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168 <CENTER>Copyright 2000 <B>Newsweek</B> <BR
169 rizwank 1.1 class=br><B>Newsweek</B></CENTER>
170 <CENTER><BR class=br><B>June</B> 5, 2000, U.S. Edition</CENTER><BR
171 class=br><B>SECTION:</B> SCIENCE & TECHNOLOGY; Pg. 46<BR class=br><BR
172 class=br><B>LENGTH:</B> 2918 words<BR class=br><BR class=br><B>HEADLINE:</B> The
173 Noisy War Over Napster<BR class=br><BR class=br><B>BYLINE:</B> By Steven Levy;
174 With Brad Stone in Silicon Valley, N'Gai Croal, Jennifer Tanaka and Arian
175 Campo-Flores in New York, Jamie Reno in San Diego, Andrew Murr in Los Angeles
176 and Pat Wingert in Washington, D.C.<BR class=br><BR class=br><B>BODY:</B><BR
177 class=br>Meet the Napster Generation. Rachel is 14, an eight grader in Potomac,
178 Md., who loves lacrosse, basketball and guitar. Listens to 'N Sync. Like
179 millions of her peers with a computer and a clue, she's been using a program
180 called Napster to download free music from the Internet, "because teenagers
181 don't have that much money," she says. She doesn't think it's wrong to use
182 Napster. "People don't think it's anything bad," she says. "Or think about it at
183 all." Smitha, a high-school student in Falls Church, Va., credits Napster, which
184 gives her almost unlimited musical choices with a mouseclick, for expanding her
185 musical horizons and "definitely" changing her buying habits. "I haven't
186 purchased a CD in quite some time," she says.<BR class=br><BR class=br>Nor has
187 Alejandro, a student at Stuyvesant High School in New York City, who downloads
188 music while he sleeps. "Napster's the best thing ever created," he says. "I
189 don't have to spend any money." Daniel, a Stanford comp-sci major, agrees: "I
190 rizwank 1.1 think almost all college students use it right now." The ethics issues of
191 Napster don't bug him. "The main thing," he says, "is convenience."<BR
192 class=br><BR class=br>Steve Bass does feel guilty about using the software. But
193 then, he's 50, way past the age of senior citizenship in the Napster Generation.
194 A Pasadena, Calif., writer and musician, he gets jazz tunes from Napster.
195 "Morally, I've gotta stop," he says. "I've got a real conflict." <BR
196 class=br><BR class=br>But conflict is what Napster, a deceptively simple
197 computer program that's turned the Internet upside down, is all about. Conflicts
198 between listeners and record labels, labels and dot-coms, even artists against
199 their audiences. According to one's point of view, Napster is a terrific way to
200 acquire digital files that play tunes or a satanic jukebox that enables piracy
201 on a scale not seen since Jean Lafitte cruised the seas. And sure enough, the
202 popularity of Napster, the fastest-growing program in the highly incendiary
203 history of the Internet, is tied to getting something for nothing. Napster
204 allows you to search for almost any song you can think of, finds the song on a
205 fellow enthusiast's hard drive and then permits you to get the song for
206 yourself, right now. For the unbeatable cost of free, nada, gratis, bupkes,
207 zero.<BR class=br><BR class=br>That's right. When you use Napster you simply
208 download the program into your computer, make up a weird name for yourself and
209 look for whatever song you want. Obscure Dylan tunes. "These Boots Are Made for
210 Walkin'." "American Pie," by Madonna or Don McLean. Within seconds you'll
211 rizwank 1.1 probably see a number of other users who have the song in the MP3 digital
212 format. One click of the mouse and your computer hooks up with the one you
213 choose, sucking up the bits that will allow you to play back the song on your
214 computer, on a Walkman-like MP3 player or even on a CD that you might "burn"
215 yourself. Fee to you: nothing. Royalties to artist, record company, songwriter:
216 nothing. Guilt: optional.<BR class=br><BR class=br>The record companies are
217 apoplectic. "The people who are on the board of directors and in the upper-level
218 management of Napster all belong in prison," says Howie Klein, the president of
219 Reprise Records. The Napster people, however, are not in prison: they're Silicon
220 Valley heroes who have gotten $15 million in venture-capital funds. The downside
221 is that they have no business model and are targets of several lawsuits charging
222 them with copyright infringement and racketeering, including one by chest-baring
223 heavy-metal rockers Metallica.<BR class=br><BR class=br>But that hardly matters.
