP3
I ever downloaded.

I remember the first time
I ever, you know...

basically, ever played
a track from the internet.

And I remember just thinking,

even though
it's just information

it's just audio,
there's such
a crazy amount of emotion.

The fact that you could

kind of share emotion
over the internet,

was so, it was really wild
to think that...

Something so important to you,

you could just trade so freely.

So I think it was um...

you know, its,
its hard to quantify

how important it was.

I was a freshman

at Northeastern University
in Boston.

One of my roommates
was into MP3s.

Yeah, he would skip class
and sit home

and download music
and he was always complaining

about how unreliable
the technology was.

Where was his,
what were his favorite bands?

I don't know.
He listened
to a lot of really weird stuff.

I had very incompatible
tastes with him.

But, um...

Like every roommate in college.

Yeah, which, it, that's why
it was a struggle.

I didn't want to make it
any easier

for him to find that music.

But no and he, you know,
he was complaining a lot

and that sort of signaled
me that

there was a potential uh,
there's a problem

that could be solved
and I just looked into it

and um, came up
with the solution,

which ultimately

became Napster.

It felt like, you know,
this way of sharing media

between people

could be used
for sharing anything.

We started with music,
but it made sense

that it could work
for anything else.

It also felt like...

This whole model f
or sharing media

was superior to like,

going and buying an album.

Being able to uh, both...um...

Buy tracks as singles

or share them with your friends

and find stuff
your friends like,

uh, and then being able to uh,
you know...

Basically, to have access
to the entire universe

of recorded music.

Where independent creators

could publish directly.

It just seemed from every,
in every way,

it seemed like a better system.

So, I would spend
a weekend working on it

You know, every time
I had to go back to school,

I'd kind of drag myself back.

Two days would become
three days.

I'd miss a day of classes,

I'd miss two days of classes.

It was just becoming
more and more difficult

for me to get myself
back to school

with any enthusiasm.

My cousin was actually
driving me back to school

and when I got there,
I thought about it

and finally realized

just what a sense
of relief I had

when I thought about the idea of
just, just leaving.

And that was the last time
I really ever came close

to the campus.
Didn't pick up any of my stuff.

Didn't tell my, my roommates.

Just, just went back
and I remember just feeling

so excited.

He came in and he was just like,

I need to talk to you guys,
its really important.

And I go, okay,
Shawn and so he came in

and uh, he says, uh...

You're not going to be
happy about this.

And he was looking at me
and I'm like what?

And he was like, '
I'm gonna drop out of school'.

And I said, 'oh no!'

Why would you do that?

And he's, you don't understand.

I have this idea,
I have to go with it now.

I have to do it now.
It's now or never.

I feel like this is
the time for me to do it.

And I don't think
you'll be disappointed.

I actually spent time working

in Hole, Massachusetts,
which is about 45 minutes

south of Boston.

Um, just, this
converted restaurant.

Like three desks in the place.

I just sat there
and worked on it.

Ummm...

For a few months
until it was actually

building a user base.

I remember I got to go up
and hang out with him

and he'd be like pizza
was everywhere, and ...

he was just jamming out
to Led Zeppelin.

He'd like sleep at the office,
on the floor.

He'd like, he never
left his computer, you know.

Its not hyperbole,
it was an actual closet.

I think he might have some pride

or just want something more,
but for me,

it was, I was having so much fun
building it,

I just didn't care.

You know, I get occasionally

a little bit uncomfortable
when people would show up

and you'd be crawling out of,
you know,

your sleeping bag.

So Fanning had written
his version one

and being not
professionally trained,

uh, not trained at all...

Uh, and just, just having
his ideas and ah,

here's a computer
and this wonder for learning

and for for absorbing, uh,

we'll just go and try
and make it work.

And it didn't work.
Like every, everyone's
first hello world program.

His was file sharing stuff.

Didn't work,
so listen to the group for help.

And I was there.

At the start was
pretty much myself

and a lot of people online
that were helping out

just to make it work.

Helping fix problems,
stuff like that.

He sort of asked, hey, how,

This thing keeps crashing.
What do you think?

But unlike anyone else,

he wouldn't let us
see the source code.

I was like, oh really?

Well that sounds
like it's probably

a - a buffer overrun
or an unchecked
battery condition.

Or something like that.

And show, show us the code
and we'll fix it for you.

And he was like, no.

Okay. This was kind of cool
because

it came out as a challenge.

It's like,
I'm not going to tell you,

but I'm going to keep soliciting
for help.

So, we're all hackers.
This is what we do.

We, you know, [stammers]

establish Commercial Vendor X

does not want to share
anything with us.

Yet, we are going
to find a way in.

Just the idea that
we were gonna build

the first decentralized
file system.

I think the patent, actually,
the Napster patent

uses this terminology.

You talk about a
distributed file system.

Since 1998.

We've been discussing it
with various different people

in our community
and we've been told

by a lot of, you know,
pretty experienced

technical minds

that the technical challenge
associated

with a decentralized file system

was actually too difficult.

It was believed
that this wouldn't scale.

He would load up this app
and it would basically

connect to one of our servers

and ask for a Napster server

that would be accessible

in like the lowest
possible load.

Allowing you to search the uh...

file names to find,
you know, what, whatever

you know, noncommercial
uh, legal, legal music...

uh, was available.

But you would basically
have a, a chance

to kind of search all,
some of all those files

that were out there, that once
you've decided you wanted one,

it would actually, um,
facilitate the connection,

would happen directly to that,
'that um, that source.

It's funny that a lot of the
file sharing technologies

are stressed when people
talk about Napster.

But as I said, I mean
Sean and I met through IRC,

which is like a chat community,
you know,

a chat based community.
And that's a huge part

of like why
we created it as well.

You know,
just wanted to create a way

to meet people through music.

Sometimes that's overlooked
and yeah,

I think that you know,
what we're providing

is just a way
for people to share

their personal material
and meet people

with similar interests
and communicate with them.

That's exactly how people
discover music

in the first place. You know,

you find out about music
from your friends

who maybe listen

to something similar
to what you listen to.

And they turn you on
to something
completely new.

You go out and buy the CD.

That's how people
experience music

and that's a big part
of the experience.

But this was the first time
I know of,

in mainstream history,

where people had a social life
online.

And then after Napster went down
a few years later,

started hearing
about Friendster.

Myspace and then of course,
Facebook and all that.

But, but um, everyone
just thinks of it

as being the file sharing
technology,

but I really think
that it was the seed

of that stuff too.

We were basically, you know,

trying to create a platform

that would allow music
to be shared

more widely uh,

on a larger scale
than ever before.

That would um...

That would galvanize
enormous excitement.

Would, it would re-energize,

re-energize the conversation
about music

and, and ultimately
that would lead

to a golden age of music.

We knew it was a long way off

from all the music
being available digitally.

I mean you opened up Napster
and there it was.

Its difficult to
describe to people

who weren't experiencing
at that time,

how much material
was suddenly available.

I mean there has
never been a time

before or since that you could,
you could get

as many different things online.

And experiences,
many different kinds of music.

And of course,
what people forget is,

what was interesting was not t
hat they could get

the latest Madonna album
for free.

It's that they could get
all different versions

of recordings of
particular music

from all the way back
to the beginning of recording

available in
this library-like forum.

The vast majority of which,

was not accessible
commercially at all.

And you know,
I just felt like this was,

this was one of the
great moments

in human history.

And I still do.

But of course, uh, great moments
in human history

usually have uh...

...an opposition

and it is exactly
uh, proportional

to their greatness.

So it was in LA,
it was the Four Seasons Hotel.

It was all of t
he top label heads.

And a lot of them knew
that we'd filed a lawsuit

against this kind of
rogue website,

but not too many of them
were paying attention

to what it was.

So I set up a computer
and I said,

'okay, you know,
Tommy what's your, you know,

give me your latest single,
or Michelle,

what's your latest single,
you know.

Richard, give me
your latest single.

Literally, it, we played
like stump the Napster.

And it was,
[stammers]

It was quite a sight.

All the heads
of all these record labels

freaking out

that a lot of pre-releases even,

were, were on there.

Um, I would say,

that was a pretty big
aha moment.

We saw the clicks of the numbers

and that's what they
were downloading

at that particular time.

That was shocking.

Not that it wasn't
happening before,

and not that we were naive.

But we actually saw it.

And that was startling.

For all of us that were
at that meeting that day.

If some day soon
you can store

your whole music collection

on your hard drive,
instead of your shelves,

what's going to happen
to record stores?

I thought that the way
that people got music

for the last 50 years worked.

You went to the record shop,
you bought a record,

you took it home
and you played it.

You loved it.

You went and seen the guys live,

Everybody lived
happily ever after.

There are no record stores
anymore.

Or hardly any, you know.

Amoeba on the West Coast.

And there's a few,
a few in England.

But it's gone.

I mean I, I never thought
I'd live to see that.

Great stores like Tower Music
are gone.

This business seems
like it survives

on a lot of older albums
and reselling of that,

so, this one, we definitely saw

new CDs and new albums not
being bought as much,

but the bigger stores,
it totally destroyed them.

