Napster: The App That Broke the Music Industry with Amber Autry and Alec Flynn | 93

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Bestie, if you're a nerdy teenage tech boy like whose mentor and uncle created Chess.net, level nerd, and you've managed to tick off hip-hop legend Eminem and heavy metal god Lars Ulrich of Metallica, do you lean into it or do you run away?

Well, Sean Fanning, co-creator of the 90s music sharing site Napster, was that tech boy.

And do you know what he did?

Let's find out, Besties.

Napster has changed everything, and the record companies are sadly behind the curve.

Critics say much of that music is pirated.

At its peak, had about 70 million registered users shut down its entire network in response to court orders.

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From Wondery and at Well Media, this is The Big Flop, where we chronicle the greatest clubs, fails, and blunders of all time.

I'm your host, Misha Brown, social media superstar who put way too many viruses on my parents' computer growing up.

Sorry, mom.

At your bestie, Misha.

And I'm very excited because joining us on the show today, we have a comedian and co-host of the podcast, I'm Fine.

It's fine.

It's Amber Autry.

Hey, Amber.

Woo!

Which sounds like the music that we download.

There we go, there we go.

Joining Amber on the show, we have a comedian and very, very funny TikToker.

It is none other than Alec Flynn.

Hey, Alec.

Hey, how are you, Misha?

So good to be here.

I'm I'm better now that I've seen you.

I'm better that you're here.

Oh, come on now.

Stop.

Don't butter me up.

Please don't.

Yeah.

Please don't.

All right, before we jump into the story of Napster, I guess I should ask, were either of you Napster babies back in the day?

I would think this is the same thing, but I was a LimeWire kid.

Is that kind of the same?

Okay, yeah.

Around the same time, yeah.

Not me personally.

I was, I'm

28.

So, yeah.

No, I know.

I'm a child, but I remember we had something called called Dat Piff where you would get a lot of

rap mixtapes.

So if you ever wanted to like, I mean, that was Wiz Khalifa, Mac Miller.

If you ever wanted to hear kind of like the birthplace of those people, that's where I would go and then crash my mother's computer.

I'm going to be 38 soon.

So I was perfect age, right for the picking for Napster, but I was definitely a LimeWire kid as well.

And we'll get into it, but LimeWire was so funny because that's the one that had all of the viruses.

Or you'd be like downloading some

Frank Sinatra song, and you just hear like porn.

Yes, the whole song would be another DJ, like

I'm like, I just want to hear Alicia Keys, please.

That's the best part.

DJ ill will.

So, but yes, today we're talking about Sean Fanning and his creation, Napster.

And yes, you heard me right, Sean Fanning, but don't worry, we'll get into Sean Parker and his F you flip-flops too.

Very good.

Now, Napster was a huge game changer.

It basically completely transformed the way that people get music.

It could have been Spotify before Spotify, and it made Sean Fanning a Silicon Valley icon, but it was brought down by infighting at the company and by billion-dollar lawsuits from the record industry.

So first, let's get to know the star of the story, shall we?

Sean Fanning.

Let's take a look at a photo of Sean to get introduced to him.

Oh, no.

Okay, yeah, yeah.

No, for sure.

Did he also have a small run as a UFC fighter?

No, he wishes.

Backyard wrestler, maybe?

He's young.

He looks young.

Oh, he was.

He was very young.

Yeah, he definitely looks like he would have bullied me.

But that's okay.

That's okay.

He was just trying to bring music to the people, everybody.

I don't know if it's more so bullying as much as a whisper in your ear not to come to school tomorrow.

Yeah, yeah.

So, Sean, he was born in 1980 and he grows up outside of Boston in very humble circumstances.

His family didn't have a lot of money, and his dad wasn't around.

He even spends time in foster care.

But there is one person in his life who Sean looks up to, and that is his uncle, John Fanning, the main male role model in Sean's life.

We'll talk more about that later.

But Uncle John is also an early web entrepreneur, which is an important fact.

So in the mid-90s, when Sean is in high school, he gets a present from his uncle that changes his life.

I have also gotten the same kind of present from my uncle.

Hey, it's a secret present.

My parents always made me go put on pants anytime he came along.

He was also into things on the web.

I think we have the same uncle.

A lot of passwords.

A lot of passwords.

Well,

yeah.

Well, he gave him a computer.

When did you get your first computer and what was the first thing you did with it?

Oh, Misha.

Well,

we're friends.

You're right.

You're right.

