0:06 college students are making good use of
0:08 the internet the latest software makes
0:11 it a bit too easy for students to access
0:13 their favorite
0:19 Tunes the main challenge was can this
0:22 thing scale to a massive number of
0:25 users and I just thought okay if this
0:28 piece of code works this is going to be
0:31 huge and I had a moment there where I
0:34 asked myself is it morally
0:37 correct technology is advancing this is
0:40 going to happen anyway you have a
0:42 generation of people now who expect
0:45 their music for free don't care how it
0:50 is I've got good intentions it's very
1:06 in 1998 at Northeastern University a
1:09 freshman sha Fanning began developing a
1:12 computer program called Napster in his
1:14 dorm room he asked for help from Ali
1:17 idar a veteran programmer he knew
1:20 through his uncle and my response to him
1:23 was you need to just concentrate on your
1:26 studies Fanning didn't follow Ali's
1:28 advice he dropped out to focus on the
1:30 program and partnered with fellow
1:32 teenage programmer Shawn Parker to
1:35 release a beta version as it started to
1:37 spread through chat rooms they traveled
1:40 to the Bay Area to grow the business
1:43 initially I was skeptical that gosh I'm
1:47 sitting across from 28 or 19y olds I
1:50 changed my tune once I learned that
1:52 there are already 40,000 people using
1:54 this thing it was one of the first large
1:58 scale peer-to-peer file sharing programs
2:00 it allowed users to access music files
2:02 stored on the hard drives of fellow
2:06 Napster users 40,000 wasn't a big number
2:09 but it was bigger than what I thought it
2:11 was going to be initially which was Zero
2:12 because people weren't willing to open
2:14 up their hard drives what I realized was
2:17 that people's emotional ties to music
2:19 their general interest in music was more
2:21 than enough to overwhelm any kind of
2:23 security or privacy
2:26 concern and in the '90s consumer
2:28 emotional ties to music equaled big
2:31 money no one baded an eye when Puff
2:33 Daddy's record label made two music
2:35 videos featuring elaborate helicopter
2:37 chases in consecutive
2:41 years only the CD boom was from 84 to
2:43 2000 you actually had to drive your car
2:45 to the Tower Records and buy a CD for
2:47 $18 to get the one song you liked and so
2:49 that was a good model it made the
2:50 industry tons and tons of [Music]
2:52 [Music]
2:55 cash selling millions of chumba W albums
2:59 with one good song was an economic boom
3:02 that was pretty much the end of that era
3:04 because very soon afterwards Napster
3:06 really took hold in the Public's
3:09 Consciousness and the consumer realized
3:11 that they could get the music that they
3:14 wanted to hear for free it was on
3:16 college campuses with highspeed internet
3:18 that Napster really took off in the fall
3:21 of 99 so uh how many MP3s do you have on
3:24 your computer about 600 maybe like a 100
3:27 or something uh 6 or 7,000 Napster
3:30 Napster Napster it's called old file
3:32 sharing seen by some as the wave of the
3:35 future it was very exciting we knew we
3:36 were building something that was going
3:38 to be big ladies and gentleman creative
3:41 Napster Sean Fanning when I first heard
3:44 about Napster I recall my impression
3:47 having two different elements one
3:49 being this is incredible it's
3:51 revolutionary and things will never be
3:54 the same again in the music industry and
3:55 the other
3:58 being this is going to destroy the
4:01 recording industry no longer do you have
4:03 to go to a store and plunk down money
4:06 and so months after napster's rise the
4:09 recording industry began a long legal
4:11 battle to stop it they're waging a war
4:13 in the courts over who controls what
4:15 artists create we've heard that we
4:17 couldn't survive before when we had
4:20 700,000 members and when we had 17
4:23 million members we felt pretty strongly
4:25 that digital distribution was going to
4:28 bring the industry closer to its
4:32 customer and in instead of killing it
4:34 they would take advantage of the value
4:36 that it brought but to record companies
4:39 whose artists range from Tony Bennett to
4:41 Metallica this new technology in the
4:43 wrong hands is simply stealing business
4:45 model built on infringement is not only
4:48 morally wrong but legally wrong at the
4:50 time the recording industry Association
4:52 of America was reporting about $15
4:55 billion a year of Revenue in the us
4:57 alone anybody with enough money could go
5:00 and make a record but didn't guarantee
5:02 you getting into stores which was the
5:04 only place that you could actually buy
5:06 that record that was the power of the
5:09 music business the distribution sell it
5:11 the issue made its way to Capitol Hill
5:13 Napster hijacked our music without
5:15 asking a chorus of studies show that
5:17 Napster users buy more records as a
5:20 result of using Napster Hank Barry a
5:23 lawyer came on to act as CEO as the
5:25 fight intensified we were trying to
5:28 negotiate with the labels we were trying
5:30 to fight the court case and trying to
5:32 keep the system working all at the same
5:34 time we had a limited amount of time to
5:36 make that happen and we just didn't get
5:38 that done within the period of time that
5:40 we that we had the free music service
5:43 run by Napster was ordered to stop the
5:47 music in July of 2001 after more than a
5:49 year of legal battles the internet
5:52 startup which at its peak had about 70
5:55 million registered users shut down its
5:56 entire network in response to court orders
5:59 orders
6:02 we accurately estimated that the courts
6:03 would say you just don't have the right
6:06 to give away all this stuff and so we