'Cause no one wanted to go
to the store anymore.

They can just get it
on their computer.

Or punch in whatever
thing they want.

I mean even iTunes now

is destroying
the music industry.

'Cause of that, people can buy
the song they want

and listen to it for one time
and that's it.

It is now the number one record
in America...

[ 'Why Do Fools Fall in Love']

The fifties
was a singles business.

The sixties, mid-sixties
is when the albums really

started to be important.

And before that...

A, a hit single, to an artist
was free promotion.

They did, it wasn't, it wasn't

a source of revenue.

The source of revenue
came from the fact that

if they had a hit, the could get

a couple of thousand dollars
a night, more.

Good morning, this is Ron Lundy,

how you doing
on a Friday morning

in the greatest city
in the world.

[jazz music]

Little Manischewitz.

From my perspective, uh,

I believe that the point
of labels is to,

in a sense,

act as a filter.

In that regard, if Blue Note
had signed an artist,

you would feel,
well that was an artist

worth listening to.

Because it was on Blue Note

and they made great records.

All these major labels,

the ones that existed
and the ones that still exist,

were started as
phonograph companies.

RCA Victor was

the Victor Talking Machine
Company.

EMI was the gramophone company.

Columbia was
the Columbia Phonograph Company.

And then when Rock-n-Roll
and LPs

spurred the sales of vinyl,
they figured

they didn't need
to make furniture anymore.

Which was what they referred
to it as.

Technology's been
very beneficial

to the record companies.

Before.

78s, when 78s
became 33 and a thirds,

you could sell
all your music again.

When they became CDs,

you could sell all
your music again.

When the CD was first initiated,

it was a true boom
at that particular point.

The eighties were
a very, very fertile period

for giant music sales.

Not as much as when
we got to the nineties,

which it was commonplace

to sell 10 or
15 or 20 million albums.

You know, the record companies,
in the '80s

had sort of uh, eliminated
their technology departments.

Their engineers,
and pretty much seeded it

to the electronics industry.

All of a sudden, technology

and how music was
gonna be recorded

went somewhere else.

It was sorta,
kinda the beginning

of the corporatization
more of America.

A&M was getting acquired,
Island was getting acquired.

A lot of the great labels

that were independently owned
were falling away

and getting put
into the landscape

of the corporations.

Once you had CDs came out,

where then in a digital world

where the copy is as good
as the master.

And it's amazing

that they didn't recognize

that there was going to be
a huge change.

I think it came back
and hit them with a,

with a wallop, you know.

Um, with the internet.

The MP3, digital music
for the quick download

is probably the
most substantive change

in music since maybe
the advent of digitalized music

or the compact disc,
or maybe even the LP.

It has changed everything.

Music is nothing but

algorithmic processes right now.

Every time you encode it,

you put it through an algorithm,

you put an envelope around it,

you zip it up, and that's it.

This is the first time
technology

actually attacked
the existing system

and started to take it away.

The Music Industry
was fairly constrained

for you know, 75 to, you know,

maybe even 100 years
in terms of like,

how music was
found, sourced, developed,

created, distributed,
marketed, promoted.

Uh, and it was a fairly
locked you know,

paradigm and uh,
Napster created an avenue

for consumers to step
out of that.

Which was superior
in almost every way.

Um, you know, it offered,
you know,

greater convenience, obviously.

A much improved price,
choice, you know.

All of these things really
conspired to you know uh,

produce an amazing
consumer experience.

Welcome to Valley
of the Dollars.

The valley and
the entire Bay Area, in fact,

are at the center
of a revolution...

This was the you know, uh,
height of the bubble.

Uh, in the valley, you know,

uh, in, in the Bay Area
and in San Francisco,

um, there was a euphoric amount
of optimism.

Anywhere that you went,
um, people were happy.

Because everybody thought

that they were
gonna be filthy rich.

Whether they were
involved in a startup

or not, um, it, there was,
it was a magical time.

You thought
you would be filthy rich.

I actually never did.

Oh come on.

Uh, I actually never did,
but anyway...

Okay, sorry. It's your story.

So basically, you, you know...

you would, you would uh,

that really wrecked everything.

Sorry.

You can start over.

Yeah, let me start over.

So uh...

Did you pass around fliers
at, on campus, or...?

No, it was completely
word of mouth, it was...

I think we spread it initially
through IRC,

which is Internet Relay Chat.

Its basically
a network of people

who just sort of congregate

around different ideas and

we started
a little Napster community.

And they just
sort of spread the idea.

It started spreading
through you know,

college, you know,
universities and,

The first point at which
it started to really take

was, there was
a, an article published.

It was one of these
internet news sites,

it might have been ZD Net.

And you know they touched

on the legal issues,
but we weren't sued at the time,

we were still
working in Massachusetts.

And uh,
that spurred a huge response

of downloads.

Before that, it was, getting
a good response

and it was spreading somewhat,

but um, that kind of
kicked off the whole

you know, period of insanity.

With the,
the business side of it,

we eventually took money

from John Fanning's friend,
Yosiamo.

Sean Parker and I moved out
to Northern California.

You know, we uh,
hired some people

and it became a company.

At the beginning,

it was just like
Parker and Shawn

and he surrounded himself

with a bunch of friends
from Cape

and they were
all good at computers

and they're just all you know,
it was just like

basically having
a bunch of teenagers

in one place.

It was pretty cool.

The first time that I typed
a search term into Napster

and saw the results came back,

I think it was
The Rolling Stones.

Uh, and I kind of pushed back
from the desk

and I was just like, whoa,
like what just happened?

Back in '99, over dial up,

shitty browsers,

web pages taking
seconds to load,

here was
a fucking fast ap.

That's what took me
from typing to submit,

to phhht!

What happened after that?

Web pages were not doing
that at that time.

And you talk about
my attraction to it and,

and moving from Chicago
to the Bay Area,

kind of on a dime
because you know,

of what I saw in the technology,

I think you could probably,
to a man,

go through the early people
that were there

and they were drawn to it,

almost like a tractor being...

because it was
this emotionally true thing.

So distracted, you had to leave.

Right, whatever you
were doing right there,

you just left.
I mean a lot of early
employees were,

it's like, you did, undid
what and what and what?

And changed all these things,
in your life and...

We lived together in San Mateo
in a small apartment at first.

Like I said, he was bringing

when they first got out there,
they didn't have like

apartment stuff, so
it was just kind of like

an Irish flop house,
you know.

Like a bunch of people
sleeping on, you know,

blow up mattresses
and things like that

and you know.

Fanning and Parker
were both trying

to explain to me
what Napster was.

I never used it,
never downloaded.

And at the time,

there were about

30 to 40 thousand
registered users,

so it wasn't that big.

After asking
a million questions,

and, and hearing
from both of them...

Music will be ubiquitous

you know, you'll be able
to get it on your cell phone,

you'll be able to get
it on your stereo,

you'll be able to get it on

whatever the device
of the future is.

And you'll be able to,

I think people are willing
to pay for convenience.

I had the 'aha' moment.

And I knew
at that moment, that...

...it was gonna be.
It was gonna be huge.

There was no doubt in my mind.

And it was a matter of...

Could we...

And-and-and then I started

to change the language
I was using.

Could we, keep the servers up?

Could, could we
make this thing scale?

The area where we were
in desperate need of help,

which was making
the servers scale,

to support all the people
who wanted to use it.

Was his weak spot
as well,

so he and Jordan worked
pretty closely together.

What I remember most
about that time

is sleeping under our desks.

The loud music.

It was all about making small,
incremental wins.

With the code and
with the technology.

It was...

It was a rocky few months.

But every time
we had a little win,

it was a big party.

The night Ali and I figured out

some seriously awesome stuff,

uh, one of the capacity
limits we had

was the ability to index

more than a million files
per server.

So four to eight thousand users

could go on the server,

uh, before the operating system,

which was Linux, at the time,

would drop to its knees.

It was an amazing night
because we got it working.

It was probably on the tail end

of one of our
two to three day stints.

Our, our binges,
and maybe, it was,

it must have been
after midnight.

And Ali and I
were just thrilled.

We put on shades,
he put on his hat backwards

and, and I was,
I got up on the table

and I'm like ooh-ooh-ooh
and he was like

this is this amazing
celebratory moment.

And there was one picture
in particular,

where we labeled it
one million files!

Yeah,
we had those kinds of moments
all the time.

By, I would say,
by December of '99,

we, we kind of nailed it.

By then there was a bunch of
really technical stuff

that we did, that caused it to
be able to scale.

And it was just a matter
of adding as many machines

as we could at that point.

Just in terms of
the amount of awareness

and exposure that the work

we were associated with um,
gained was meteoric.

So in like a
four or five month span,

it went from
30,000 registered users

to over 20 million.

Total users count now,

I think we just recently
passed 20 million users.

AOL has 23 million.

Even as it really blew up,
I know on the,

on the engineering side

we're watching
these numbers go up,

the simultaneous users
go up and up and up

and then there's more and more
press coverage

but it's still a small company

in a bank building and uh,
I think some people

had a better
understanding of kind of,

the significance of what
was going on than others,

but day to day it was very hard
to comprehend.