224 The fight over Napster has taken on a larger dimension, involving the future of
225 music publishing, copyright law, 21st-century ethics and the relationship of
226 artists to their audience. Pamela Samuelson, codirector of the Berkeley Center
227 for Law and Technology, fears a "civil war" between artists, technology
228 companies and desperate "copyright holders who want to control it all." For a
229 few years now, the emergence of friction-free Internet pathways has raised a
230 raft of questions about the future of entertainment and media, with no shortage
231 of Chicken Little cyberpundits predicting an intellectual-property
232 rizwank 1.1 apocalypse#151;for music and everything else. But it took Napster to actually
233 bring down the sky. And though there's hope that things will ultimately work
234 out, right now no one is quite sure how to pick up the pieces.<BR class=br><BR
235 class=br>Sitting at the center of all this controversy is Napster's creator: a
236 slouchy, bullet-headed 19-year-old college dropout who suddenly finds himself
237 the hottest star in the world's hottest industry. One evening last week Shawn
238 Fanning steps out on the roof of his company's building in San Mateo#151;a drab,
239 five-floor structure with a drive-through ATM and a red Union Bank sign on the
240 facade#151;and squints at the sun while being interviewed by NEWSWEEK and
241 photographed by Rolling Stone. At that very moment, a 30-minute MTV special on
242 Napster is being shown to all of America, but he decides not to watch. "The
243 media attention doesn't seem real," he says. As the photographer shoots,
244 college-age Napster employees toss bean bags at him. It's just another night in
245 Silicon Valley.<BR class=br><BR class=br>Only a year ago, Fanning was an obscure
246 freshman at Northeastern University in Boston. After surviving a difficult
247 childhood#151;his family was on welfare during his early years, and at one point
248 he and his siblings were briefly shipped out to a foster home#151;he was a
249 determined kid, according to his uncle John Fanning. The uncle had suffered a
250 similarly rocky beginning and took an interest in his nephew, letting him work
251 at his computer-game company near Cape Cod and purchasing a PC for him.
252 According to Uncle John, Shawn applied to only two schools because he didn't
253 rizwank 1.1 have the $40 application fee#151;he was too proud to ask his uncle for the
254 money#151;and one, Carnegie Mellon, turned him down.<BR class=br><BR
255 class=br>Before finishing his freshman year, Shawn was bored and "partied out"
256 at Northeastern, and spent much of his time on IRC, an Internet chat system. One
257 IRC friend, Sean Parker, 20, lived in Virginia; another, Jordan Ritter, 23, was
258 also in Boston. Fanning had noticed that his college roommates were into trading
259 digital tunes on the MP3 format with each other but had difficulty finding files
260 they wanted. He suggested the trio create a way for people to search for files
261 and talk to each other, "to build communities around different types of music."
262 File-sharing was almost an afterthought.<BR class=br><BR class=br>While writing
263 the program#151;dubbed after his childhood nickname, from hairier
264 days#151;Fanning spent "all waking moments on software." At first, he says, "we
265 were just thinking of this as a cool project"#151;but they needed money for
266 equipment and high-speed connections. Parker and Fanning's uncle convinced him
267 it should be a business. The program went up in September 1999, and people
268 instantly took to it, quickly creating a critical mass of tunes. As the audience
269 grew#151;"we were doubling in users every five to six weeks," says John
270 Fanning#151;the company found an angel investor, an interim CEO and a new home
271 in Silicon Valley.<BR class=br><BR class=br>Fanning's program came at a pivotal
272 moment. Ever since the VCR, the march of technology has created controversy over
273 the way people make copies of artistic works. Film and TV studios hated the
274 rizwank 1.1 device, and tried to litigate it out of existence#151;an effort that ended with
275 a Supreme Court ruling that consumers were allowed to copy television shows for
276 personal use. (Now, of course, those same studios make the bulk of their profits
277 from the device they tried to kill.) The use of the audiocassette was viewed
278 with similar panic. But piracy from those media was limited by the difficulty of
279 making multiple copies. The Internet changed that#151;it allows fast, unlimited
280 file distribution, especially with high-speed connections. Still, anyone who
281 tried to use the Net to sell illegal digital copies of songs or films was
282 clearly breaking the law.<BR class=br><BR class=br>But because Napster simply
283 allowed users to share their personal files with each other, Fanning and this
284 new company claimed they were kosher. It's the digital equivalent of the piano
285 player in the brothel: hey, we don't know what goes on up-stairs. But that
286 excuse went only so far, especially as the record companies began to notice that
287 the Napster Generation had commenced swapping files en masse. Whereas most
288 start-ups get changed by the arrival of the suits, Napster had to face the
289 arrival of the lawsuits.<BR class=br><BR class=br>First came a filing from the