Why not get my first computer?

You know what?

I think I was around middle school and I started writing a book.

I know that sounds

really cool, but it was really just reading the book that I was currently reading and retyping the letters onto the computer.

So I was writing someone else's book.

Okay.

I remember we got, like, if we're talking about like a P, like your own thing, like, we got iPads as a school in sophomore year.

What?

My high school?

Yeah.

I went to like an all-boy Jesuit high school.

You can imagine,

I mean, honestly, we just started using them as frisbees and shit.

Oh my God.

What?

Yeah, he would just be like, don't drop the iPad.

Don't drop the iPad.

So cool.

Well, once Sean tries out his new computer, Fanning, he's completely hooked.

Up until this point, he's been all about playing sports at school, but now he's trading in his baseball glove for a mouse and keyboard.

And he's also letting his homework take a backseat to noodle around on this computer.

So Fanning says,

I started compromising my schoolwork.

I quit all sports.

I was playing and I focused all of my energy on learning about software development.

So he is very much making the conscious choice to become a big old computer nerd.

Love.

Love.

Yeah.

Sounds cool to me.

Now, Fanning's, he's 15 and with his new computer, he gets into hacking and starts spending time chatting online with other folks who share that interest.

And that's how Fanning meets the second Sean in our story, Sean Parker, who's also 15 years old.

Wait a minute.

You're telling me this is the only story of a 15-year-old meeting another actual 15-year-old on the internet?

The one confirmed case?

And doing something successful from it.

No second guessing.

Like, wait, you sure you're not a 45-year-old adult?

I'm not being set up

for a TV show.

So, Sean Parker was famously played by Justin Timberlake in the social network.

So, let's take a look at a picture of Justin and Sean.

So, here's JT in the social network.

Love.

It's going to be me.

Hey.

And here's what Sean Parker looked like back in the early days of Facebook.

Uncanny.

Whose idea...

Okay.

Yes.

Amber, do you want to just give a stab at describing him for the people who are listening only?

Picture Justin Timberlake,

and you got it.

Yeah, you got it.

I mean, yeah, he kind of, he looks like he could, he's the kind of guy who's going to like talk to you after you're done mountain biking or something for the first time.

You know that song, Tiptoe by the window.

He looks like he would sing that.

Imagine how stoked he was when that.

He was like, oh, fuck yeah, dude.

He's like, I see it.

I see it.

I see it.

Finally.

By the time someone put some respect on my name.

So Parker is also a big computer nerd, and he started learning about computer programming when he was just seven years old.

And he and Fanning really hit it off.

So the two Sean's even had the idea of starting their own internet security company.

The idea being that they could help companies avoid getting hacked by people like them.

Wow.

At 15?

Yeah.

I was diddling around at 15.

That's crazy.

That's good for them.

Same.

The company doesn't go anywhere, but they do keep in touch.

Who knows?

Maybe they'll be able to collab on a project in the future.

Wink, wink.

So it's not until Fanning is in college in 1998 that he gets the inspiration for Napster.

Fanning's light bulb moment is listening to his roommate talk about how hard it is to download music on the web.

Gosh.

But I mean, yeah, before streaming, it was, it was all about like CD sales.

I was, I was so cool buying my weird Ali Yankovic.

Yeah.

Yeah, those CDs were the best.

I still, I bought CDs.

I remember those days.

Yeah.

So, I mean, it is hard to imagine now, but in these days before Napster, the idea of sharing music online, totally foreign to people.

And there isn't a streamlined, user-friendly site or program that would make downloading music accessible to the masses.

In other words, major opportunity here.

So Fanning thinks he knows how to solve the problem.

His idea for Napster is to build software that will allow people to use the internet to connect with each other's computers and download music from each other directly.

Where do you think the name Napster came from?

Napping?

Can you nap something?

Like steal it?

Nope.

Like kidnap?

No.

Yeah, that's okay.

All right, what do you think, Alec?

Please.

Where did it come from?

I bet it was like

a pet that they maybe had.

Like, yeah, that's Napster.

Like, that's Napster 2.

We threw the first one at the wall during a party.

My God.

I don't know.

Well, it actually comes from Fanning's high school nickname.

The Napster.

Gently, his hair is naturally curly, and a buddy of his referred to it as Nappy.

Oh.

So, yeah.

Oh, so just like that isn't the new nickname was born, Sean was nappy or sometimes Napster.

So we obviously have to acknowledge that the word nappy is widely considered to be racially derogatory.

