Napster – Digging the Success Story

Napster was an online peer-2-peer file sharing (read MP3) service started in June, 1999 (Yepp, this month is the ten year anniversary, coincidence?) by Shawn Fanning with support from his…

Napster was an online peer-2-peer file sharing (read MP3) service started in June, 1999 (Yepp, this month is the ten year anniversary, coincidence?) by Shawn Fanning with support from his uncle. It reached over 13 million unique users by February 2001. Though by today’s standards (Facebook has 200 million), it was mammoth given the number of people who were on Internet in 2001.


Let us analyze the service, which was not only immensely popular but changed the file-sharing scene for ever. As a side note, this article is not about the legal/moral issues related to file-sharing and is part of Ten Years, Ten Products and Ten Million Lessons series.

  • Focus: There has been a trend of startups who want to launch a service which can do everything between checking your email to teaching budhism (though I know deep down inside that emacs can do that). Napster focused on sharing just Music via the MP3 format, it didn’t bother about letting users share cute pictures of cat or porn. In the article related to google we also saw how search engines morphed into full fledged portals which for some became the primary reason for their failure.
  • Commitment: Shawn fanning dropped out of college to commit himself to Napster, a story we often see from Gates to Zuckenberg. I am not saying the reason they became a success was because the dropped out of college, but they had the guts to sacrifice the degree based on their convictions in their own projects.
  • Convenience: Carrying on from the “Death before Inconvenience” theme, it is hardly difficult to see it here, why would somebody cross the street and spend a couple of hundred bucks on buying a whole album when he wants to listen just or two songs which he can download from the convenience of his room. A fact later exploited by the iTunes Store.
  • College Crowd: During the initial stages, college students formed an overwhelming majority of all Napster users.  Possible primary reasons are:
    1. Availability of Massive Network Resources, college campuses had already invested in high bandwidth Internet connection
    2. Relatively Technology Savvy crowd
    3. Low purchasing power
    4. Ease of Viral Spread. College is a place where your product will be talked about in the dining room and there will be a guy in your dorm who would install it for you.
  • Napster isn’t the only service to exploit this segment, remember Facebook, which was open to only college students in United States when they started.

Now with the benefit of hindsight, we can also not ignore the fact that omission of any partnership between Napster and Record Labels was a reason for its relatively early demise. Though we can not say with certainty that back in 1999 with the impact of file-sharing unknown Record Labels would have even agreed on a partnership like they did later with iTunes and Napster itself.
For a nascent stage startup a FUD (Fear, Uncertainty, Doubt) campaign by anyone with a zillion dollars (RIAA) is enough to cause major hiccups. Anybody remembers ICL (Indian Cricket League) formed without the support of BCCI (Board of Cricket Control in India) and does anyone not know about IPL. (Indian Premier League).

I would wind it up by paying my homage to the brainchild of 17 year old teen, which changed media distribution systems forever and got phrases like “Intellectual Property” to mainstream.

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