290 Recording Industry Association of America (RIAA) for copyright infringement.
291 Then the heavy-metal Metallica crew found their music downloaded on Napster and
292 were furious#151;they had their lawyer file another suit. For good measure they
293 sued some of the universities whose students used Napster, including Yale and
294 the University of Southern California. Further, the band took the drastic step
295 rizwank 1.1 of collecting the handles of 300,000 users who had allegedly downloaded
296 Metallica songs, demanding they be removed from the system. Drummer Lars Ulrich
297 personally delivered the names. Another suit was filed, by rapper Dr. Dre. (All
298 are currently pending.)<BR class=br><BR class=br>Meanwhile, Napster's popularity
299 kept increasing. At one point the program became so widespread that some
300 colleges banned it#151;users were gobbling up more than half the computer
301 resources of some schools, just swapping tunes on Napster. Log on at a given
302 moment, and you could find about a million songs available for instant
303 downloading.<BR class=br><BR class=br>And now Fanning is sort of a rock star
304 himself, albeit of the Silicon Valley variety. Instead of a villa in the south
305 of France, he lives with Parker in a dormlike apartment a couple of blocks from
306 the office. Two other Napster employees sleep on the floor every night. Fanning
307 spends what little time he has outside work lifting weights at 24 Hour Fitness,
308 every night between 11 and 2. He doesn't go out much. "San Francisco would be OK
309 if I had a fake ID," he says. Fanning and his partners did make a trip to
310 Berkeley last week to see the Smashing Pumpkinsand ran into lead singer Billy
311 Corgan backstage. They talked for an hour. "He was a huge supporter#151;he
312 totally understands how it evolves," Fanning gushed to a friend.<BR class=br><BR
313 class=br>Indeed, how Napster evolves is the big question for Fanning and
314 partners. That's why the recent $15 million investment by the big-shot Silicon
315 Valley venture-capitalist firm Hummer Winblad was so important. Other firms,
316 rizwank 1.1 nervous about the lawsuits, had demurred, a startling occurrence in an
317 atmosphere where a few million bucks of VC money can be obtained by some nerd's
318 vigorous sneeze. Hummer Winblad installed one of its VC's, Hank Barry#151;a
319 former copyright lawyer#151;as the new CEO. "We're trying to build a bridge to
320 everybody involved in Napster," he says. "From music educators and users to
321 record companies." Especially the latter. Barry's already been active in trying
322 to reach a truce with the music industry, calling RIAA president Hilary Rosen
323 and even Metallica. "He asked for a dialogue," says Ulrich. "It's a weird
324 situation, though, because we're in the middle of putting him out of
325 business."<BR class=br><BR class=br>Many observers think that Napster's outlaw
326 rep has permanently tainted the company. Some of the preliminary rulings have
327 gone against it, more than 120 universities have banned it for legal reasons
328 (including those sued by Metallica, which dropped them from the suit) and more
329 bad news have come with a recent survey. Napster supporters had insisted that
330 its users might actually buy more CDs after risk-free sampling of downloaded
331 tunes. But a recent study, using the definitive SoundScan
332 music-sales-measurement system, concluded that while overall CD sales have been
333 significantly up, purchases have tanked at stores near college
334 campuses#151;Napster country.<BR class=br><BR class=br>The "civil war" Samuelson
335 referred to may have already begun. Not only the business people are taking
336 sides, but the artists themselves. Napsterites like Limp Bizkit's frontman Fred
337 rizwank 1.1 Durst, whose free summer tour will be funded by the start-up, are excoriated by
338 industry types. "Is [Durst] saying only kids with computers should get [his
339 music] for free?" jokes Val Azzoli, co-CEO of the Atlantic Group. "He should
340 give his music away for free at every retail store in America! The schmuck!"<BR
341 class=br><BR class=br>While so far only Metallica and Dr. Dre have taken the
342 step of moving against their fans, their lawyer Howard King says that at least
343 five other artists have contacted him. Meanwhile, Ron Stone, manager of artists
344 like Tracy Chapman and Bonnie Raitt, insists that the entire Napster movement is
345 little better than thuggery. "Basically they're saying our art is worthless,
346 it's free for the taking," he says. "Music used to be a collectible, now it's a
347 disposable." With a few other artists and managers, he's starting an ad-hoc
348 committee called Artists Against Piracy. Somehow it doesn't have the ring of
349 Save the Rain Forest.<BR class=br><BR class=br>But even if the music industry
350 succeeds in killing Napster, it is faced with a series of imitators, some of
351 whom are even scarier from an industry point of view. In a way, Napster is a fat
352 target for attackers: it uses a centralized database, which allows the company
353 some control over its users. (And keeps a list of transfers handy for potential
354 litigants.) But with some newer systems, the searching is done in a distributed
355 manner that can't be shut down or modulated. One of these systems is Gnutella
356 (pronounced New-tella). Unlike Napster, Gnutella could be used to exchange not
357 just music files but any files, including movies, text and photos#151;a
358 rizwank 1.1 copyright holder's nightmare.<BR class=br><BR class=br>Amazingly, the program
359 was written by Justin Frankel, a well-known programmer at Nullsoft, a company
360 owned by America Online#151;which is in the process of purchasing Time Warner,
361 the world's biggest collection of music labels. Within hours after Gnutella was
362 posted on the Nullsoft site, AOL executives had it withdrawn. But the code
363 circulated through the Net and now hundreds of programmers are supporting an
364 active Gnutella community. If Napster is shut down, says Gene Kan, one of these
365 pro bono developers, "the postapocalyptic pirates are going to be using
366 Gnutella."<BR class=br><BR class=br>Even more radical is Freenet, created by
367 23-year-old Ian Clarke, an Irish computer scientist living in London. His
368 program is not only decentralized but has safeguards to protect the privacy and
369 identity of users. The actual files to be downloaded will be encrypted and then
370 randomly distributed among the community of Freenetters, who won't even know
371 what information is stored on their own disks. (Could be songs, could be kiddie
372 porn.) File transfers will be untraceable. Clarke's motives are
373 political#151;his dream is to liberate intellectual property. "My opinion is
374 that people who rely on copyright probably need to change their business model,"
375 he says.<BR class=br><BR class=br>Most observers, however, are more sanguine
376 about the eventual outcome of the Napster Wars. Even the most virulent opponents
377 of the software can recognize the popularity of Shawn Fanning's creation.