But whether Fanning's friends had that cultural awareness or not, Napster became Fanning's nickname nonetheless, and he decided to repurpose it for his new website.

In the late 90s, no way.

Although he's really into computers, Fanning has never written a program of his own, but he does buy a coding how-to guide, probably coding for dummies, and he gets down to business and he's obsessive about working on his napster idea.

He stops going to classes, spends days on end working on the code, sometimes even passing out in the middle of typing.

This guy really sends it, dude, like on everything.

But we have to remember back in this time, it's that was not common for us to be like up and like scrolling or on technology like all night long.

You know, it's very normal now, but in the late 90s, not so common.

Have you ever been so obsessive over something that it's made you stay up all night?

Cocaine.

Cocaine.

Yeah.

A little party here and there.

Yeah, yeah, yeah, yeah, yeah.

Just general anxiety, honestly.

You're like fear and dread.

Yeah, well, Fanning believes that he's onto something huge here.

And if he doesn't hurry, someone else is going to beat him to the punch.

So he initially shares Napster with just a few college friends to try out.

Fanning asks them to, you know, keep it on the DL, but it doesn't stay secret for very long because people are downloading music online for the first time and they are loving it.

Word of Napster starts spreading around and all of a sudden there are hundreds of people using it.

And this is when in 1998, as Napster is taking off, Fanning's old friend Sean Parker comes back into the picture.

Parker is 18 at this point and he has dreams of being an entrepreneur and he sees some serious potential in the idea of this music sharing software.

You know, it's important to note that at the turn of the millennium, the music industry is raking in money from selling CDs, a multi-billion dollar market.

So, in the year 2000, there are close to a billion CDs sold in just the United States.

Nice.

But yeah, I mean,

we have to take ourselves back.

This is the era of like the Backstreet Boys can break CD sales records by selling a million albums in just one week.

But the internet is about to change everything.

The record industry is a dinosaur, and Napster is a rapidly approaching asteroid.

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So Parker and Fanning, they get down to business and start planning their next moves for Napster.

Fanning, he's a shy kid who doesn't necessarily feel comfortable being the face of a company.

So teaming up with old buddy Parker and getting his help with the business feels like a natural step.

Because he looks just like Justin Timberlake.

Because he, I mean, spitting image.

Uncanny.

Sexy, and I know it.

Plus, I mean, they had been looking to start a business for some time together.

Now, at this point, do you think that Fanning and Parker are thinking about any of the legal issues that might go into creating a music sharing site?

I mean, they're 18-year-old boys in college.

Oh, I feel bad for them already.

No.

Yeah, I mean, nah.

I bet it's just like they just don't even, nobody knows anything.

Nobody knows anything about anything.

Well, in addition to getting an assist from Parker, Fanning also looks to his Uncle John for advice and help.

And this makes sense because Uncle John actually has experience running a website.

He's one of the founders of chess.net, which had raised half a million dollars from investors.

Yes.

But Fanning's decision to let Uncle John in on the business comes with a price.

In May 1999, Uncle John sets Snapster up as a corporation, but he gives himself a 70%

ownership stake of the company.

Of course he does.

Of course he does.

This is a prequel to the social network.

But a co-worker of Fanning's believes that Fanning is completely blindsided by the move and thinks it was not agreed upon.

Oh, no.

But he doesn't fight back.

One reason is that he thinks his uncle's experience and network of contacts will be good for the fledgling company.

Yeah, we got to get business cards.

Initially, at least, Uncle John delivers.

He does get one investor to shell out $250,000 for Napster in 1999 money, I might add.

Parker also raises another $50,000 from investors.

And on June 1st, 1999, the two Sean's officially launched Napster.

Fanning is just 19 years old at the time.

Wow.

Well, let's take a look at what Napster looks like when it first launches.

Oh, my.

Take all my information.

Yeah, that looks safe.

Yes.

I love it.

So nostalgic.

It looks cool as hell.

And you know, like the screen pops up with a damp, damp, damp, bam.

Like or a nice little jingle to open it up.

Well, Napster quickly establishes itself as the hottest thing on the internet.

In just a few months, Napster has raked up 150,000 users and counting.

People are loving the experience of suddenly having access to a whole world of music.

I mean, they're making connections with fans via the site's chat functions and are finding obscure tracks that they never would have been able to listen to before.

But let's be real.

It is 1999, so I'm sure there were some people that were using Napster to find rare jazz records, but most users were probably just wanting to download the latest Sugar Ray track or Mambo number five.

