Metallica is a band from San Francisco, California that was formed in 1981. Napster was a pioneering peer-to-peer file sharing Internet service, founded by Shawn Fanning, that emphasized sharing digitally encoded music as MP3 audio files. On April 13, 2000, Metallica filed a lawsuit against the file sharing company Napster. Metallica alleged that Napster was guilty of copyright infringement and racketeering, as defined by the Racketeer Influenced and Corrupt Organizations Act. The lawsuit was filed in the U.S. District Court for the Northern District of California. This case was filed soon after another case was filed against Napster, the A&M Records, Inc. v. Napster, Inc., which included 18 large record companies. Metallica v. Napster, Inc. was the first highly publicized instance of an artist suing a P2P software company, and encouraged several other high-profile artists to sue Napster.
On July 11, 2000 Lars Ulrich read testimony before the Senate Judiciary Committee accusing Napster of copyright infringement. In the testimony it is explained that in 2000, Metallica discovered that a demo of the song "I Disappear", which was set to be released with the Mission: Impossible II soundtrack, was being played on the radio. Metallica was able to trace the source of the leak back to a file on Napster's peer-to-peer file-sharing network. It was also discovered that the band's entire catalogue was available for free download. Metallica argued that Napster was enabling users to exchange copyrighted MP3 files. Metallica sought a minimum of $10 million in damages, at a rate of $100,000 per song that was illegally downloaded. Metallica hired NetPD, an online consulting firm, to monitor the Napster service. NetPD produced a list of 335,435 Napster users who were allegedly sharing the band's songs online in violation of copyright laws. The 60,000 page list was delivered to Napster's office. Metallica demanded that all of their songs be banned from file sharing, and that the users responsible for sharing their music also be banned from the service. This led to over 300,000 users being banned from Napster, although software was released that simply altered the windows registry and allowed users to rejoin the service under a different screen name. The suit also named several universities to be held accountable for allowing students to illegally download music on their networks. These universities included University of Southern California, Yale University, and Indiana University.
In March 2001, the federal district court judge ruling over the case, Marilyn Hall Patel, issued a preliminary injunction in Metallica's favor pending the case's resolution. The injunction, which was substantially identical to one ordered in the A&M case, ordered Napster to place a filter on the program within 72 hours or be shut down. Napster was forced to search through its system and remove all copyrighted songs by Metallica. Dr. Dre and several of his fellow artists, a number of record companies, and the RIAA subsequently filed lawsuits of their own which led to the termination of an additional 230,142 Napster accounts. On July 12, 2001 Napster reached a settlement with Metallica and Dr. Dre after Bertelsmann AG BMG became interested in purchasing the rights to Napster for $94 million. The settlement required that Napster block all of the music being shared from any artist that did not want their music to be shared. This $94 million deal was blocked when Judge Peter Walsh ruled that the deal was tainted because Napster Chief Executive Officer Konrad Hilbers, a former Bertelsmann executive, had one foot in the Napster camp and one foot in the Bertelsmann camp. Napster was then forced to file for Chapter 7 and liquidate its assets.
The Napster program was originally a way for nineteen-year-old Shawn Fanning and his close friends throughout the country to trade music in the MP3 format. Fanning and his friends decided to try to increase the number of files available and involve more people by creating a way for users to browse each other’s files and to talk to each other. As a result, Napster went live in September 1999 and gained instant popularity. Napster’s number of registered users was doubling every 5–6 weeks. In February 2001, Napster had roughly 80 million monthly users compared to Yahoo’s 54 million monthly users. At its peak Napster facilitated nearly 2 billion file transfers per month and had an estimated net-worth of between 60-80 million dollars. Fanning designed Napster as a searching and indexing program, meaning that files weren’t actually downloaded from Napster’s servers but rather from a peer’s computer. Users had to download a program called MusicShare which would allow them to interact with Napster’s servers. When users would log onto their Napster account, MusicShare would read the names of the MP3 files that the user had made public and would then communicate with Napster’s servers so a complete list of all public files from all users could be compiled. Once logged into Napster a user would simply enter the name of the file they wanted to download and hit the search button to view a list of all the sources that contained the desired file. The user would then click the download button and the Napster server would communicate with the host's MusicShare browser to facilitate a connection and begin the download. This method of file sharing is referred to as peer-to-peer file sharing.
Peer-to-peer is a distributed application architecture that partitions tasks or workloads between cooperating users. By joining one of these peer-to-peer network of nodes, the users allow a portion of their resources, such as processing power, disk storage or network bandwidth, to be directly available to other network participants. By utilizing this type of application structure, any MP3s, videos, or other files located on a users' computer are instantly made available to other Napster users for download. This is one of the major reasons Napster was so popular, it was easy to use and had a large number of files for download. Being one of the first of its kind, Napster made a significant contribution to the popularity of the peer-to-peer application structure. Many other software applications followed in Napster's footsteps by using this model including BearShare, Gnutella, Freenet, and today's major application of torrents including BitTorrent.