Meet the Napster

DAN LOH--AP
The Napster Kid: Shawn Fanning terrorized an industry. Will he be able to go on?

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Fanning, to put it another way, is coachable. That's a trait picked up from his jock years, when he excelled at basketball and baseball, hitting .750 as a shortstop on a state championship-winning team. It may be that his success as an athlete gave Fanning the confidence to quit school to pursue his idea. And it may be through playing team sports--running endless baseball fungo drills and basketball layup lines--that he picked up the discipline that allows him to focus on whatever is in front of him, to complete whatever task is at hand, whether it is taking a pitch to the opposite field or writing a computer program. You learn, believes Fanning, how to take criticism when you're part of a team.

In creating Napster, Fanning not only transformed the music business, but he also helped launch a new programming movement--and a whole wave of start-ups dedicated to what has become known as P2P, or peer-to-peer, client-based Internet software. Among Napster's revolutionary qualities is that it allows computer users to exchange files directly, avoiding server bottlenecks and, Fanning once hoped, legal problems. Only Napster's index and directory reside on a central server; the files are actually transferred via various Windows protocols directly from user to user. That means that no copyrighted material is ever in Napster's possession.

There are myriad--and totally legal--possibilities for P2P applications, from swapping dense technical files through a local-area network (something scientists at the Centers for Disease Control are looking into) to replacing corporate servers with P2P systems for business applications. "The old days [i.e., the current Internet] were all about centralization and control, almost Soviet-style," says Miko Matsumura, CEO and co-founder of Kalepa Networks, a six-month-old start-up that plans to link P2P networks into a sort of alternative Internet. "In this new topology, everyone brings their own resources. The new network will be built on top of the old network. Like Rome was built in different layers."

The new network, in other words, may not completely supplant the old, but it offers a new space for creating ideas and transferring them faster, more freely, more widely than ever before. Teams of designers, Web developers and business-school graduates are working up P2P programs and business plans and trotting them over to venture capitalists, who, in the wake of all the buzz about Napster, have been funding P2Ps the way they funded their alphabetical brethren B2Bs--business-to-business companies--last winter.

Napster, insists Aydar, could not have been written by a team, nor could it have been written by anyone 21 or older. "Shawn could focus on problem solving--and there was no one to tell him he couldn't do these things. There was no one who ever really understood what he was doing. He didn't even understand the legal issues involved. It was such a cool idea that he never once stopped, never really came up for air."

Those issues--what Fanning knew and when he knew it--are now integral to the legal proceedings that will determine the future of digital music and perhaps the future of all industries that trade in intellectual property (see following story). Attorneys for the record industry have subpoenaed Fanning's e-mails and taken depositions from him, his uncle and other early Napster employees. Their contention is that Napster is guilty of something called tributary copyright infringement, which means Napster is being accused not of violating copyright itself but of contributing to and facilitating other people's infringement.

Which really means that if consumers are not guilty of breaking the law, then Napster cannot be found guilty. The issue may come down to what Napster lead attorney David Boies, who successfully prosecuted the Department of Justice's case against Microsoft, describes as "the definition of commercial or noncommercial uses." It is perfectly legal for consumers to copy music for their own enjoyment--i.e., noncommercial use. Congress has even declared, in the Audio Home Recording Act of 1992, that it is legal to make recordings and lend them out to people, provided it is not done for commercial purposes. It is unlawful, of course, if it's done to make a profit. "The law does not distinguish between large-scale and small-scale sharing or lending," insists Boies, who puts Napster's chance of winning the suit at fifty-fifty.

The record labels certainly disagree, and they have sought an injunction to shut down Napster, which U.S. District Judge Marilyn Patel granted in July. Although it was immediately stayed by federal appeals judges, the same injunction will be ruled on by a federal court as early as next week. That ruling is likely to determine the future of Napster.