It was one of the first times
in history

where you had this sort of
pure youth revolution.

Young, inexperienced, relatively
unsophisticated, but smart kids

could create something
entirely out of nowhere.

And revolutionize
an industry that they frankly,

knew nothing about.

And had
no relationships in.

And this all happened,
this you know,

I, I think probably
six months passed,

uh, before we ever

had a conversation

with anyone

in the, from the music industry.

And it wasn't, it wasn't
because we didn't want

to have a conversation
with anyone

in the music industry,
we just didn't know anyone

in the music industry.

that there are so many wins
with digital distribution

that ultimately, you know,
once we have

the opportunity
to work with artists

and work with the labels

to discuss, you know,
what models are viable

and what are not,
we can come to a conclusion

and find a good model
that works.

There was this,
this moment in time

when you had someone
like Shawn Fanning

who had the idea,
um, was smart enough

to build it, but didn't know
enough about the industry

to know that it was
just an impossibility.

Right, just not something
that was ever gonna fly.

Um, but then at a time
when you could get

tens of millions of dollars
in venture capital,

to back something
which is clearly

copyright infringement.

Right? That was
the amazing thing

You know, I remember
being in IRC with Shawn

once upon a time and
him telling me, you know,

we're raising
70 million dollars.

And my response to him,

I couldn't type it fast enough,

was don't take the money.

You don't have a business.

You know, this is,
you cannot build a business

on copyright infringement.

Napster was operating
in a legal gray area.

And this very
important law, the DMCA,

which was an amendment
to the copyright act,

set up a series of safe harbors

for uh, different technology
providers and

telecommunication providers

to immunize them
against lawsuits

from the content industry.

I believed pretty firmly,

and still believe to this day,

had it, had, had Napster
been fully legislated

at that moment,
that we would have qualified

for I think it was Safe Harbor,

I want to sway
it was Safe Harbor D,

which provided protection
for indexes.

Like Yahoo and Alta Vista.

From the very beginning uh,

like anyone who
looked at Napster,

you were concerned
about the rights issues.

And I knew Jeff Berg at ICM.

Which at the time
was one of the biggest agencies

in Hollywood.

[music]

And I called up and said,
hey Jeff,

there's an awesome company
up here,

it's quite disruptive.

Can you go gather up

some of the music lawyers?

So we went down
and had this meeting.

I remember Mo Ostin was there,
or Mo Ostin's lawyer.

And a couple of other people.

So we ran in there
and said, hey,

we need to come
to an agreement here.

It should be easy because

you're not going
to stop technology.

Um, and tell us
what you want us to do.

We want to cooperate.

And um, and guess what?

Nobody really cooperated.
And it never got resolved.

It's still not resolved,
it's 12 years later.

And that's pretty pathetic.

Ultimately, we were gonna
have to figure out

a revenue model.

And when, by the time
we started talking

to the labels,
we were more than happy

to turn the whole thing over
to the labels.

And basically,
become their digital music

distribution service.

We always wanted that.

I recall we contacted them

and started having conversations

and we had serious conversations

in about September.

Of 1999.

Explaining that there
was a problem here

and they needed licenses,
but it would, it would be

great for them to be talking
with the companies

about licenses
and so on and so forth.

And when it became clear
that they were just

stringing us along
and they really had no

intention of actually
negotiating licenses,

we filed a lawsuit in December.

We're being charged
with con-con...

Contributory...

Contributory and vicarious
infringement,

or something to that effect.

Basically saying that
since you know about it,

you guys should be held liable.

They're claiming that we did,

but we can't really
discuss anything...

And yeah, did we know?
Yeah, we knew.

But...

We also knew that...

This thing called
the internet existed.

and it was new.

And as it evolved,

these things were
going to start to happen

and things were gonna
have to change.

And the way in which
the world worked

was gonna have to change.

And we were just
the catalysts in that.

When Indiana University
banned Napster,

student Chad Paulsen
put up a website in protest.

Within weeks, over
13,000 students

had joined Paulsen
in his effort to free Napster.

It's not really necessarily
Napster itself,

it's the software and the
ideals behind the program.

It's like going to
a rock concert,
you know, just

listen to a new bands,

listen to up and coming music

and Indiana university
is just shutting it down.

I U and many universities
nation-wide,

maintain that they
banned Napster

because it put an
enormous strain

on their internet connection.

What's up man,
I'm with MTV News.

I was wondering
if you had any MP3s
on your computer?

So uh, how many MP3s
do you have on your computer?

About 600.

Maybe like a hundred
or something.

Uh, six or seven thousand.

Come again?

Six or seven thousand.

- For real?
- Yeah.

How many MP3s
you have on your computer?

Uh, probably like 300.

For real,
where'd you get them from?

Uh, truthfully, most of them
from Napster.

Are you a pirate?

Well, I don't know.
My roommate does the whole

computer thing.
Margaret are you a pirate?

What we had was basically
a nuts and bolts capacity issue.

Our internet connection
to the outside world

was being taken up nearly 61%
by users of Napsters

on, Napster on campus.

So, we had to
decrease that significantly,

or we had to ban it.

It very much felt like
now everyone was coming

to grips with the fact
that this is something that

they're going to
have to deal with.

I think at first,
they were trying to...

You know, they were really
trying to be like no.

This is just not
going to happen.

But now it's obviously so big,
it's out of their control.

For the first time,
the audience has gotten

to the technology
before the industry.

Before the music business.

Why are
the record companies afraid?

The record companies are afraid

because they'll be
forced to share.

File sharing and this
whole new notion of people

getting music
through the internet,
the downloadable

distribution, to me,
I look at it as the new radio.

I mean we care very much
about artists

and so we think
that there is a solution to
there's,

you know, a way
that the technology
can be adapted

to-to-to benefit you know,
all of the, the parties

involved. The artists,
the industry and the users.

We think right now,
it's definitely a viable system

for all three and we think it,
you know, it can be

modified and can be improved
to be, you know,

even more valuable.

You know, there were these,
these iconic artists

who we'd grown up idolizing.

Some of whom wanted to kill us

and some of whom,
thought we were the, the answer.

I'm all for technology

and its interesting,
the exchange of music,

but the way that it's set up

right now,
it's theft,

basically. Pure and simple.

I'm bootleg proof, you dig.

I, I got people that you know,
go around the world

you know,
smashing on stuff like that.

You heard about
the I Love You virus?

My peoples have something
to do with that.

I mean I can just do that to 'em
if I have to maybe.

I think this aspect
of technology

is really gonna bring uh,
a lot of different angles of

life and commerciality
out of to the corporate world

and give it back
to the individual.

Just give the fans the music.

You know what I'm saying?

Uh, the internet is
just a way for you to just ...

Go right into it and
you give it to the fans.

It's great, isn't it?

Isn't that good? Isn't it?

Napster is, is bull[beep].

Is that that internet site?

That's where there's the, the...

trading of music.

We don't, we don't really know
enough about that,

so we can't really,
not really into computers.

It's bringing true democracy

back into the music business.

And it's changed,
it's forcing the artists

to change the way
that we relate to the consumer.

A musician goes out there
and works hard

and pays their dues.
Why would you expect them

to work for free.

There's no doubt, uh, in my mind

that the, the future
of music is free.

to stop fans from
trading music on the internet.

Even if it's not through
a company or a website,

fans are gonna trade
music on their own.

There's no stopping it.

You know, that,
this revolution is,

is already taking place.

It's now, this is now
and we accept it and we get it.

And we're gonna grow with it.

And it's just another
addition to technology

and I'm a technology freak.

What do you say
to the artists that are so,

you know,
just so loving it the,
the new guy,

the, like
the Fred Dursts of the world,

who just they think
it's the greatest
thing for music?

Um, well
he's a moron to start with.

Okay, alright.

What more needs to be said
about that?

Nothing else, I guess.

We get a lot of bands who,
who send us email

and say, you know,
we've been, we put our music

up on Napster, we,
we started sharing it and now

you know, we, we see a hundred
other people that

have it, they're listening to it
and eventually

that translates into more people
at their shows,

selling more CDs.

There were so many
success stories,

dispatch was a great one
because they were,

you know, a band and
they were touring

and their CDs weren't for sale.

And some of these places
they were playing

for the first time.

[music]

I think the first time
I ever yeah,
the name Napster

was backstage
after a college gig

where we'd played
Boston and New York

I bet for five or six years.

Just over and
over and over again.

Had finally built up
our fan base

to like 500 people a night

or 700 people a night
and then we flew a red eye

to play a college gig
in California.

Halloween gig, or something

Had never been West, ever.

And then there were
more fans there

and they knew all the lyrics.

- It was...
- Yeah.

And there was no, no radio.

And no press and no one knew
except everyone.

Yeah, it's kind of like uh,
instant distribution.

You know, without the,
without the big wigs on top

figuring out it's like this

But its not like
we don't like big wigs,

'cause I've seen
you wear big wigs.

I'm wearing
a big wig at the moment.

Its a huge wig.