378 "Despite all their scary characteristics, people love this stuff," says
379 rizwank 1.1 Samuelson. And just about everybody agrees that eventually the labels should
380 muzzle the lawyers and view the Web experiments as potential partners. "How many
381 industries try to kill off their biggest distribution channel on the Internet?"
382 asks Gnutella developer Kan.<BR class=br><BR class=br>In fact, a number of
383 Napster spinoffs intend to work within the system, getting licensing deals from
384 record companies. One of these is Scour.com, whose key investor is superagent
385 Mike Ovitz, who first heard of the company, founded by UCLA students, by reading
386 the college paper. Ovitz notes that as a talent representative, his interest is
387 in helping artists make the most of the new technologies. He thinks that
388 eventually money will flow to those artists from models other than direct
389 payments. "I'm looking at radio, sponsored shows, advertising-driven models,
390 subscriptions," he says.<BR class=br><BR class=br>Rob Glaser, CEO of
391 streaming-audio leader Real.com, thinks that when the record companies come to
392 their senses and figure out ways to work with the Internet (expect some efforts
393 by the year-end), the worst problems will fade. "All the illegal activity ends
394 when prohibition ends," he says. "When there's a legal way for people to get
395 what they want, mass bootlegging will recede."<BR class=br><BR class=br>The
396 expectation is that music will become cheaper, and there will be more of it
397 around, and it will be easier to find. But before that happens, the wars have to
398 quiet down. The lawsuits have to be dropped. And the file-swappers have to come
399 to grips with the fact that free isn't forever.<BR class=br><BR
400 rizwank 1.1 class=br>Meanwhile, the Napster Generation keeps searching for tunes, keeps
401 downloading them and doesn't bother with concepts like intellectual property. "I
402 sympathize [with bands, labels and music publishers] in the capitalist sense,
403 but the technology isn't stoppable," says <B>Rizwan</B> Kassim, a 19-year-old
404 sophomore at UCLA. Kassim's own experience is instructive. As one of the alleged
405 violators identified by Metallica, his account was shut down by Napster. But
406 Kassim simply began a new one under another name, and kept on downloading. He
407 also stopped listening to the band, in any format, deleting all his Metallica
408 tracks from CDs he burned using Napster.<BR class=br><BR class=br>In a final
409 flourish, he took the one legit Metallica CD he owned and auctioned it on eBay.
410 "I think I got a couple dollars for it," he says.<BR class=br><BR class=br>At
411 least someone is paying for music in the Age of Napster.<BR class=br><BR
412 class=br><BR class=br><BR class=br><BR class=br><B>GRAPHIC:</B> GRAPHIC:
413 (Diagram) How Napster Nabs Tunes (Graphic omitted); GRAPHIC: (Chart) Battle of
414 the Bands Gets Bloody (Graphic omitted); PHOTO: EASY LISTENING: Rob Bies, 17,
415 catches some good vibrations at home in Delaware using a computer hooked up to
416 the Internet; PHOTO: NAPSTER GENERATION: Freshmen Netizens tune in to digital
417 vibes at Wesleyan University in Connecticut; PHOTO: GET WITH THE PROGRAM:
418 Nineteen-year-old Napster creator Fanning (left) and Michael Robertson, head of
419 digital music site MP3.com, helped start the revolution<BR class=br><BR
420 class=br><B>LOAD-DATE:</B> June 1, 2000 </DIV><BR><BR><BR><BR>
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