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Napster The One Time King of the Internet Nilay Sezin Demir Demetrius Lind Mike Walker CIS 2010 - 07/25/2005.

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Presentation on theme: "Napster The One Time King of the Internet Nilay Sezin Demir Demetrius Lind Mike Walker CIS 2010 - 07/25/2005."— Presentation transcript:

1 Napster The One Time King of the Internet Nilay Sezin Demir Demetrius Lind Mike Walker CIS 2010 - 07/25/2005

2 Intro Napster is an online service that allows computer users to share high-quality digital copies (MP3s) of music recordings via the Internet. It provides and index of all the songs available on the computers of members currently logged onto the service. Napster therefore functions as a sort of clearinghouse that members can log onto, search by artist or song title, and identify where MP3s of interest are so that they can download them from another users computer hard drive.

3 Brief History Napster was founded 1999 by Shawn Fanning, then a freshman at Northeastern University in Boston. Fanning wrote a simple program that would search and index music files. By aggregating all the websites in one place, this allowed music fans to easily shift through hundreds of sites. Napster incorporated and began beta-testing its software as downloads. Something happened. Word of mouth spread news of the new killer app.

4 Cont Fanning, only 18 at time, not only spent several months writing the code that would become the utility Napster, but also develop another way of storing the songs on a central computer, the songs live on users machines. This is called peer-to- peer sharing, or P2P.


6 Reasons for the Piracy College students tend to like music Colleges and universities have spent lots of money making high-speed Internet access and computers available to students. College students tend to be comfortable with technologies like MP3. College students tend to have little money

7 Perspective Napster has become one of the most popular sites on the Internet in history. It had its peak in 2000 more than 60 million people using its software that allowed internet users to copy and share music for free. Napster and its founder held the promise of everything the new medium of the Internet encompassed: youth, radical change and free exchange of information. But youthful exuberance would soon give way to reality as the music industry placed a bulls-eye squarely on Napster.

8 **A few months after the RIAA lawsuit was filed, Metallica, a heavy metal band, and rap star Dr. Dre filed separate lawsuits accusing of copyright infringement and racketeering. **The Recording Industry Association of America (RIAA), argued that song swapping via Napster and similar firms has cost the music industry more than $300 million in lost sales.

9 … On July 26, 2000, U.S. District Judge Marilyn Patel granted the RIAAs request for an injunction and ordered Napster to stop making copyrighted recordings available for download, which would have effectively shut down the service by pulling the plug on its most popular feature.

10 However, on July 28, 2000, just nine hours before Napster would have had to shut down, the 9th Circuit Court of Appeals stayed that order, granting Napster a last- minute reprieve until the lawsuits can be tried in court.

11 In its battle with the RIAA, Napster turned to three past rulings on copyright infringement to support its defense: Sony Betamax, the 1992 Audio Home Recording Act, and the 1998 Digital Millennium Copyright Act.

12 Because Napsters MP3 technology has legitimate uses, Napster argued that it should have the same protections as Sony. Napster also sought to apply the 1992 Audio Home Recording Act (AHRA), which permits people to copy music for personal use. Napster attorneys argued that the company has broad protection from copyright claims because it functions like a search engine rather than having direct involvement with music swapping..

13 Despite its claims, Napster was found guilty of direct infringement of the RIAAs musical recordings, and the ruling was upheld on appeal on February 12, 2001. The District Court of Appeals refuted all of Napsters defense tactics and ordered the company to stop allowing its millions of users to download and share copyrighted material without properly compensating the owners of the material.

14 Q : Was that a lawsuit to stop the use of MP3 technology?

15 Transition to Legitimacy After the decision by the circuit court to shut down Napster, the founders decided to retool to become a legitimate business They worked with artists and record companies to provide music downloads legally In August 2004, Napster announced the first portable digital music subscription service

16 Current product offerings Napster membership –Renting music –$9.95 a month for PC –$14.95 a month for mobile players (excludes iPod) –Access to 1,000,000+ songs –When membership ends, user no longer can play music –Some songs not available Napster light –Purchase songs for $0.99 each

17 Reviews PC Magazine, Troy Dreier, 2.15.05 "Being able to download anything you want is really a lot of fun, and means you can take a chance on lesser- known artists without worrying about the usual 99-cents- a-pop cost of buying a track" The New York Times, Wilson Rothman, 3.17.05 " a future in which renting music is standard practice, this concept of ownership may become silly"

18 Business Strategy Our objective is to become the leading global provider of consumer digital music services. We intend to pursue the following key strategic initiative to accomplish our objective: –Continue to Build Our Consumer Brand –Continue to Innovate by Investing in New Services and Technologies –Continue to Pursue and Execute Strategic Partnerships –Continue to Pursue Strategic Acquisitions and Complementary Technologies Questions: –Is this a viable business strategy? –Where will Napster be in five years? Source – Napster 2004 Annual Report

19 Questions ?


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