So for an independent band,

with no uh, ties to any
label

to get to that scale just by
free sharing,

it was pretty clear
that it was um,

pretty powerful and they
were really open about

the gratitude for that.

Napster was absolutely the,
the most well known

and most chatted-about
company

in the tech world by far.

It was pretty cool
working at Napster

Like if you showed up,
you were kind of the star
of the party.

All you need was a Napster
you know, sticker

and you were probably
gonna either get

a free drink or, or get laid.

Uh, one of the two,
so it was actually

a pretty awesome time
to be associated

Ron has a party
on a Friday night.

We learned that day

that Hummer Winblad
had invested.

We had a large gathering

for our limited partners in

the Angel Investor LP funds.

You had Warren Buffett,
Dana Carvey,

Mark Andriessen,

Schwarzenneger's,
Schwarzenneger's Hummer.

Schwarzenneger's Hummer.

You had Shawn Fanning,
Sean Parker

Larry and Sergey of Google fame.

Not then, but now, Google fame.

And uh, I can remember
you know, how, how taken

the Google guys were
by the Napster guys,

so to speak.
And I can remember thinking

you know, good luck
with that search engine thing.

I hope that works out for you.

They actually said
at one point like uh,

something to the effect of
how they were envious of

the Napster brand
and how it's so cool.

And I'm like,
but you guys are you know,
doing great

and they said, 'no,
but it's nothing like Napster.'

And I'm thinking,
in my head like uh,

you have no idea.

You have no idea.

We actually didn't imagine that,
that what they would

do was total shutdown.

We figured, like we as naive
technology guys

went this is really cool.

So the music business

is gonna try to find some sort
of business model

around this, right?

Wow, downloading music
for free is awesome!

What the hell is that?

I don't know, let me check

[crash]

Freeze, F-B-I!

Down on the ground!
Down on the ground!

Hands, let me see those hands!

My initial resistance
to the new services

created on line was based
on the debate

having been framed
in terms of piracy.

Being labeled as such
by the record companies,

it understandably sent
a ripple effect of panic

throughout the
artistic community.

they thought we just
had some big hard drive

full of music.

And we were just you know,
pirating everything.

Like as if we'd gone and

[stammers] as if we'd sat there
and put CDs and

ripped them for months
and months
and months and months and then

lo and behold,
we had the entire library of all

recorded music and
we were giving it away.

Our users are exchanging
content um, and we

we at Napster
never come in contact

with any of the music
that people are, are,

are distributing.

So...

And not only that,
but we're also fully compliant

the Digital Millennium
Copyright Act,

which requires us to
remove infringement links

when recording to us.

We were used to piracy,

but there was a quick remedy.

The R-I, double A

Recording Industry
Association of America

would get in touch with the FBI,
they'd do a raid,

they'd take it and then
four blocks later,

they'd go set up again.

So we dealt with, with piracy.

But it was piracy
in the hundreds

or the thousands.

It wasn't piracy in the millions

and tens of millions
and ultimately, billions.

That's scary.

This is a company
that is building a business

You know, they've got
venture capital money.

They're out on Wall Street,
looking for financing.

This isn't, you know,
just a, a sweet,
young guy,

who's looking for some fun
in his college dorm room.

They're building a business.

By facilitating the stealing
of artists' music.

A lot of the uncertainty,
I think uh, the, I'm sure,

plenty of lawyers and others,
all kind of put the,

the industry in a place
where it felt like

it needed some protection
or some control,

to at least exert control
long enough to figure out

what to make of this and
play it safe and I think

unfortunately,
that led to the missing

of really big opportunity.

I can get that the labels
were afraid,

it was so new, it was so fast,

that, and, and they
have control issues.

with legal agreements
and this thing

was like a hacker.

It was, you,

there are no nation
state boundaries

on the internet.

Right? You can't,

laws don't really apply to them

unless you can find them.

For me, it was not about
piracy and consumers

stealing
intellectual property right.

For me, it was like how great
must
music be

that these people
are coming together

and sharing
their taste of music.

And the press about
Napster was controversial

and misleading.

It was all about control, power

and how can we protect
our existing

business model.

I think Napster
had 60 million customers

Uh, or people you know,
which were...

getting their music
through Napster.

And uh, that seemed
like an incredible opportunity.

But because the major eight
record labels were

unable to come to any terms
with them,

they essentially burned it,
burned it down.

I think like any,
anything in the world,

those big innovations
rarely come from

the big companies that are
already dominating

that game. Because it's not
in their interest

to completely reinvent
what they're doing there,

so they become actually,
very complacent.

The music business is a great,
great example

of, of that.
Of just complacency being

a total uh, death sentence.

The five global heads
of the companies at the time

most likely, couldn't agree

that today was Wednesday.

And for different reasons.
People had different ideas

people had different visions

and no one was used to this

and the word ambush
happened a lot of times

in the conversations that
we had with everybody.

The record business
was kind of ambushed.

However we want to look at it.

And you gotta deal
with an ambush.

You dealt with Pearl Harbor,

you gotta deal with it, right?

There was no awareness

that something like
this was coming.

Uh, even though uh,
a lot of the technology

of the internet is
actually based on

peer to peer functionality.

It had never been
used in this way.

This was something
entirely different.

This was all the
content in one place.

It was an amazing experience
and everything was up there.

Everything.

But things change.

And you gotta change with it.

And to stick your feet
in the mud when the world

is tearing by you
like a bullet train,

is just laughable.

And you get real old, real fast.

And you got into the,
kind of the, the bin

in about one, one year,

you're like yesterday's news

'cause you didn't keep up.

Some of those labels
got caught out there.

Some of the artists got
caught out there.

'Cause they have an
older school look

at the music industry.

From the moment that
Hank came in,

he was looking at making
deals and he did

everything but turn
cartwheels on

Hollywood Boulevard in
order to get them.

I think it was, you know,

we will not negotiate
with terrorists.

You know and I think, you know,
that's literally

how they perceived Napster

and I think you know,
in most things,

um, you know, you need a hero

And before you can find you
know, that hero,

you need to clearly
identify the villain.

And we were that.

All of a sudden, one day

I got a call from Cliff
Bernstein saying,

they're playing I Disappear

on 30 radio stations.

I go, how can that be possible?

We haven't even finished it yet?

And then we sort of, you know,
looked into it

and traced it back to some
company called Napster.

and we were like, huh?

It went straight downhill from
there, boys and girls.

[laughing]

The moment, the
quintessential moment

where I knew it was
out of control

was uh, when Metallica
delivered Napster

user names for us to block.

The heavy metal band, Metallica

has been most vocal in its
opposition to Napster.

and drummer, Lars Ulrich

even plans on delivering a
truckload of paper

to the company, listing people

who use its software to share
unauthorized MP3s.

Thus, kicking off
Metallica's much-hyped,

Monsters of Miniae filled
legal battles tour.

We could, we couldn't
believe how, you know,

what, what, how,
how crazy this was.

You know, Metallica was
coming to our office

to deliver boxes full of,

I think it was like 260,000
names of infringing users.

Who were violating
Metallica's copyright.

Uh, they could have put it,

on, on a old three and a half
inch floppy disc.

But no, nope.

They printed them all out
on paper and not,

What Metallica has done is
harvest user names from
the internet.

And from the Napster site. Now
anybody can get that

it doesn't necessary uh,
correlate to uh,

to actual legal names of
Napster users.

They simply downloaded anyone

who has a Metallica
song available

on the Napster site.

There you go.

Now, once again,

we're not going after these
people specifically.

What we're merely doing,
is giving Napster

the information that
they thought

that we couldn't gather.

Which is basically, real people

downloading Metallica
master songs.

Not bootleg live recordings.

What will they do?

I think maybe if we could get
the Napster people out there,

they could take that question.

do not go anywhere near the
front of the office.

Because it's gonna be, you know,

And uh, we were like
opening the windows,

trying to look out to see
what was going on.

Finally, Shawn and Sean are
like, this is done.

And Fanning and I
decided at one point,

just prior to Lars arriving,

that we would sneak out the back
door of the office

and run across the
street and watch.

Just watch this whole spectacle.

And we were like just laughing,
hysterically.

There's a podium set up
on the sidewalk.

I mean 25 mikes from
news organizations

to get the pearls of wisdom

and views of Lars Ulrich,

who then takes a few questions,
but you know,

he's got to actually deliver
the names and so,

there we are, uh, Bonnie and
Clyde, in the elevator,

uh, where if you had a shot of
it, the doors closed

and it's Howard King
and Lars Ulrich

and a couple other thugs.

And the doors closed and Lars
turns to us and says,

'hey guys, nothing personal'.

At which point, the door was
open to be like,

well why didn't we talk to
each other about this?

I'm sure it's not the
end of the story,

Well I think he probably assumed

that he'd walk into a dark,
expansive room

and you'd be, you know, sitting
in a chair with like

a, a cat. Do you know
what I mean?

With like TV
monitors in the back

and I mean the reality
was you know,

that this was a really low rent,
shitty office building

with a bunch of kids
running around in it.

And I'm sure he was blown away.