Yeah.

The good stuff.

Okay.

The good stuff.

A little bit of moniker in my life.

Okay.

How the hell am I going to make a mixtape for the girl I like?

Yeah.

We took that shit seriously.

Carly, I made this for you.

As Napster is growing, Fanning and Parker also level up their funding by getting investors to give them a few extra million dollars.

Fanning and Parker move out to Silicon Valley in September, and to save money, they live together in a classic tech startup bruh apartment.

It's got zero frills.

Someone's always sleeping on the couch.

Practically every available surface is covered in old takeout containers.

Parker, however, he does treat himself to two luxury items.

a big screen TV and a custom sports car, a Mazda RX-7.

Oh, where is his mother?

This is crazy.

The man.

No,

he must be stopped.

Yes.

Well, you have to spend the rest on hair gel, clearly.

So let's budget correctly.

But at this time, in tech circles, Napster has made Fanning a major celebrity.

Larry Page and Sergey Brin, the brains behind Google, they meet Fanning at a conference and totally fanboy out about how much they love his site.

That's cool.

So less than a year after launching Napster, it has 20 million users.

Oh my God.

Amber, are you okay?

Is this making me nervous?

What are you doing?

She's like, oh, my God.

It's fine.

I didn't

get it.

It's going to be okay.

This happened 20 years ago.

I'm just now hearing about it.

All right.

At this point, Napster is so big that people using it, it actually slows down internet service providers and internet service on college campuses.

That's right, Napster is literally breaking the internet.

So let's take a look at a clip of a news report from around this time.

Oh, this will be great.

Wait, can I wait, pause before we do this?

You want me to narrate this?

They're calling it Napster.

This is every one of these reports.

Yeah.

Both San Diego State and UCSD have banned the Napster website from their college computer system.

The colleges say the demands of Napster and MP3 have slowed down their online service to students.

I think they should continue to warn people and if people that do abuse it, then yeah, you've been warned.

We'll cut you off.

Who was that guy?

A random Napster user.

Okay.

They're like, do you have a second?

He's like, I've got all the time in the world.

I have a lot of seconds.

I just ripped a dab in his dorm room.

What?

Is this extra credit?

They're doing something right, I think, if in less than a year, people are trying to ban it.

Yeah.

You know what I mean?

So meanwhile, the broader music industry is also taking notice of the Napster phenomenon.

They see it as an existential threat to their business that has to be shut down as soon as possible.

At one meeting of music execs, an industry insider even suggests that they should try to ban the internet as a way to get rid of Napster.

Very smart.

That guy just has weird stuff on the internet.

He's like, what if we just got rid of all of it?

Yeah, his search search has like

and that man was Sean Diddy Combs.

The Sean trifecta.

That's what this whole,

but obviously they don't wind up trying that strategy, but they're not going to stop until they take down Fanning and Napster.

Fanning is about to become public enemy number one for the music industry.

So it's not just the recording industry executives who have a beef with Napster.

One of the biggest critics of the site winds up being the drummer of legendary rock band Metallica, Lars Ulrich.

What?

Amber, I love how you're learning all this for the first time.

You see what?

Lars?

No.

He's my favorite heavy metal drummer.

You seem so chill.

Well, Lars first finds out about Napster because there's this cool new Metallica song that's getting a lot of radio play.

The problem is, it's a track they haven't even released yet.

Because of Napster, a song called I Disappear that Metallica is still working on for the Mission Impossible 2 soundtrack has been leaked to radio stations.

So there's a real cultural divide and PR war that starts to emerge over Napster, and it's perfectly timed with this era when the world is just getting acquainted with the internet.

So there are people who think that bands like Metallica are lame and out of touch for pushing back against Napster.

They basically think it's greedy and old-fashioned to have problems with file sharing.

But there are also plenty of people who agree with the music industry that Napster is effectively stealing from artists.

So let's take a look at a clip of an interview where Eminem sounds off on the subject.

Well, this is straight up disrespectful.

That shit is bullshit.

All that Napster shit is bullshit.

And anybody who stands for it is bullshit.

You know what I'm saying?

Nobody, I don't want nobody to get my

music for free.

You know what I'm saying?

I don't want, I mean,

the week that my that my album came out i missed at least 30 000 sales by you know what i'm saying by people downloading my on the internet or whatever i like his visor

please help that thing's cool i might get one of those i get what he's saying but eminem starting off with saying anything is disrespectful i just kind of clock out a little bit you know what i'm saying i think you said verbatim this shit's whack

i mean i totally get where people are coming from.

