On December 6, 1999, attorneys for the Recording Industry Association of America (RIAA) filed a complaint in the U.S. District Court for the Northern District of California. The defendant was Napster, Inc., a company less than a year old. The allegation was contributory and vicarious copyright infringement. The plaintiffs were eighteen record companies, including A&M Records, Sony Music, and Universal Music Group. The lawsuit sought damages of up to $100,000 per copyrighted work shared—a figure that could reach into the trillions.
Napster, founded by Shawn Fanning, provided software that allowed users to search for and download MP3 music files directly from each other's hard drives. It did not host the files; it hosted the index. By that December, millions of users, primarily college students on fast campus networks, were trading songs without payment. The industry saw catastrophic loss. Napster saw a revolutionary community. The lawsuit was the inevitable collision between a pre-digital business model and a post-scarcity network.
The legal argument centered on a single, powerful concept: control. The RIAA contended Napster could control the infringement on its system and financially benefited from it. Napster argued it was a mere conduit, like a telephone company. The court sided with the RIAA, issuing a preliminary injunction in July 2000 that effectively shuttered the service. The ruling established that a platform could be held liable for the infringing actions of its users, even if it did not directly host the material.
Napster's demise did not stop file-sharing. It fragmented it into more resistant, decentralized protocols like Gnutella and BitTorrent. More consequentially, the lawsuit forced the music industry to confront digital distribution. The costly legal victory delayed the inevitable by half a decade. The vacuum Napster left was eventually filled by Apple's iTunes Store, a licensed, paid model that the industry itself should have built.