But I will tell you that a
few minutes ago,

when I dropped off all the names
that they asked for

uh, I met two really nice
guys up there uh,

I put a human face to this
whole thing Napster

and we had a very civil, very
cordial conversation

for ten, 15 minutes.They
said their side,

I said my side.

And its sort of like the
ultimate thing

in just American society, agree,
disagree.

Coming from two different
points of view.

But you know, what, to me,
Napster keep trying to do,

is try to sort of you know,
drag it out

and make it about
Metallica and their fans

or make it you know, why didn't
Lars call us personally?

Come on, you know, like let's
stop bullshitting

each other here.

I think it's about the
most unhip thing

that I've seen a big
rock star do.

I would imagine a Celine
Dion or something

might be the first one out
there, but uh, but nobody,

uh, nobody that uses Napster,

I don't think there's
probably any

Celine Dion songs being shared.

So that's probably uh,

that's probably where it's at.

There's one picture of this guy,
uh,

with a Metallica t-shirt and,

and standing right next to a guy

with an AFTRA t-shirt.

It's like this is,

this is oh my god, this is
out of control.

This is the vortex of this

crazy tornado
hurricane that we're,

we're in the center of.

The center of the debate.

Do you agree with these guys?

Uh, depends on which guys
you're talking about,

I agree with Metallica.

That's cool.

And you know, it's true, for
some reason Metallica

had decided that they
were going to be

the lightening rod for all
these other artists,

who were like, you know,
not quite sure

what they thought of the thing.

Um, and, but they were

you know, they were angry.

Like Metal was supposed to
be about like being

renegade and being like,
anti-establishment

and-and-and, you know,
sticking it to the man.

So it was kind of ironic
that this metal band

was suing us.

It was like Metal and
like Gangsta Rap.

Like the two least likely
people to go after us

were the ones who were suing us.

Napster is stealing from us.
Straight up.

And I'm gonna fight 'em
to the death.

[loud boom]

Any time things go to
Capital Hill,

you know that the, the shit's
really hit the fan.

Like that's, you know, then,
then it actually means
something.

It started to be talked about

in all those broader terms.

So it went beyond just
rights and that issue.

It became the, the way that we

exchange information period.

When those concepts started
to be introduced,

I kind of realized that, there
was no going back

at that point. That was,

This was the future.

there has been an
upheaval of sorts

concerning how music is copied
over the internet.

What Newsweek Magazine dubbed,

The Noisy War Over Napster,

involves more parties and
has much broader

implications than that
moniker implies.

Just like a carpenter who
crafts a table

gets to decide whether he wants
to keep it, sell it,

or give it away,

shouldn't we have the
same options?

We should decide what
happens to our music

not a company with no rights
in our recordings,

Which has never invested a
penny in our music

or anything to do with
its creation.

The choice has been
taken away from us.

I became a royalty artist when
I signed a contract

with Columbia Records,

with a group called The Byrds.

And we recorded um,

15 albums or so,
during that period.

And aside from modest advances

for each of these albums, I
never saw any royalties.

Even though we've had
number one hits

with Mr. Tambourine Man, and
Turn, Turn, Turn.

I saw nothing but the advance,
which is uh,

divided five ways. It was only

a few thousand dollars a piece.

And uh, [clears throat]

with the advent of MP3 dot com,

I'm getting 50% of the, the CDs
that come out now.

I think it's a wonderful thing.

Thank you, Mr. McGuinn,
that's uh, that's uh,

that's a complaint I've heard

from a number of people.

Uh, Mr. Berry...

Napster simply
facilitates communication

among people
interested in music.

It's a return to the original
information sharing

approach of the internet

and it allows for a depth and a
scale of information.

that is truly revolutionary.

Napster's helping
and not hurting

the recording
industry and artists.

A chorus of studies show
that Napster users

buy more records as a result
of using Napster

and that sampling music
before buying,

is the most important reason

that people use Napster.

One of the Senate Hearings

had a bunch of key personalities

that were invited.

And Hank Berry was
there on our side.

And Hank's a lawyer,
he's our CEO.

So very thoughtful, you know,
well prepared,

articulate argument, you know,

having to be defensive at times,

but at the end of the day,
he's playing fairly.

And then there was, Gene
Kan from Gnutela.

My name is Gene Kan,

I'm a Gnutella developer,
one of many.

I'm not the inventor
of Gnutella,

one of the people who
happily talks about it.

And Gene's a pretty mild guy
and he's a nice guy.

He's kind of thoughtful, a
little bit introverted

but in this role,

he decided to just
absolutely run with it.

and so he just played the

crazy anarchist destroy
the system role

I remember being so
entertained by

by all the fallout from that.

is the holy grail of
distribution channels.

It is the zero marginal cost
distribution channel

Uh, that means that it
cost the same

to transfer one copy of
intellectual property

as it cost to transmit
10,000 copies,

or one million copies, or
ten million copies.

old world tactics may
no longer work

on the internet.

This is the new economy.

Can we stem the tide of
new technologies?

Highly unlikely.

So what does the future hold?

Great things if
profiteers adapt.

If intellectual property
profiteers adapt.

There's room only for
the leaders.

The internet is, is
ignanomously

inhospitable to middlemen
and followers.

Technology moves forward

and leaves the
stragglers behind.

The adopters always win

and the stalwarts

Mechanized farming is a
good example.

You don't see anyone out there

with a horse and
plow these days.

Very intelligent statement,

except that I don't
think we infringe

when we download
because it's for

educational and
governmental purposes.

So it's very used.

And since we, since we
define what that is...

[laughter]

You know, we went to the
senate hearings,

expecting you know, to be sort,
I mean it was sort of

established as an information

gathering session, so we
expected it to be us giving

them lots of information.

And, and trying to explain to
them, how things work.

But surprisingly, they
really understood

and they were very supportive.

You know, they did not want

They understood it was adopted

by you know, 20 million people
and that was really

powerful to them and so they
were all about trying

to structure things so that it
would be worked out

between all the people
who had issues.

And um, you know, I, I
suppose that, that maybe

you know, I got my hopes up.
That you know,

everyone would sort of
understand things

as well as they did.

Prize one, and the Webby award
for music goes to...

Napster.
[applause]

The first version of the
product, was pretty much

the same set of features

and it was sort of a very
simple application.

But once we were sued, we
couldn't really do much

with it. So to have
something growing

that quickly, to have so
much attention

and have so many great ideas

and so much passion

among the team members and
desire to make it.

Make it work, make it last.

To uh, not be able to actually

change the product and
make it better,

to not be able to really
pursue a lot of the great

ideas for how to make uh, it
a viable business.

I think it was actually
incredibly frustrating.

You know, there was
all this focus

on the recording industry uh,
and the legal battle

from a business perspective, uh,
but

almost no focus whatsoever

on the value of the business.

which was this platform

and its capabilities and
what it could do.

The legal issues
around the product,

and the interface between
the legal team,

which was becoming an
increasingly large

and influential part
of the company,

and the product and
engineering team,

which was becoming
increasingly small

and marginalized part
of the company.

Eventually the
lawyers took over.

The first mutiny was when we
moved into that office.

in Redwood City.

And it was a giant cubicle farm.

And as soon as Jordan
and I saw it,

we looked at each other

and we didn't have to say
anything to each other.

We were like, this is, we,
we knew it was bad.

The layout of the office.

So we'd gone from
having funky desks,

I, I would call door desks,

like we would
literally buy doors

that have the knob hole there.

That would be where all
your wires went,

to cubicles with walls.

We wanted to all sit
together and, you know

we'd gotten used to that.

And that's how we work.

Management offices were
literally up a floor

looking down on the floor,

if you can imagine, it used to
be a factory work floor.

Horrible metaphor, you know,
sit in your cubicle

and shut up, right.

And you know, you're expendable.

Oh, these people
need to be is...

Isolated and that noise

is gonna bother these
other noise.

Who the fuck are you assholes?

Do you have any idea what
creativity is about?

That was a fucking
super buzzkill.

Uh, and, and you know, we,
we won a few like

minor battles, but the war
was completely lost.

I had the advantage

and uh, Sean Parker didn't
enjoy this luxury.

But I had the advantage of
kind of being able to

kind of stick my head
in the sand,

in terms of being able to just
work on the product.

So, I had this attitude of if
things got crazy,

or people seem to be
acting irrationally,

or uh, if we were nervous, I
could just work harder

on the product. Write more code,

put my head down.

So that got me through a
lot of the time.

First of all, what is your,
what is your name

and what do you do here?

I'm Shawn Fanning. I uh,
started the, the company

and I'm currently an
engineer at Napster.

How 'bout you?

I'm Sean Parker, I am also
a founder and um,

I do a variety of things.

Working with the
legal team to uh,

business related strategy.

Do you have a nickname,
like Napster?

Um, no.

Shawn Fanning and I, we
literally went from being

high school kids leading
relatively normal

mundane lives.

To...

...12 months later, nearly
bringing one of the largest

US industries to its knees

and basically fighting what is
uh, in terms of potential

assessed damages, the largest
corporate lawsuit

in the history of the world.