I mean, how often, Amber, like, do we see like our clips on Instagram and shit, like, getting pilfered and screen grabbed and then putting on, put on some other account?

Meanwhile, that account reaps all the benefits of like followers and what have you.

No, 100%.

I'm behind what he's saying for sure.

Yeah, it makes sense.

I mean, like, I have literal like fake accounts of all of my content that have a hundred thousand followers.

Oh, my God.

Like, and they're making money.

Yeah, they're making money off.

They're making a lot of money off of what everybody else else is doing.

So, Fanning and Napster, they know it's not a good look for artists to be trashing the site.

So, they decide they need to drum up some good PR for themselves.

So, in April 2000, Fanning and Napster are about to close a deal that will get them $15 million in additional funding.

And they decide to spend some of that money to help improve their image.

How would you use $15 million to improve your image?

Britney Spears?

Spring break.

Back then, oh my gosh.

I think back then you go to spring break and you say, Hey guys, get your computers out on the beach.

Let's download some more Sugar Ray.

They're like looking for somebody, like an artist to say that this is okay, right?

Yes.

So like Ricky Martin

would have been great.

Would have been a crazy.

What did they get?

Limp Biscuit?

Hoobastank?

Napster decides to spend $2 million to sponsor a completely free tour headlined by Limp Biscuit.

Hey, let's go.

Yes.

My way of the highway.

Yeah, totally the guy that you want representing your company.

The choice is extra questionable, though, because this is happening right after Limp Biscuit's disastrous Woodstock 99 performance that basically started a riot.

And if you want to hear more about that, we've got a whole dang episode on Woodstock 99 that you can check out.

But if there's a beef, okay, and you got like Eminem and Metallica or Limp Biscuit, who are you siding with?

Eminem and Metallica.

For sure.

Yeah, but then again, Limp Biscuit has nothing to lose.

That's also true.

Well, the fight between Napster and the record industry escalates in a major way on April 13th, 2000, when Metallica sues the company for copyright infringement and racketeering.

And that's just the first domino.

Dr.

Dre files a copyright lawsuit of his own, and then the Recording Industry Association of America, R-I-A-A, jumps in as well with an infringement suit worth $20 billion.

Oh my God.

It's not good.

And we're like, wait, my bubble gut.

What's this?

If I was Sean and Sean, I would just be like, I'd be like, well,

I guess this is the end.

I'd be like, Uncle John owns 70% of it.

Talk to him.

Yeah, exactly.

So Metallica, they also hire a firm to figure out the identities of individual Napster users so they can go after people one by one.

Now, Napster, no, Napster doesn't exactly have great security.

User IP addresses, they aren't secure, which means it is possible to identify specific people who are using the site.

That's not good.

Ultimately, almost 20,000 users are identified and sued for using Napster.

No, dude.

Yeah, you don't remember like all of a sudden people were like, uh,

I want to download this song, but I don't want to go to prison.

Yeah, yeah.

Yeah.

So despite these mounting legal troubles and despite the very real risk that you might get personally sued for using the site, Napster is just getting more and more popular.

By the middle of 2000, 14,000 songs are getting downloaded off of Napster every single minute.

What?

Yes.

And this is still the dial-up days, but people don't mind tying up their phone line for hours to get that latest Britney track.

After all, it is Britney.

You have to shockpile at this point.

And that's also true.

But despite the public success of the company, behind the scenes, Napster is far from functional.

Fanny and Parker and the other Napster execs, they are constantly at odds with each other.

One Napster VP says, quote, there were horrible conflicts at the board level that effectively derailed most of our strategies.

Is there a board?

The Monopoly Man was the head of the board.

So the big issue is that the higher-ups at the company think they should be the ones in charge and they're not willing to give an inch to anyone else.

And all this fighting is just not making it possible to move the company forward.

It's also costing the company money.

So one investor who was thinking about giving cash to Napster, but decided not to because of all the bickering, said, you had multiple people all thinking they were running the company.

Oh, yeah, that's what he said.

And the infighting at Napster isn't being helped by the fact that right now, Fanning and Parker may be letting other things distract them.

Girls.

They are 18, 19, 20.

Parker's gotten really into the rave and nightclub scene.

And as we all know, it can be really difficult to maintain a work-life-party balance.

So.

Hey, don't have to tell me twice.

