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[Digital beeping,

electronic tones]

[Static hum]

[keyboard clacking]

I released an early beta version

During the summer

and it spread quickly

By word of mouth.

[John stewart] napster users

can download musical selections

In - In mp3 format.

Mp3 is what's called a variable

loss compression algorithm.

Here's how it works.

Napster and

downloading distribution

Is the biggest excitement

Since disco,

rap and the beatles.

Its like new radio.

The majority of usage

of the mp3 format, um,

Is for unauthorized [word].

Yeah, i would like a cd player,

But i can't spend $16 on a cd.

Napster is an evil, evil,

evil, evil place to go.

...standing by live in san mateo

with more details on this story.

This last fall semester wore on

Hundreds quickly

turned to millions.

With the program spreading

Across college campuses

like wildfire.

I have never seen the industry

Under siege like this

In the 30 years

i've been in this business.

It's very important

that the internet

Go the legitimate route

instead of becoming

A haven for pirates.

You don't think

this is stealing?

Not at all.

'Cause you're just getting

a few songs

That you find interesting.

The "n" word you know, appeared.

And we had to defend ourselves.

[Don henley]

whether we like it or not,

Napster has changed everything.

And the record companies

are sadly behind the curve.

At its peak,

Nearly 60 million people

used the site

To swap music files

from each other's computers

For free.

The whole internet

could be re-Architected

By napster-Like technology.

Now sure

is the tip of the iceberg.

I think you're talking about

the proverbial finger

In the dyke.

F*** napster!

30 years ago,

the san francisco symphony

Released its music on Ips.

Then came cassettes.

And now of course, cds.

But in the very near future,

You may be able

to download their music

From the internet.

We met over the internet

and we knew each other

For like three or four years

or something.

Before we ever met in person.

Mm-Hmm. We met the first time

as a result of napster.

Shawn flew down

from boston to virginia

To meet with some investors

That i set up

a meeting with.

The doorbell rang, i was

nervous for a brief second.

Kind of like going on a,

like a first date.

Uh, with someone

you're starting a company with.

And uh, and the door opened,

it was fanning.

He looked at me

and he said,

'You look exactly

like i thought you'd look'.

And i said, 'you look exactly

Like i thought you'd look'.

And he said, 'okay great,

Let's go over the presentation'.

So we jumped into the powerpoint

And went through all the slides,

And then got in

my parents' minivan

And my dad drove us

to our first investor pitch.

I take issue

with people who say,

'Ah, the moment i saw it,

I knew it was gonna be

f***ing huge

And take over the universe'.

They're all lying.

There's no possible way.

No one had that

conceptualization

In the beginning.

I don't even believe

fanning did.

You're saying that people

Are gonna download a client,

Put a client on their computers

And they're going to

allow stuff on their hard drive

To be shared.

Most of the development

of the web,

Up until napster,

Was basically about

Information storage

and information retrieval.

It wasn't about connecting

people to people.

We're gonna, like,

download stuff

From each other?

Like, i was like,

Nobody's gonna open up

their hard drive like that.

Nobody's gonna allow

Their bandwidth to be used.

This sort of comes

onto my radar.

And its really interesting.

No one is going to share an mp3.

That, that was my quote.

No one's gonna share an mp3.

And...

boy was i wrong.

I was so wrong.

Our system has been bilked,

This time sharing system

for, for about

Six months now. Its been

working and in that time,

We've gone from

getting one console

To getting about

six working now

With six more due

the rest of spring.

What is internet anyway?

Internet is uh,

That massive computer network.

The one that's becoming

really big now.

[Off-Camera] it's a

giant computer network

Made up, made up of uh,

started it from...

oh i thought

you were gonna tell us

What this was?

It's like a computer billboard.

[Off-Camera]

it's not, it's not a,

It's, it's

a computer billboard,

But its nation-Wide

and it's it's several uh,

Universities and everything

all joined together...

and others can access it?

[Off-Camera] and it's

getting bigger and bigger

All the time.

I wrote a piece back in 1990,

That, that it would

shortly be the case that, that

Everybody under 20,

At that point, would become

native to a place

Where everybody over 20

at that point,

Would always be an immigrant.

So i was a young teenager

and i ran,

I was running a uh,

running a bbs,

Which was um, somewhat

sophomorically titled,

'Realm of darkness'.

But online in the bbs era, meant

Connected to potentially one,

Maybe a hundred other people.

Maximum.

And that, that's what was

so profoundly different

About the explosion

of the internet.

Was that it was one network.

So suddenly,

you could be connected

To everyone.

There are now,

a very large number of people

That are online,

that are young.

And you know, they have

a completely different sense

Of how the world works.

And what power is and what,

What authority ought to be.

I mean its a profound shift.

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