The music swapping website,
Napster,

which for almost a year now,
has provided

millions of music
fans world-wide

with an
unprecedented opportunity

to copy and trade music
on the internet,

was dealt a serious
blow on Wednesday,

when Federal Court Judge
Marilyn Patel issued

a temporary injunction
against Napster, pending

the outcome of a trial,
which will ultimately

determine the future of
the software.

an internet community to help
music fans find MP3s,

I didn't' think it would be
embroiled in a legal battle.

But we are. And as you know,

the recording industry
has filed a suit

to shut Napster down.

To shut you down.

Today there as an important

hearing in court.

and the judge ruled against us.

Hank Barry, Napster CEO,

is here to tell you what
happened today

On the 27th of July,
we all gathered

in Judge Patel's courtroom

and uh, we had a hearing and it
was supposed to be

something relatively low key,
you know...

It was a hearing on a
preliminary injunction

motion that the labels, uh,
were moving

and uh, the judge
came in and uh,

right from the outset
didn't look good.

Uh, this is a preliminary
injunction uh, it's been

entered without the basis of any
evidentiary hearing.

We asked for an
evidentiary hearing.

We asked to have an
opportunity to come in,

cross-examine their witnesses,
to have this

decided not on the basis of uh,
15 minutes for me

and 15 minutes for Dan
Johnson argument.

But on the basis of
actual evidence.

We asked to have this
decided at trial.

Um, the Court decided to do
it on the basis

the Court decided to do it.

David Boies was a lot of hype.
He had just won

the Microsoft thing and had
had that big Aetna

thing that he had won etcetera,
etcetera.

So it was like, we got
the big name.

But, fundamentally, he did
not understand k

what was going on.

At a technical level.

So the legal arguments he was
making didn't fit with

what was actually going on.

And it was a complete and
utter disaster.

I felt like we had
developed a better

understanding of the
impact of the TMCA

and all the complexity
around trying to make

the case work. To watch it be
handled the way it was

with Patel. It was actually
very disheartening.

And then you know, Shawn's email

came out.

Uh, there were these early
memos that were

discovered, where um, I made
reference to the fact

that we were well aware

of the fact that our users
were pirating music.

Uh, and given that our users
were pirating music,

it might be, it might behoove us

to protect their anonymity.

So that our users weren't sued.

And the documents that
Judge Patel relied on

is the following...

Users will understand that they
are improving their

experience by providing
information about their

to name or address or other
sensitive data.

That might endanger them.

Especially since they
are exchanging

pirated music.

That is the
co-founder of Napster

writing what the system is
intended to do.

and it is exactly what the
system has done.

And this was uh, at a time
when uh, when we

believed that what
we were doing,

basically, just
facilitating relationships

between users so that they
could share music,

was totally legal under the DMC.

It was like essentially a
brainstorming document

where I used the word piracy.
Which was a, which was a
taboo word at Napster.

You're not allowed to talk about
piracy, only allowed

to talk about sharing.

The focus then became the email.

When in fact, there were all
these other issues.

So Sean became the scapegoat.

I, I was sort of on this
forced vacation...

...in North Carolina the, the
lawsuit was happening.

On the other side of the world,

I was sitting in this beach
house and I got the call

from Alicia, who was
Hank's assistant.

And uh, and was writing the
litigation and she said

she said Sean it
doesn't look good.

And your memo is up on it,
it's blown up in a,

you know, 4000 point type on a
huge screen, in the

courtroom. And uh, you know,
they're calling you

a music pirate and they're
calling us all music pirates

and the judge doesn't like it.

They needed a nail. They found
the nail and they

put it straight into that
coffin and that was it.

Now, it was easy for the
business guys to say, 'look

this guy not only
doesn't add any value

in our opinion, but he also
wrote this email.

and it's all his fault.

There wasn't a whole lot I
could do about it.

it, it sort of, it sort of
was what it was.

The company needed to
make a clean break

from its past and try
to move forward.

Um, and so I sort of realized

that that was the end.

So I had this one
meeting with Hank,

he walked me through uh, walked
me through, then I

and that was it.

I vividly remember the
conversation of him

asking me to come to his aid
and help him preserve

his role in the company.

And after we talked for a while

about what that would be
I just told him that I

thought he was lucky.

To be able to get out of this
thing and go work

on something else.

Um, because it had felt like,

you know, it had been uh,
nothing like the first

you know, the first phase that
we had gone through

and enjoyed.

I don't know uh, if that
really contributed to it

that email. But I do know

that it had a huge effect

on the judge's perception
of our intent.

We are pleased with the
court's decision.

We think the decision
will pave the way

for the future of online music.

This once again
establishes that the rules

of the road are the same online
as they are offline.

And sends a strong
message to others

that they cannot build a
business based on other's

copyrighted works
without permission.

Have you heard from Metallica?

[laughs]

I have not. But I"m sure that
they are very pleased

and I'm sure that they and Dr.
Dre take great comfort

in the court's decision today.

'Cause until Napster gets
its day in court

if this injunction is not
stayed it will obviously

have a very severe effect on
Napster service.

So you will seek a stay?
then obviously?

I still find it difficult,
certainly a bit shocking

uh, some things
happened this week

that I was certainly not
expecting to have

to deal with.

Napster fights for survival.

Front page of CNN.

This is horrible.

The Ninth Circuit issued an
order, it was only like two
sentences and it said...

This is a case of
first impression,

It's the first time we've ever
seen a case like this.

and we're gonna stay
the enforcement

'til such time as we, the
Ninth Circuit,

have had a chance to
look at the case.

Lawyers representing Napster

and the recording industry

squared off before a
three judge panel.

At the Ninth Circuit
Court of Appeals

in San Francisco.

And what the Supreme Court
was saying is you

can't take a snapshot and say,

how is it being used today?

What you've gotta ask is what is
what is it capable

of being used for?

Because otherwise, you're gonna
deprive the public

of something that can be used

for non-infringing uses.

They designed it to be a
pirate system.

No, they designed it
for fair use.

Samples?
No, no Sir.

Oh they designed it for
concert work.

That the authors really

don't care about a copyright.

Even though they have it out on
a, on a, on a recording.

That's what they tell us.

- No that isn't...
- I've read their brief

That may be what they tell
you now, your Honor,

but they tell you...

Anything on MP3 file goes
through the Napster system

or does it go user to user
on a direct basis?

It doesn't go through the
Napster system...

You know, their hand,
their fingerprints,

you can't find them on those
things, can you?

The fingerprints you can't find

because Napster
doesn't want you to.

They don't touch 'em.They never
have anything to do with it.

My fellow in New Jersey, and
my fellow in Guam

will have a direct connection

on the internet, right?

And that's how the music
is transmitted.

It is transmitted on the
internet and we are not

trying to stop the internet,
certainly.

That hearing ended about a
half an hour ago,

here in San Francisco. No
ruling from the court

is expected at lest for
another month,

but after that ruling
does come down,

many observers believe
that the final word

on Napster will
eventually and ultimately

end up coming from the US
Supreme Court.

I worked on several
presidential campaigns.

And I would say that the
pressure that Shawn

and Hank had on them
was just as much

as it would be on a
presidential candidate.

With the difference being

that they weren't asking for it.
Either one of them.

[music]

Ladies and gentlemen, this is
very exciting day

An element of this alliance
is that Napster

today, for Napster,
for Bertelsmann.

will develop something like
[inaudible] services.

Middelhoff was a very
genuine guy.

He had great energy and he
really believed in it.

And was trying to do
the right thing.

Took a big risk in getting
involved, especially given

the relationship that
Bertelsmen had with BMG.

That being said, it was
incredibly complex deal.

It was a ton of money.

None of them really,
none of them

did get the conviction or let me
say, did learn that

the business model and
still existing

business model of the
music industry,

isn't working anymore.

Yeah, and I think this was
clear in 2000, 2001,

when you saw how people
did use Napster.

I think this would have
changed the world

much more than Facebook
is doing today.

Just the fact that this huge
German media conglomerate

was coming in and gonna be
throwing some money

that I might be working for
a few more months.

So I felt okay about that.

I think that that,

that mindset was the
company's mindset.

They were weird, it was
a survival game

at that point. It was just, it,
it seemed wrong.

Everything seemed wrong.

There was a line crossed where
they were no longer

actually trying to make
a cool product.

We were just trying to survive.

Whatever it was, we were just
trying to find a way

to survive.

We developed a new
business model

for membership based service

going forward in the future.

And uh, we give money to Napster

to develop that model, to
implement it, and then

we're gonna join them
and we all hope,

and we're gonna work
jointly on this,

to make that happen as
soon as possible.

That's why Shawn has to get
back to California

to get his cap on and start
decoding again.

Couldn't you preclude a search
under certain song

names and if you can do that

doesn't that suggest that
your efforts to stop

the trading of copyrighted
music is disingenuous?

No, because we have not
been able, ever,

to work anything out with
the plaintiffs.

They simply refuse to talk,
refuse to cooperate.

in any effort to solve
this problem.

No, because, because
you're never going to

come up with a search that's
gonna satisfy them.