Fanning also may not have his eye on the ball as much as he should at this point, and there's a reason for that as well.

That's because as Napster has become more and more popular, Fanning has also become a celebrity in his own right.

In September 2000, just 15 months after Napster's official launch, Fanning introduces Britney Spears at the MTV VMAs and pokes fun at Metallica at the same time.

Let's take a look at a clip of the show.

In the last year, this teenager has developed a technology that has revolutionized the way

we all get our music, and he is here tonight.

Ladies and gentlemen, creative Napster Sean Fanning.

Oh, he's got the shirt.

Nice shirt.

Nice shirt.

You like it?

You like it?

Actually, a friend of mine shared it with me.

Wow.

Wow.

Wow.

Wow.

Wow.

Wow.

There was no PR

CC'd on the email.

Wow.

That's what rock and roll is all about.

Wait, why would they ever make him like the VMAs?

Everybody's mad at him there, right?

Yeah.

Lars Ulrich is in the audience.

I cannot.

This is.

This is so good.

Okay.

Good drama.

The camera cuts to Lars from Metallica sitting in the audience and not looking amused.

Oh my God.

And he's in a baseball cap.

Like, you little talk.

Those, like, Jinko jeans.

I know.

Super wide leg.

Well, one month later, in October of 2000, Fanning appears on the cover of Time magazine.

I can't.

I like it.

This is a good pose.

Put the socks hat on.

You're going to do this for your next tour.

You're goddamn right.

What's next for Flinster?

Wow.

I mean, I'm split, dude, because part of me is like, pop off, life is crazy.

You're having a good time.

But the other half is like, again, where is your mother?

Does he have

a mother?

No.

Oh, that's right.

That's right.

My bad.

Okay, he lived in that's right.

My bad.

By the way, the Time article about fanning from this issue, it's glowing.

It says that Napster ranks among the greatest internet applications ever, up there with email and instant messaging.

Okay, let's go, Sean.

Uh-huh.

Well, I like music more than I like email.

That's true.

Now, Fanning might be getting some great press, but you know who doesn't care about all that good PR?

All the people suing him.

Yeah, Lars.

And though these lawsuits are an existential threat to Napster, Fanning and the company are just not equipped to deal with them.

So if you are Fanning right now, 20-something years old, how worried are you that this is all going to come crashing down?

Probably not that worried.

In my 20s, I was like, oh man, this freaking blows.

But I'd never thought that like crashing down just sounds too dramatic.

If I'm him, I'm just going like, all right.

Right.

At this point, you've been set up then.

You've already, I mean, like, obviously we all know you can lose, you can lose money as much as easy as you make it however

millions of dollars and he was on the cover of time like i was just gonna say like getting invited to the vmas you've already done like all this before you can even have a sip of alcohol what do you what are we talking about here i feel like uncle john's about to mess everything up

Well, the billion-dollar lawsuits would be a major challenge, even for the best-run company.

But remember, Napster is far from being well-run.

Fanning and the other Napster execs are now arguing with each other about what the best way to handle the lawsuits is.

And if they can't agree on that, when they go to court, they're going to be toast.

So some folks at Napster think that the company should just settle the lawsuit, but others think that the most important thing is to raise more money so that they'll be in a better position to negotiate with the record companies.

Basically, some people are getting very cocky that at some point the record companies are all going to be coming crawling to Napster, asking to get in on the service.

What strategy makes the most sense to you?

Like just settle and get past it?

Or

settle and get a good relationship with these artists.

Like, what if we did this and this for you?

You know, like, so you can keep the company moving, keep those people happy.

Well, Amber definitely didn't forget about Uncle John, and neither did I.

So he's still got 70% of the company, and he's in the group of people who think that Napster has the upper hand.

By the way, Uncle John is another thing that execs at Napster are fighting about they're outraged that he has such a big share in the company like if napster manages to take off the way everyone's hoping it will some estimates say his stake in the business could be worth 150 million dollars

okay that's for being a good guy that's what i would say i'd be like hey i nurtured this entrepreneur into what he was today i gave him the computer it's a finder's fee bitch finder's fee yeah so the other folks at napster think his business sense is questionable at best Uncle John is proving to be a real burden to Napster.

And at one point, some companies that are interested in investing in the company say they'll only do it if Uncle John gets booted from the company, but he refuses unless he gets more money to make his exit.

Wow.

Have you ever had a family member get in the way of your success?

Absolutely.

Yes.

Story of my fucking life.

