Fanning, Napster enabled computers to share mp3 (compressed music) files over the ‘Net. In effect, Fanning had created a global jukebox of music, and user's no longer had to pay the record industry to use it.
Several major record companies filed a lawsuit against Napster straight after its launch in 1999. By the time an injunction forced Fanning to close Napster two years later, the creation had burned its place into the Internet's history books as the first peer-to-peer application. It also paved the way for digital music's leap into the mainstream: iTunes.
ITunes' launch coincided with Napster's demise in 2001. Never one to miss a digital zeitgeist, Apple's Steve Jobs quickly pounced on the new appetite for digital music (and the long awaited explosion of broadband adoption) by launching the first iPod later in the same year.
As Apple's combined music player, library and store grew apace Napster was still catnapping. During the intervening years Napster became caught in legal wranglings. An American bankruptcy judge blocked the sale of Napster to German media firm Bertelsmann AG in 2002. When Napster was acquired by its eventual owner, Roxio, Inc., in 2003, Apple's iTunes Music Store owned around 70 percent of the online music market.
Roxio wasn't just buying a name when it bought Napster. It bought instant awareness and a shortcut to Apple's lead. According to Adam Howorth, European communications director of Napster, Roxio bought the name "because it is the biggest name in digital music with a 92 percent recognition rate among Internet users." But Roxio was also buying into Napster's infamous past.
Trading on the reputation of the past glories of brand name is a tricky gamble to get right. However, it paid off for VW when it bought and resurrected Audi in the sixties. Famed for fast racing cars (and competitors of Mercedes-Benz), VW made the most of Audi's past performance to successfully enter the luxury market with its newly acquired brand.
But brand success can't thrive on name alone, as Napster found out when it launched Napster 2.0 with the same business model as iTunes. Both sold individual songs for under a dollar a download.
Napster's fortunes began to turn around when it introduced a "Napster to go" alternative. The model works like this: customers can download an unlimited amount of songs from Napster's library for US$ 10 (or GB£ 10) a month. In the words of Napster's latest ad campaign, users can "try before they buy."
But the model has a hefty catch: users don't own the tracks they download. If customers don't renew their subscription every 30 days, they lose their music. The system uses "Janus" technology—software developed by Microsoft to control the distribution and consumption of music. The Janus technology is undeniably clever but it's not without its idiosyncrasies. Perhaps not surprisingly, it's not compatible with the iPod.
From a brand point of view, the Janus technology doesn't sit too comfortably with Napster's brand persona either. Writing by email, Howorth says that the brand values most repeated in Napster focus groups were: "renegade," "credible," and "holding the key to the world's music library." The latter is obviously very positive, but would words like "renegade" or "credible" be part of the brand image of Microsoft?
Many of Napster's current customers probably never even used the original. Fifty-six thousand of its 410,000 users are university subscribers, but there's still a groundswell of ‘Net users who care deeply about Napster's credibility. The Electronic Frontier Foundation (http://www.eff.org/) lists Napster as extinct on its website. Rather derisorily they state that, "Napster 2.0 doesn't share much more than the name and kitty logo with its extinct cousin."
This smaller early-adopter audience counts. In the digital world, they have the word of mouth power to make brands like Google, and more recently, Internet Explorer's latest rival, Mozilla Firefox. It is this same audience that have been adopting other more illegitimate music sharing sites like Grokster, eDonkey and BitTorrent (a peer-to-peer file distribution tool) sites like the now extinct Supernova.
What ever happened to Napster's inventor Shawn Fanning? He went straight with his own legit music sharing system called Snocap. Touting (yet another way) of licensing music, Fanning's Snocap could be an outside bet to take off. But it's probably too little too late. The legitimate music download market seems to be a two horse race between iTunes and Napster, with Apple enjoying the greater lead by far.