The Napster Controversy

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Themes: Ethics in Business
Period : 2000
Organization : Napster.com Recording Industry Association of America
Pub Date : 2002
Countries : India
Industry : Media, Entertainment & Information

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Case Code : BECG007
Case Length : 07 Pages
Price: Rs. 200;

The Napster Controversy | Case Study



"If a new technology has a single present or potential legal use that is of social or commercial importance, then there cannot be a bar against the use of that technology."


- Napster sources, in 2000.

"Napster is not a technology. It is a business created to facilitate the anonymous theft of music."


- Sources at the Recording Industry Association of America (RIAA) in 2000.

The Napster Controversy: RIAA vs. Napster

In the summer of 1999, a website, www.napster.com, was launched in the US - and the global music industry was changed forever. Napster was a system which enabled musicians and music fans to locate music available in the MP3, and WMA1 music formats.

The website made it possible for its users to freely share their music files through the Internet with other users all over the world. Napster maintained a database of music files held on the computer hard-drives of other registered Napster users.

A user, looking for a particular song, sent his request to Napster. The software then checked the availability of that song with this database, and if available, sent it to the user who requested the song.

The service became extremely popular within a short span of time. The website attracted 1.6 million simultaneous users during the height of its popularity in February 2000.

Napster's offering of this 'peer-to-peer' technology was strongly condemned by the Recording Industry Association of America (RIAA), a trade group representing the world's biggest record labels, Universal Music, Sony Music, Warner Music, EMI Group and Bertelsmann AG. RIAA alleged that Napster was engaging in or assisting others in copying copyrighted music without payment or the express permission of the rights owners. RIAA also claimed that Napster would significantly harm the sales of the recording industry. In December 1999, the body sued Napster in the Federal District Court for copyright infringements and petitioned the court to shut down the website.

The legal battle was covered extensively in the global media. In the beginning of July 2001, Napster had to stop offering its services due to certain technical problems. While the company was working towards setting the problems right and resuming operations, in mid July 2001, a District Court Judge order barred Napster from offering the file-sharing service. Even as Napster users strongly protested against the order, the company appealed the ruling before the US Court of Appeals in San Francisco. The Appeals Court granted Napster temporary reprieve against injunction until a further review of the injunction request.

What followed was a highly publicized struggle between the recording industry and Napster and other websites offering such services. The controversy raised several questions regarding the impact of the emergence of newer technologies like Napster on the traditional modes of conducting business. Was the recording industry using its financial power to suppress technological innovations in the music business? Or was Napster wrong in allowing people across the globe to access music without paying for it and without the artistes' permission? The case eventually came to be seen as a struggle by the powerful entertainment industry against a new technology threatening it.

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1] MP3 is a computer software compression scheme that allows the digital music in compact discs to be shrunk to a tenth of its size. WMA indicates music files encoded in the Windows Media Player format, which takes half the storage space of MP3 files.