[beeping]

We had an entire row of
computers dedicated to

temps who just sat there, coming
up with variations

on artists names, that
needed to be blocked

so Madonna was one and you know,

so it was basically this
Whack The Mole game.

Blockage is bad.

Motherfucking alias names
like Limp Hashbrown,

In Suck, Flu Fighters,
Pappa Crotch,

Dick See Chicks and
Crotch Box 20.

When the effort went from you
know, trying to make

it a successful service and make
the product better,

to trying to uh, play this
game of Whack A Mole,

it was kind of you know,
foreshadowing

of a, what was to come.

Hopefully be able to show
to them that we do

support Napster and we do
believe in a cause.

And that basically, the
music's out there.

I mean they can't erase all
the MP3s that I have

and all the MP3s that tons of
millions and millions
of people...

Dedicated online music fans
maybe planning to

spend a hard day's night at
their computers.

Downloading free songs

through the popular
Napster website.

A San Francisco Federal Court
made it clear today

the times they are a changin'

It's been a somber week

for fans of copyright
infringement.

As a federal court judge ordered

popular file sharing service,
Napster,

to remove millions of
songs that are owned

by the major record labels.

Record companies fought
tooth and nail

over the issue and the
court's agreed.

It's the record companies
who hold the patent

on cheating musicians
out of money.

American intellectual property

is our nation's
greatest trade asset.

We cannot stand idly by as
our nation's assets

are in jeopardy or dismissed.

By those who would use them for
their own enrichment.

That's why today's decision

is so especially important.

Now, Napster can take a nap.

I'd like to add a word or
two about the future

of Napster.

we've been developing a Napster
service that offers

to members of the community.

and importantly, makes
payments to artists.

I"m focused on building
this better service

and I still hope to have it
in place this year.

The new technologies we
are developing

are amazing.

I hope that by further review,
or by agreement

we can find a way to share them
with the community.

I would also like to
thank everyone

for being so supportive.

Napster works because
people who love music,

share and participate.

many people have said it
would never work.

We've heard that we
couldn't survive before,

when we had 700,000 members

and when we had 17
million members.

Today we have more than 50
million members.

to keep this community growing.

If we work together, I know
this will succeed.

Thanks.

The tipping point for my romance
was uh, after we were
injuncted and then

reinstated and then reinjuncted.

That was it. It was like
being broken up,

uh, with, with your favorite
girlfriend uh, and

and getting heartbroken and
then her coming back

to you and, and your heart
just like okay,

maybe I can look past the wound.

And, and nope, we reject you
again and I'm out.

It's like, ahhh, this sucks.

That was the point at which uhh,
I realized

that...

...the cool of what we had done

was pretty much over.

You know, Ritter left
because of all this.

And Parker was shown the door
and Shawn Fanning

slowly became detached.

He...

...He would just sit at his desk
and strum his guitar.

And if you went up to him, to
ask him a question

or to talk to him

He would just keep
strumming his guitar.

And he'd look at you, he'd
look at you with like,

some curiosity as if
you're like an alien.

But he would just keep
strumming his guitar.

And...

I think that, that was his way
of dealing with this.

That sort of pivotal,
pivotal sort of moment,

where uh, it looked like things
weren't going well

Fanning was ...

...on the cover of
Time Magazine.

Sort of, which is, in
American culture,

like the peak of public
recognition.

And it all felt, it felt sort
of, it all felt sort of false.

I think Fanning probably
felt the same way.

It's like he was going
through the motions

and doing what he had to do...

[clears throat]

Doing a huge amount of press.
But you could tell

that, that the company was
coming unglued.

Well, what's interesting is,
can I just start,

I'm so sorry, man, okay.

Well what's interesting is that,
that's not going to change.

We're going to maintain uh,
Napster uh,

in it's current form, what can
I start over again?

I'm sorry. I keep
mixing up my words.

Oh, those days in San Mateo,

that was our youth.

We had a lot of energy,
we were excited,

we were like a little kid
running around.

And then we became teenagers

and-and-and then the
lawsuit happened and we

started going into adulthood.

And we get these adult
figures coming in.

And we start to get older
and by the time

by the time it had gotten
close to the end

it was like, we're old,
we're fragile.

It's the end of days, so we're
just letting the time

pass. That's what it was like.

And I can remember right up
until the day that

I was fired, thinking,
there must be a shot.

There must, there's just no way

all this can just go away.

Uh, and then I
remember being out

the other end of the company
and still talking

to the folks that were there

and you'd keep hearing about,
you know,

the next Bertelsmann loan,
the next label deal,

discussions, the next and,
and you know,

and once you're removed from it,
you're just like oh,

Like this is not gonna happen.

Uh, but still, maybe
they're right and

uh, I don't, that, that, it's
amazing to me now

how there was not a
chance in hell

that any agreement was
gonna be come to.

There was a very long,
slow decline of Napster
at the end.

And ultimately getting shut down

when the filtering
was ineffective

because the technology
wasn't there yet.

Um, 98 point something percent,

wasn't good enough.

I called Ali Aydar and I said,

'You know, we need to turn off

the file sharing here.'

we never talked about this,
but can you do it?

And he said, 'Yeah,
I can do it.'

And he left the room

and he came back in a
couple hours and said,

'I turned everything off, but
it's still working.'

And it found, and we found
out that there were

a bunch of open Nap
servers out there,

that were not controlled
by the company.

That other people
had implemented

and were around the world,
so the, the

software client was
still working,

but we, the company had
nothing to do with it.

Today, Napster filed
for bankruptcy.

Oh man, we, we had
to have raised

north of a hundred
million dollars.

So and that, I don't
think any of us know

where that went.

This was such a common
question from people

which was sort of, how do
you make money

and investment vs.
actually making money

from service, but you know,
the idea is that

we're not gonna
generate any revenue

until we can actually
pay artists.

And it's hard to actually think
of a startup that's

ever raised that amount of money

that went away as quickly.

Like, usually if you raise a
hundred million dollars,

in a startup, like you got
about five years

of, of runway.

Like you've got a ton of runway.

The thing is 80 million of it
came from Bertelsmann.

Thirty million probably went
back to Bertelsmann.

Using all their other services,
right?

Yeah. But then the B was 15.

We gave a million dollars to Dr.
Dre.

Another million dollars
to Metallica.

I have no, I mean
it's just crazy.

This is mind boggling dude.

I mean in, in any
investment calculation,

you say the paying capital let's
say, 115 million dollars.

And then the company did so
badly that it went to zero

and so the money lost, was
115 million dollars.

But wait, there's more. In
Napster's case,

you have to now tally the
settlement dollars

that will float out
of Bertelsmann

and everyone else and Hummer.

You're talking about a 500
million dollar sink hole.

Perhaps more that
went on for years

after the asset was sold out of
Chapter 7 Bankruptcy.

We went to the uh...

Good job.

Yeah, so thanks...

Wow, man.

I promised, I
promised I wouldn't,

but yeah, uh, and that's
Shawn's fault,

for the record.

- Uh, no.
- That's kind of crazy.

But we went to, we took
this awkward drive

like a year, I think ...

[conversation fades out]

[ping pong ball bouncing]

[no audible dialogue]

We thought about going to
the Supreme Court,

we got advice from the lawyers

that the timing wasn't right.

That we should wait until
there was more decision

in the trial.

Do you regret that?

I regret it now, yeah.

I would have liked to taken it

I would like to have
had a jury trial.

You know, we never had
a jury trial.

is the effective shut down
of Napster.

And what that's going to
do is give birth

to a thousand of Napster spawn.

And these children

are going to be much
better bred.

So once the record companies

went after Napster, did that end

this kind of illegal
music sharing?

This pirated music sharing
on the internet?

Actually,not at all. There's
a theory out there

that piracy will be eradicated

and no one will ever
share a music file.

But that's really a
pipe dream for

[stammer] really
getting everything

getting the internet
under control.

What was seen from piracy,

is that after Napster

people went to other music
sharing software.

Such as Limewire, or Morpheus,
Gnutella or Music City.

Things like that.

A bomb went off and nobody knew

what the hell was happening.

The cat wasn't going
back in the bag.

I don't care how many
people we sued.

I don't care how effective or
ineffective the RIAA

were, was with certain
aspects of it.

It wasn't going back.

People are gonna still
download for free.

It's free! It's free.

It's wrong, but it's free.

If there is an under-net of
piracy, that's something

that our industry has always
had to live with.

The idea is to keep
commercial pirates out

of the marketplace, so that
legitimate commerce

They were saying was it's just a
matter of copyright is
gonna be fixed.

And maintained by, by
some combination of

enforcement and education.

And I said, well this
sounds a lot like

the war on drugs, guys, I mean,
I don't think

this is gonna work.

That certainly didn't.

File sharing services allow for
the illegal downloading

of copyrighted works,
which can get you

into trouble in a hurry.

Many parents may be
surprised to learn

those consequences can
include lawsuits

with penalties and
legal fees costing

thousands of dollars.

Downloading or sharing music
without permission

is not okay.

I don't think people are
stealing music.

I think the record
companies are not

adjusting

to technology.

But rather than adjust

and figure out how to work
with it and use it,

they fought it.

