The Napster Controversy

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Excerpts

Napster was developed by two students of Northeastern University, (Boston), Shawn Fanning (Fanning) and Sean Parker (Parker).One of Fanning's friends had been searching in vain for digital music on the Internet. Fanning, who had an interest in computer programming, decided to help him by writing an Internet-based file-sharing program. Once the program was developed, Fanning and Parker began collecting funds from their friends and families to set up Napster as a start-up...

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Napster supporters claimed that the recording industry was over-pricing its products and that file sharing was the only legitimate way to get music cheaper. RIAA argued that if customers felt the merchandise was over-priced, they were free to decide against buying it. RIAA supporters cited the case of global diamond prices, which were being artificially inflated because they were controlled by an international cartel. They countered that by Napster's logic, it would be ethically right for a person to steal diamonds...

Towards the end of September 2001, Napster agreed to pay $ 26 million to music publishers to end the litigation. Napster also agreed to pay $10 million to the Harry Fox Agency, the licensing arm of the National Music Publishers Association for the future use of copyrighted material. In addition, Napster agreed to pay music publishers one-third of the revenues given to content owners. It was reported that Bertelsmann was providing Napster the money for these deals...