So, what is Fanning thinking as all of this is going going on?

Like, why isn't he stepping in?

Well, he is more focused on programming than engaging with any of the legal stuff, which probably also rubs people the wrong way.

He's also experiencing some malaise at this time.

Napster only launched 16 months earlier, but he's already seriously missing the not-so-long ago days when it was just him working on Napster, the days before he was famous.

And where's the other Sean?

Getting into trouble and then getting booted from the company, it's discovered that he wrote an email where he called Napster users pirates.

Dun, dun, dun.

This is a big no-no at Napster, since it feeds into the narrative being put forth by the record industry.

So Parker tries to get Fanning to help dig him out of the hole, but Fanning is stretched so thin that there's nothing he can do.

And at this point, Fanning is so frustrated and overwhelmed by everything, he even threatens to quit the company.

So much drama.

And while Fanning is failing to act, the clock is ticking.

The lawsuits are moving forward and the company still doesn't have a strategy.

Okay, so what would you do?

What would be your strategy at this point?

And then a $20 billion lawsuit.

I know this is probably not the vibe, but I'd probably look into going to therapy.

Oh.

Good, yeah.

Oh.

No, this is good.

I just need a little guidance.

Yeah.

Well, in a last-ditch effort to save Napster, the company tries to cut a deal with Vivendi Universal.

Vivendi is the biggest music company in the world and owns a ton of record labels.

A deal with them would make Napster go legit.

The company is that people would pay for a subscription to Napster and then Napster would pay the record companies a small amount for every song those users download.

Sound familiar?

Spotify.

Everybody gets a cut.

Everybody's happy.

So this is a major opportunity for Napster.

They can get out of legal trouble and move the company forward using a model that we now know works really well and is very popular.

But as negotiations are going on, Fanning isn't able to exhibit the kind of leadership the company needs.

And they aren't able to put up a coherent strategy or unified front.

And as a result, the deal with Vivendi falls through.

No.

I mean, why would Vivendi want to risk on a company that seems like it's in total chaos?

So they're like, I'm out.

Damn.

Yeah, that sucks.

I mean, he's 19.

He's literally like, put together this pitch deck.

I'd be like, I just figured out how to code.

But I mean, he was this close to being Spotify.

That's a huge miss.

It's a huge miss.

He had to walk so Spotify could run.

Yeah.

There we go.

So Napster reaches a high watermark in February of 2001, with some estimates saying that it had more than 70 million users at this point.

But that same month also marks the beginning of the end when the court finds in favor of the RIAA.

Napster did violate copyright.

And Napster has days to either start charging people or close down for good.

Oh my gosh, we'll start charging people.

Well, it sets up a 48-hour-long mad dash as Napster users try to get their hands on as much music as possible before their free lunch ends.

What music would you be going for?

Like, what would be like top of the best?

Spice Girls, Backstreet Boys, Britney Spears, Christina Aguilera, Ricky Martin.

um

definitely Metallica.

Hello, because you know that's gonna be after under a paywall.

Oh my god.

In July of 2001, Napster is ordered to turn off its servers.

Just two months later, in September, Napster is forced to shell out $26 million to pay off musicians and other rights holders.

And as a result, by May of 2002, Napster no longer has the dough to pay their staff.

Those Though legal bills aren't cheap.

And employees start leaving the company en masse.

By June, Napster declares bankruptcy.

That's just three years after it launched.

An incredibly quick collapse.

I've gone to brunches that have lasted longer than that.

And Napster eventually tries to reinvent itself as a subscription service, but at that point, it's way, way, way too late.

Why do you think Napster wasn't able to bounce back with a rebrand?

Yeah, the point was that it was free.

Yeah.

Yeah.

Yeah.

That was the big draw.

But then the iPod came around.

You know, so there's more competition, right?

There was LimeWire was out there that people were still able to illegally pirate music from.

And at this point, iTunes and iPod have also launched.

And basically people moved on to a company that was more reputable.

than what Napster was.

You know, and also they won't get sued

for downloading the music.

That's a big one.

Yeah.

That's a huge one.

And what happens to Fanning after Napster collapses?

Well, he never made any money off of it.

I'm going to cry.

That's terrible.

Yeah.

No money.

No, Napster may have had millions of users and may have raised some venture capital money, but it wasn't around long enough to ever figure out how to generate any revenue.

There wasn't ad space being sold.

There wasn't any of that.

They were just collecting money to run operations.

