Napster — The File-Sharing Service the Courts Shut Down

Napster let people search for MP3 music files stored on other users' computers and copy them. According to the English Wikipedia, Shawn Fanning and Sean Parker launched it in June 1999; the federal district court described it as the brainchild of a college student who wanted to make it easier to swap music with his roommate. Within six months 18 record companies had sued, and after an appeals ruling in February 2001 its file transfers stopped in July 2001. They never resumed.

Apart from the launch, the dates are taken from the court rulings and orders.

An index on the server, transfers between users

The 2001 appeals ruling described how Napster worked. A user downloaded Napster's free MusicShare software from its website and registered a user name and password. Users could make the MP3 files on their own hard drives available to others; a search by song or artist went to a Napster server, which returned a list of matching file names from its index. The files themselves did not pass through the servers. Napster's servers passed on the internet address of the user who held the file, and the two computers connected directly to copy it. The court called this file sharing "commonly called 'peer-to-peer'".

The court also quoted the district court's finding that the servers did not search the contents of MP3 files, only a text search of the file names users had given them. That point later shaped the dispute over whether infringing files could be blocked by notices and file-name matching.

Rapid growth, and the lawsuits

According to the district court's order of 10 August 2000, Napster's internal documents projected 75 million users by the end of 2000 and estimated that, even without marketing, its "viral service" was growing by more than 200 percent a month. About 10,000 music files were being shared every second, and more than 100 users tried to connect every second. The court put Napster's value, measured at least in part by its user base, at between $60 million and $80 million; in May 2000 the venture firm Hummer Winblad had bought a 20 percent stake for $13 million.

On 6 December 1999 A&M Records and 17 other record companies sued Napster for contributory and vicarious copyright infringement, among other claims. On 7 January 2000 Jerry Leiber, Mike Stoller and others filed a suit on behalf of a putative class of music publishers. On 26 July 2000 Chief Judge Marilyn Hall Patel granted a preliminary injunction barring Napster from facilitating the copying or distribution of the plaintiffs' music without the rights owners' express permission. Two days later the Ninth Circuit stayed it pending appeal.

The ruling of 12 February 2001

The appeals court first considered what users were doing. Napster argued that sampling songs before buying them and "space-shifting" music a user already owned on CD were fair uses. The court held that once a user lists a song on Napster it becomes available to millions of others, which distinguished the case from the Supreme Court's Sony decision on video recorders and from the Ninth Circuit's own decision on the Rio portable MP3 player, and it upheld the finding that users were unlikely to have a fair use defence.

It then held that Napster was likely liable for both contributory and vicarious infringement. Napster had actual knowledge that infringing material was available and materially contributed to the infringement; it also had the right and ability to police its system, failed to use it, and benefited financially from the infringing files.

But the court also said that imposing liability merely because a network allows infringing use would violate Sony. Contributory liability arose when Napster received knowledge of specific infringing files and failed to remove them. Finding the injunction overbroad because it placed the entire burden on Napster, the court sent it back so that plaintiffs would first have to give notice.

Shut down in July 2001

On 5 March 2001 the district court issued a modified injunction. Rights holders had to give the artist, title, proof of ownership and the names of files on the index; Napster had to keep searching its index and block files containing the noticed works. According to the 2002 appeals ruling, the district court monitored compliance for three months through regular reports and a technical adviser, and concluded that infringement of noticed works was still occurring.

Napster disabled its file transfers itself to install and debug a new filter that used audio fingerprinting and was not fooled by variations in file names; users could still upload files and search the index. The district court ordered Napster to keep transfers disabled until it could show that the new system would screen out noticed works with sufficient reliability. Computerworld reported in March 2002 that Napster had closed its file-trading network in July 2001, and that at its height the service claimed as many as 60 million users.

On 25 March 2002 the Ninth Circuit affirmed both the modified injunction and the shut-down order.

What became of the name

According to Variety on 25 March 2025, the original Napster was sued into bankruptcy, after which the brand was relaunched and passed through several owners; Best Buy sold it to Rhapsody in 2011. Hivemind Capital Partners and the blockchain company Algorand acquired it in May 2022, and in March 2025 Infinite Reality bought it for $207 million. Variety described today's Napster as a fully licensed music service with 110 million tracks in 34 countries.

After Napster stopped, the story divided: other file-sharing software such as Japan's Winny, music stores licensed by the record companies such as iTunes, and later streaming services such as Spotify.

For the wider story of networks, see the timeline of the internet and the web.