6:08 were perhaps a little smug and confident
6:10 in the belief that the courts would say
6:12 it's not that and people would stop
6:16 doing it we didn't really factor in
6:19 the consumer
6:22 adoption the youthful lack of respect
6:26 for copyright and the
6:29 anonymity com would combine to make it
6:32 pretty Unstoppable as a model the
6:34 industry may have crushed Napster but
6:37 the idea had taken hold and a flurry of
6:39 other downloading Services took its
6:42 place it's free and it's easy and you
6:44 know it's wrong yeah but a lot of people
6:46 do it pretty much everybody does
6:49 desperate to stem the tide the labels up
6:52 the stakes and sued almost 20,000 people
6:55 for using illegal downloading software
6:56 legally downloaded music is the same
6:58 thing as going into a CD store in the
7:01 city but CD sales continued to plummet
7:03 shuttering record stores across the
7:06 country an industry in turmoil so when
7:09 Steve Jobs came to the table with plans
7:11 for a new online music store the major
7:14 labels finally surrendered the thing
7:17 they had fought so hard to maintain the
7:19 distribution you had only two choices
7:21 either you don't do a deal with Steve in
7:23 which case people continue to just email
7:25 the mp3s to their friends or you do a
7:28 business with him and he has a store and
7:30 then you can sell things things this
7:32 week Apple computer launched its iTunes
7:34 music store and they are hoping that
7:36 this is an answer to some of the piracy
7:38 that is going on online over the next
7:41 several years digital sales boomed more
7:44 than billion songs but today even the
7:46 iTunes model is threatened by the
7:49 shifting Sands of music distribution
7:51 download sales are declining as online
7:54 streaming services like Spotify gain
7:57 popularity and as the industry reels
8:00 corporate Brands see marketing opportuni
8:02 with the energy drink company Red Bull
8:05 even starting its own record label who
8:07 knows 5 years from now if anybody's
8:09 going to buy music anymore but maybe
8:11 they are streaming it which you see on
8:13 the Spotify and and the YouTubes of the
8:16 world those those numbers keep going up
8:18 and up and up a recent study found that
8:21 the most popular way for 12 to 24 year
8:24 olds to discover new music is the online
8:28 video website YouTube it used to be that
8:30 the only way that you could do this free
8:32 music sampling was through downloading
8:34 illegally now there's other ways to
8:37 sample music for free consumers also use
8:40 YouTube to upload and share music some
8:42 of which they don't own the rights to
8:45 when YouTube first started my view was
8:49 that it was actually worse than Napster
8:50 this should
8:54 be easy to shut down but after legal
8:56 challenges the company emphasized its
8:59 efforts to try to stop infringement
9:00 offering in the copyright owner the
9:03 chance to take a video down or run ads
9:05 against it the growth of Music on
9:10 YouTube has been 100% organic and driven
9:14 by the community by artists by fans the
9:16 part that wasn't organic was YouTube's
9:19 partnering with the music industry to
9:21 enable the usage of copyrighted Works
9:23 some in the music industry say the
9:25 money-making potential of YouTube has
9:28 yet to pay off for many artists but
9:30 today the industry is largely embracing
9:33 online platforms and their communities
9:35 as a form of distribution that can't be
9:38 ignored and they are not the only ones
9:40 many many records are made by people in
9:43 their garages basements or bedrooms and
9:45 the distribution is there they'll make a
9:47 video they'll stick it on YouTube and if
9:54 [Music]
9:57 it m lemore and Ryan Lewis jumpstarted
10:00 their career without a record label when
10:03 their video went viral on YouTube you
10:06 have artists like M lemore who was able
10:08 to reach millions and millions of fans
10:11 before getting to radio he would have
10:14 had a very difficult time achieving that
10:18 if you were to rewind back to the
10:21 9s for many others streaming services
10:23 hurt their bottom line royalties are
10:26 small fractions of what artists once
10:28 made from sales and some musicians have
10:30 had to Grapple with this new reality
10:32 more than [Music]
10:36 [Music]
10:38 others I I haven't seen much money from
10:41 record sales Spotify and Pandora and all
10:43 that stuff is great but again the amount
10:44 of money I received from that is very
10:47 small we're really very happy to be here
10:49 with Miss Emy L Harris Robert Ellis is a
10:51 singer songwriter who's released
10:53 critically acclaimed albums and tours
10:55 with the likes of Willie Nelson and Emmy
10:58 Lou Harris in the last few years we've
11:00 been on the road pretty much non-stop I
11:02 think we did 290 something days last
11:04 year I would say touring represents
11:07 probably 100% of my income when I was a
11:09 kid if I had told myself what I was
11:11 doing now I would think that I'd be
11:13 making a lot more money than I am
11:16 yeah music is as important if not more
11:18 important than it's ever been I think
11:20 the challenge is of finding ways to
11:24 monetize that importance Napster might
11:28 have hurt recorded music sales but it's
11:30 the respon responsibility of the
11:33 industry to figure out how to extract
11:36 their value out of each generation this
11:38 happens in every industry the Rocky
11:39 Mountain news published its final
11:42 Edition Blockbuster Video is no more
11:45 borders is going into liquidation music
11:47 was the first industry that really had
11:51 to confront the idea of free content
11:52 music was at the Forefront of it whether
11:55 it liked it or not [Music]