Here's what you do: Take user data, sell it to foreign governments.

Yes.

There we go.

That's the big business.

But not only that, like Fanning still has to deal with all of the legal bills.

He's in debt to the tunes of tens of thousands of dollars.

So it is the complete opposite of a Silicon Valley success story.

He founded a truly groundbreaking company, but wound up in worse shape than if he'd never started it in the first place.

That makes me bummed out because he's like, wow, I have all this talent and skill.

Let me play around.

And he fucked around and found out.

Well, let's do a little, where are they now?

Okay.

Yes, of course.

First, it's important to note that Sean Fanning, Sean Parker, and John Fanning were never held personally liable in the lawsuits against the company Napster.

John got into his own little scuffles with his other businesses, but the three got away pretty free and clear on this one.

So brace yourselves for a shock.

Napster technically still exists.

It's been bought and sold many times over the years by a bunch of random companies.

Even Best Buy owned Napster at one point, but it's still kicking as a subscription music service.

Wow.

If you're interested in shelling out for some Napster nostalgia, subscription will cost you $10.99 a month.

Okay.

Is it a good?

That's interesting.

I wonder if they do a Napster wrapped.

Ooh.

Yeah.

It wouldn't be that hard.

That's the funniest thing to me when people are like, oh my God, I can't believe I listened to this much Beyonce.

It's like, you can't believe it.

So Parker, as we mentioned, would go on to invest in a little company called Facebook and recent estimates put his net worth at around $3 billion.

So you can say he landed on his feet.

As for Fanning, he would continue to work founding companies in Silicon Valley and some estimates put his net worth at over $100 million.

So not too shabby.

Okay.

I mean, he's fine.

All these guys are going to be fine.

Well, here on the big flop, we try to be positive people and end on a high.

So are there any silver linings that you can think of that came about from Napster?

I could think of a couple.

I mean, the democratization of music, the formation of a playlist, I think, and the shareability of music is a good thing.

Parallel to that is that people, I think, now no longer have the attention span to kind of like sit there and digest an entire album front to back, which I think might hinder the creative goals of a lot of musical artists now, where they might just be more focused on like the big single.

But I will say, you can put together some bang and playlists.

I think it's a good story about risk.

Like, he took a massive risk and utilized what lit him up, like his talents, and it definitely failed.

But he's still worth a lot of money.

Like, it just goes to show you, you know, when old people are like, you'll be all right.

You really will.

You really will.

Yeah, I think even though the company had, you know, a rise and a fall, they are generally regarded as visionaries.

And, you know, we've said it the whole episode long.

This is iTunes, YouTube, Spotify.

They're all versions of what they were trying to build.

It's really cool.

And so, yeah, it was kind of the blueprint for how we interact with music today.

So, now that you both know about Sean Fanning, who created Napster and changed the music industry forever, but wound up with nothing to show for it, would you consider this a baby flop, a big flop, or a mega flop?

I think this is a baby flop.

In the grand scheme of things, the stakes are never as high, I think, for a 19-year-old.

At the end of the day, he had a good two and a half years of like being the guy, party guy.

He was on the cover of Time magazine.

I mean, think about it.

When we talk about

Snapster in the popular culture now, we mostly only talk about Justin Timberlake.

You know, we're not even really talking about Sean Fanning too much.

Yeah, yeah.

So he could still kind of be a normal guy.

I think he got the best of both worlds.

Exactly.

I would say baby flop too, because I was going to say the exact thing.

Like, people will still work with him.

They're like, you're smart.

You know what you're doing.

You were a kid when you messed up.

So, and you got to pay back all that money.

A little baby flop.

Little baby flop.

Little baby flop.

I did a little baby flavop.

You know, I have to say, I have to agree with you because based on all of the episodes that we've done on this show, I mean, he wasn't lying to people.

He wasn't run by greed and, you know, nobody died.

So that's like the grand scheme of what we've covered.

Yeah, they seemed pretty innocent when it comes to Napster.

Well, thank you so much to our guests who are visionaries in my eyes.

Amber Audrey and Alec Flynn.

Yeah, thank you for joining us here on the Big Flop.

And of course, thanks to all of you for listening and watching.

If you're enjoying the show, please leave us a rating and review or subscribe.

We'll be back next week with another flop.

Fuck Mary Kill, the shake weight, skecher shape-ups, and a power balance band.

You can wait till next week to decide because we're talking 2000s fitness fails.

Bye.

Oh, there we go.

Bye.

Bye.

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