How The Music Industry Took On Napster And (Not Everyone) Lost

Two decades on from Metallica's infamous decision to sue Napster, Eamonn Forde looks back and explores how the rock troupe's co-belligerent Dr Dre ended up outsmarting Ulrich & co, changing tack, and laughing all the way to the bank

20 years ago this May, Metallica became the unwitting poster boys for the War On Piracy when they delivered an ominous 13 boxes of documents to the offices of Napster in San Francisco that listed hundreds of thousands of users they had accused of illegally downloading their music. This was the band’s opening act in a protracted legal drama to shut the service down.

Metallica were – along with a number of major labels (but not BMG as its parent company Bertelsmann actually invested in Napster, or at least lent it $100m) – eventually victorious as the company was hounded into insolvency. Metallica remain massive but have never quite emerged from the miasma of this, regarded as puppets of The Man and Entitled Millionaire Luddites who didn’t understand how technology was going to upend everything they had spent the 1980s and 1990s shoring up.

This is the biggest blot on their copybook and they take all the flak for daring to go against Napster and refusing to countenance that the days of wine and roses were coming to an end.

However, another major name was also involved in the legal assault on Napster and has, over the past two decades, been airbrushed out of this particular chapter of the music industry’s history. Dr Dre was at the forefront of those vocally attacking Napster and also got his protégé Eminem to windmill into the company.

“When I worked nine to five, I expected to get a paycheque every week – it’s the same with music," said Eminem at the time. “If I’m putting my heart and all my time into my music, I expect to get rewarded for that. And if you can afford to have a computer, you can afford to pay $16 for my CD."

Old Napster is long gone. The name was sold multiple times and it carries on today as a small but still active legal streaming service. Yet the story of Metallica and of Dr Dre is a modern morality tale about the lessons learned from taking a technological bruising and how the different stages of grief, as defined by Kübler-Ross, guided how they made sense of the post-Napster world – one swiftly moving into acceptance and the other still toggling between the anger and bargaining stages.

They are parallel universe Zeligs of digital music’s turbulent first two decades. One of them is now richer than they could ever have imagined thanks to deftly surfing the digital wave and reinventing themselves as a Silicon Valley power player. The others are still wealthy but cast as chugging traditionalists who are still reliant on touring to keep their fortunes topped up.

It is the photographs of Metallica drummer Lars Ulrich in standard issue rock star shades overseeing the transportation of these 13 boxes of evidence to Napster’s offices that most left their mark in the public consciousness, like a hot mug burning a ring into a Polaroid of their credibility.

It is also Ulrich’s words to the US Congress in July 2000 when testifying against Napster (alongside Roger McGuinn) that follow him like carrion crows. “Napster hijacked our music without asking," he said. “They never sought our permission."

Ulrich said he was doing this less for himself and more for the people in the wider industry ecosystem who are kept in work by people paying for albums – from studio hands to label employees. He also said he was doing this for the acts just starting out.

“Most artists are barely [earning] a decent wage and need every source of revenue available to scrape by," he told Congress. “Also keep in mind that the primary source of income for most songwriters is from the sale of records. Every time a Napster enthusiast downloads a song, it takes money from the pockets of all these members of the creative community."

While this was debatable – some acts felt Napster killed them and others felt it was the start of a shake-up of a legacy power structure and contractual inequities that made them less reliant on record labels – the image stuck of a grasping millionaire wanting to protect his status as a Croesus of the drums.

The music world was divided on what Napster not only was but also what it represented – although few wanted to put their heads above the legal parapet like Metallica and Dr Dre had done.

“I think the day of the lazy artist is over with," said Chuck D at the time. “I think it’s back to earning the respect of the fans one by one."

Even Sting – Sting FFS! – was relatively sanguine. “I do not think the genie will go back in the bottle," he said. “People are attracted to this idea of downloading music, but our society works on people being paid for their efforts, and it’s just a matter of that catching up with the technology."

Dr Dre was just as focused on tearing Napster down as Metallica were. His Aftermath Entertainment was among the labels filing suit against the service and he used the same attorney, Howard King, as Metallica. "I don’t like people stealing my music," said Dre. In the court papers submitted in the case, he added, “Napster has built a business based on large-scale piracy."

In July 2001, after a yearlong legal and media war on Napster, <A href="“ target="out">they reached a settlement with the service and said they would license to it when its planned legal version got off the ground. (Spoiler: it never really flew and it had to file for bankruptcy in June 2002 as its running costs and legal bills drove it into the ground.)

“Our beef hasn’t been with the concept of sharing music; everyone knows that we’ve never objected to our fans trading tapes of our live concert performances," said Ulrich, talking of the proto-P2P world of swapping cassettes in the 1980s metal underground. “The problem we had with Napster was that they never asked us or other artists if we wanted to participate in their business. It’s good that they are going legit."

Dre added, “I work hard making music – that’s how I earn a living. Now that Napster’s agreed to respect that, I don’t have any beef with them."

It is telling that they both used the term “beef", a colloquialism intentionally deployed to make millionaires appear relatable. But in reputation terms, Dre walked away with the wagyu and Metallica were left to chew on gristle.