And they started to sue
their customers.

And everything. And I, I think
that alienated them

from both the public
and the artists.

Can you explain again,
[inaudible] what,

if anything, you're doing
to catch thieves?

Well, we have tried to be, uh,
and I think,

have succeeded in being
as responsible

in this space toward
individual users

as anyone could hope to expect

from the music industry.

We have historically been um,
very uh, tolerant of

of downloaders, but
very aggressive

against the uploaders.

We have tried to be focused on
distribution sites

with significant
amounts of music.

I don't think this is about
punishing individuals.

Well, they did. They sued over
18 thousand regular

old normal people and uh,
average settlement size

was about $4000 dollars.

from people who could
hardly afford $4000.

So I don't think that
was a good move.

Particularly from a public
relations perspective.

You don't get your
market to like you

by suing the shit out of them.

I mean what they've done is to,
is to turn an entire

generation of kids into
electronic hezbollah.

Who hate them for
ideological reasons.

I mean I know a lot of
people that, that won't

buy music, period.

Because they don't want to
enrich those people.

And they didn't have to
have it like that.

[music]

Good hard working people all of
a sudden got laid off

as major music industries,
entire floors were turning

I remember, you know,
people who'd been

working so hard, doing
such great work,

there's no longer a need
for them because

the market shrinking
because these people

kind of caved in on
their own greed.

Their bosses, their CEOs, their
rock star A&R people

all of a sudden, realized
they'd been shoveling

a bunch of mediocre crap to
a bunch of people

who they devalued.

But now the people
have a choice.

They can cherry pick
the records.

They now can not have to take
it from you for $22

They can now spend three bucks
on the three songs

that got made into videos.

And everything came loose.

Well it's the perfect storm,
again.

It's three sides really,

when you really think about it.

Free is a pretty big component.

The corporatization of
America and the world

in creative companies.

Right?

And the downsizing of
the structure

of the music companies.

The whole crux of the argument,
I guess, is

that there's great things

about modern technology, music
and there's things that's shit.

And there's great things
about the past,

some of the past stories

had to go because the
people demanded it.

Therein lies the problem.

I think uh, we dropped
the ball you know,

but I-I-I don't see why

we can't read you know,
recapture it to some degree.

But uh, it'll it'll never be
like it was, when we
controlled everything.

Napster ended up,
unfortunately in the strip

they [inaudible] process and
when uh, people like Steve Jobs,

they were so smart and business
smart, that they said

where is talent okay, we hire
the Napster people.

iTunes in the US has an
84% market share

last month for all legally
downloaded music.

I don't think you can point to
any digital music

service that exists now that
doesn't uh, tip its hat

in some way to Napster.

and I, I can tell you
that you know

with the first version of iTunes
that was released,

had shocking similarity to the
UI that Napster was using.

And I don't think that
was accidental.

When we finally, we made
money at Napster.

So, I mean that we, I was left
with pretty significant

legal debt. Um, which was you
know, to the extent

that Napster was like
Napster University.

Was actually not that
different from

the college debt that most kids
would have at that age.

Sort of comparable uh, in scale.

Uh, so, but I had this,
this legal debt

and Fanning wasn't that
much better off.

After Napster was shut down,

Shawn Fanning and I cofounded

a company called Snocap.

Which was Shawn's
attempt to rectify

the rights issues.

Having been a bit disillusioned

with how the case had gone

and the way that the
conversation

and debate had operated at such
a superficial level

I jumped on this idea of
wanting to create

an independent
copyright database

where any rights holder,
independent or otherwise

could register their work.

And the idea was that

everything that was unclaimed,

would be freely sharable

until somebody came in and
said this is mine.

to try to work back
towards a world

where all this
interesting diverse music

would be available.

And it was nice and it made
sense in my head,

but the actual act

of trying to get
everyone to buy into

as an intermediary was an
incredibly challenging

What happened was there was a
lot of excitement

and, and there was a lot of
interest in Snocap

until Steve Jobs came up
with his deals

and the iTune Store. Not
because Snocap

was't a great idea, but
because the industry was

not prepared. They
felt much safer

with one retailer.

And once that happened,

you could just see the air go
out of the tires.

It was, actually, that was one
of the hardest times for me.

I had just, and then you know,
I, I just uh,

'cause I enjoyed it and uh,
eventually started a,

you know, a company, but it
took uh, gaming and

sold it to EA.

I'm very fond of both of them,
personally.

And...

I think Shawn Fanning...

...is coming through it
reasonably well.

I-I-I-I think Sean Parker is
having a difficult time

in ways that you know,
I would too.

I mean it's, first of all, he
was, he was crushed.

And then he came up with
something else

that was great, which was Plaxo,

and it never had the opportunity

to demonstrate that greatness.

and he was crushed again.

And then he attached
himself to Facebook

and has made an absurd
amount of money.

He actually came up with,
I think,

some of the most important ideas

that drove the
success of Facebook.

I mean while he was living
in my apartment.

I, I was there. I
watched it happen.

he's genuinely
trying to reinvent

the music business.

With Spotify.

It seems incredibly archaic that
we've' come this far

and we finally started to
figure out that there's

models like Spotify, models
like iTunes that,

that work, that are
beginning to restore

growth to this industry.

And, and even as all of this is
starting to click,

you still have these
reactionary lawmakers

who think they can legislate

the problem away.

that's somehow gonna
solve piracy.

I mean haven't they
learned anything

from watching the
last ten years.

of peer-to-peer distribution>

It's not connected to any
particular IP address.

It's totally decentralized.

I think of what we've seen
in the last decade

is that this war, which has
basically criminalized a

whole generation is uh,
culture's Vietnam.

Uh, it's been a
complete disaster.

It has not achieved
its objectives.

Which should be to pay artists,
uh.

The only people that have
gotten paid in this war

Who've been waging the
ever-expanding

legal actions against people

using culture the way
technology seems

to encourage them to use it.

There's always this idea
that the format

and the style of the way
people access culture

is gonna destroy an industry,
you know.

So people tend to get like
psychologically

bugged out, you know,
completely not

being aware that the
change underneath

their feet is the way we live.

Alright, here we go.

♪In the squares of the city

We live in a very new world.

You know, technology in the
last ten years,

has turned the world
on its head.

Art and artists are going to
start revolutions

We've already seen it in
the year of 2011.

Art and artists are going to
change governments.

They're going to change the
direction of rivers.

And it's gonna be done
through flash mobs,

file sharing.

People vous le vous-ing
half-way across the world

in a microsecond on their
hand-held device.

Trading music, trading files.

This front of
information in music

it makes, it makes me hopeful

and it makes me sleep
well at night.

In that, the more the
music flows,

the more the information flows,

the more wiki keeps
leak leaking,

the more governments are going
to be hard pressed

to be more transparent.

[crowd singing]

The main thing here is for
people to recognize

That what we're
doing is creating

the foundations of the future

in a very fundamental way.

I mean we are building the
future that we all

might want or might not want.

Depending on our current
vested interest.

And I think that it takes a
really crummy ancestor

to want to maintain his
current business model

at the expense of his
descendants' ability

to understand the
world around them.

And if you really want
to figure out

which side you're on here, ask
yourself you know,

what's gonna make you a
better ancestor?

[music]

The journey was like a, was
like a theme park ride

or something. IT was like
Pirates of the Caribbean.

People just like you know,

weird scary people
popping up at you.

and you're kind of moving
through this thing.

You're not really in control.

we're in like a you know, a
little, little, you know, car

at the top of a giant hill
and we got all the

momentum and inertia
at the start

and the rest of it is just
trying to survive

the downhill, you know,
slope and...

The drunk skiing or the
Pirates of the Caribbean.

Um....

[both laugh]

I don't know, if we found a
good analogy for that

experience, I'd be impressed.

Um, it sort of a...

I get to be Johnny Depp.

Alright.

Who are you?

- I don't know.
- Who else was in that movie?

You know, I had something I
really wanted to say.

I just fucked that all up.

No, but ....I don't even know
if it was important.

If I'd known what it was
actually gonna take

to solve those problems back
then, I probably

never would have done it.

It took, it took that naiveté,

that maybe these were
problems we were capable

of solving at that time.

To even, even you know,

get up in the morning
and go to work.

You're born into the world
thinking that you are uh,

you know, you're entering an
industry that people

understand. Or you're
entering a world

that's been seen before.

And seldom do you,

do you, do you sort of wake up
to the realization

that you're, you're the uh, um

that you're the, the explorer.

In most cases you assume

that um, there is some history.

To what you're doing and that
uh, especially when

When you're that age, and you,
and you find yourself

in an, in an, in a new
industry that's new to you

you assume there must be
someone out there,

who has the answers.

And then you wake up and realize

the answers are being written.

You know you, you are
the precedent.

[music]

the idea itself is out there.
People understand it,

people enjoy it. And so to me,
I mean that was

absolutely worth all of the, the
trouble along the way.

I think um, you know I think
the technology itself

is pretty powerful and
people have shown that
they love it.

And so um, I think you know, it
will always exist.

Regardless of how it evolves
or how it changes.