Digital Disruptors

The Story of Napster – Part One

The history of the ultimate digital disruptor - Napster.

In the ’90s, it was a great time to be in the music business. Things were booming. And as a result, there were expensive parties, big launches. That was part of the culture.

This was the era of NSYNC and the Backstreet Boys. This was the era where a single hit could sell 10 million albums plus. Artists were just printing money. Artists had the great sales of CDs over that period dwarfing whatever had happened in the industry before. The profits coming in were massive. It was a hell of a lot of fun.

Birth of the MP3

We really didn’t foresee the change in the technology. We’ll be telling you tonight about a method of compressing audio data called MP3. And that was the end of everything we know. The birth of the MP3 was a seminal moment for all of media and entertainment. It would completely change the music industry. It opened up people’s minds to what the future would be.

The music industry is not viable. Movies, books, television, nothing creative had any value then. The music industry simply did not embrace the magnitude of the change and it failed. You can’t fight progress. You can’t fight technology. The MP3 totally changed people’s relationship to the internet, to culture, to how society works. It’s a fact that was so much bigger than just the music industry.

The story of the MP3 really begins in West Germany back then in the early ’80s and even late ’70s. People started trying to compress music. Dieter Seitzer was a visionary who came up with the MP3. He was seeing the original digitization of music with a compact disc and thinking, instead of manufacturing millions upon millions of plastic discs, why don’t we store all the data in one centralized computer and then stream it to people in their homes. So, he applied for a patent to use the phone system to transmit music. In 1982, that’s when they had this idea. But they had a huge problem.

The compact disc took about a million bytes of information to store one second of audio. And the pipe they were trying to send it through, the telephone, could only do about 128,000 bytes. For this to work, they somehow had to magically shrink the size of the compact disc by 90% or more. The patent examiner looked at it and said, “No, it’s not possible.” Essentially, almost everyone thought this was impossible.

There’s no way to do this. But around 1987 or 1988, Dieter Seitzer’s brilliant graduate student, Brandenburg, made a breakthrough by taking advantage of this sort of obscure academic discipline – Psychoacoustics (the study of how the ear perceives sound).

The Era of Peer to Peer

By 1998, the pirates found out that music can be listened free of cost in computer. Dan Tsurif was the early mp3 pirate. He was the founder of mp3 piracy group known as ‘Audiopunks’. This group specialized in everything from punk rock, to ska, to hardcore and heavy metal. They had downloaders from Indonesia, Japan, or Russia and many more countries. People were downloading from his group. This wasn’t called piracy in that time but rather it was file sharing

The latest advance, called MP3, comes via the internet. It was the future of music and audio. There were millions of people out there who not only understand what digital downloading technology is about, but who use it daily to great personal advantage. There wasn’t any panic in the industry in the early days.

Some people took this thread as an opportunity. People used to call it the celestial jukebox. Celestial jukebox was a theoretical construct at the time. Every song ever made was going to be in the cloud ,and would be instantaneously available to anyone on the planet simply by pressing a button on your gizmo. But the industry really did not embrace that opportunity.

But there was an awareness that the digital revolution was coming and anybody who was in a senior position had to say how do we make this work for us? They began trying to find a way to legitimately sell music on the internet. ‘What systems do we develop? How do we deal with how we sell it? How do you price it?’ these questions were in the mind of music company owner. Sony Music said they will the first major recording company to sell new releases through the internet. These virtual singles will be released at the same time as CDs go into the stores.

When the Peer-to-Peer (P2P) came, it changed everything. In 1999, observing the file sharing system as good, Shawn Fanning and Sean Parker created Napster.

Now at the time, there were all these MP3 files being created, but there was no sort of central index where people could go download them easily. Shawn Fanning thought of creating a technology that could connect peer to peer server and could download music. Parker’s role was essentially the face of the organization. Fanning wrote the code. Fanning kind of did all the technical and computer side stuff. He wrote all the codes.

If you typed any artist’s song in the Napster, you will get the song instantly. It was by far the fastest way to download music from the internet. It allows anyone to copy thousands of musical selections for free. And it’s spread so quickly that it’s clogging computer networks on hundreds of campuses. So, this became hugely popular overnight basically. It was really one of the first viral apps.

Video Timeline

0:38 – Craze of CDs
1:32 – Sudden rise of MP3
2:49 – How the MP3 changed the music
3:18 – The birthplace of MP3
4:20 – Science behind MP3
8:11 – Piracy in MP3
12:12 – How MP3 affected the music industry
14:14 – The creation of Napster


Editor of On a mission to build a world leading Scottish digital nation.

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