The record industry was pulled inside out like a surgical glove in the wake of Napster. It took Apple’s iTunes Store (launched in the US in 2003 and the following year in Europe) to show that a legal download business was possible. But recorded music revenues – having been plumped up like Augustus Gloop in the 1990s with the CD boom – kept on tanking as music purchasing went from a $16 CD to a $0.99 download. This death spiral carried on until 2015 when things started to bottom out and tiny shoots of recovery were spotted.

The financial lifeline for the industry as a whole (although how that carried through to artists is a whole other debate) was not downloads. If anything, that hastened the decline of the CD even further. Rather it was in streaming – with its economic recalibration of consumers that turned sporadic buyers into regular subscribers – that saved the record business and saw it return to growth. And it was in their attitudes to streaming that reinforced (for a while) Metallica’s image as technologically anachronistic (or, if we are being ungenerous, technologically illiterate) and Dr Dre as highly prescient (or, if we are being equally ungenerous, crassly opportunistic).

Another important name here is Sean Parker. He did not create Napster, but he was – after meeting its architect Shawn Fanning on message board w00w00 in 1999 – the one that saw the brass ring and grabbed it, turning Napster into a “brand" that was feared by the old music industry and fully embraced by a whole new generation of music consumers for whom “disruption" was a feature, not a bug.

What Napster did – by breaking apart the old industry structure and creating a new way for users to connect with not just creators but also each other – was to cause an earthquake that allowed new types of companies to build a billion-dollar future for themselves on top of the rubble left from the collapse of the old guard. And what Parker did that really set him apart was to hitch his wagon to not one but two of these companies and make himself richer than Napster ever could have done. He also beat a path for Dr Dre to follow along on and for Metallica to dig their heels into.

Parker, with a keen eye on the future, alighted upon the nascent Facebook in early 2004 and joined as president later that year, drawing in investors and helping create the social media company that swallowed the world, driving revenue last year of $70.7bn and starting 2020 with a market cap of over $600bn.

Parker next got involved with Spotify in 2009, approaching co-founder Daniel Ek that August and becoming both a board member and investor, playing a key role in getting the service launched in the US. He also invested an estimated €11.6m in the company that would give him a return many multiples of that.

After seven years, Parker left Spotify as it was heading towards its public listing in 2018. It is unclear just how much he made from the company, but it currently has a market cap of $27bn despite racking up years of losses as it moved to become the biggest player globally in music subscription. The LA Business Journal estimated Parker had a net worth of $13.2bn as of late 2019. Disruption pays

In that time, Metallica were among the major acts who initially refused to license their music to Spotify. It was presumed that the previous “beef" with Napster would stop them from doing so as long as Parker was a key figure at the company. The ice was to eventually thaw in December 2012 when the band struck a deal with Spotify and Ulrich even appeared on stage with Parker to announce the armistice. The band were rumoured to have negotiated equity in Spotify as part of the deal (following what the major labels and the indies, via rights body Merlin, did in order to license their music to it).

They were late to streaming and also late to become stakeholders in streaming services. The financial returns were no doubt still significant, especially the rumoured stock option and the 14.5m monthly listeners they have on Spotify that have pushed tracks like ‘Nothing Else Matters’ and ‘Enter Sandman’ to close on half a billion plays each.

How Metallica moved here stands in sharp contrast to how Dr Dre played his hand.

Jimmy Iovine had founded Interscope Records in 1990 and Death Row Records – founded by Dre and Suge Knight in 1991 – became a subsidiary of Interscope in the 1990s. In 2006, Dre partnered with Iovine to create an electronics company, linking with Monster Inc to develop a line of headphones. What eventually became Beats By Dre was launched in 2008. In 2011, phone manufacturer HTC bought a stake in the company for $309m but Beats eventually bought out HTC’s stake across two transactions in 2012 and 2013 totalling $415m.

Gearing up for the power play of their lives, Beats acquired a niche streaming service called MOG for a figure rumoured to be between $10m and $16m in 2012 and that – under the codename Daisy – provided the chassis for what was to become Beats Music in 2014. Even though the service only got to users in the hundreds of thousands, Dre and Iovine had the contacts and the industry recognition to make it appear to be punching far above its weight.

Cut to Cupertino: Apple had been clinging to the iTunes download model as co-founder Steve Jobs had famously said in 2003 that “we think subscriptions are the wrong path" and that consumers “don’t want subscriptions".

Of course, it is wrong to hold a 2003 quote over someone’s head long after their passing (Jobs died in 2011), but his vision did somewhat stymie Apple’s entry into the streaming wars. Realising that downloads were tanking and Spotify was going to steal its thunder, Apple had to act swiftly to at least close the ground on this Swedish upstart. The only way to do that was to do what Apple had long done – buy up a smaller company and incorporate its ideas and technologies or pounce on an existing idea and pass it through the Apple Magic Filter to create world-beating products.

Beats was making most of its money from headphones, but Apple really wanted its streaming service. It eventually got it, paying its founders $3bn and changing its name from Beats Music to Apple Music. The deal didn’t quite fulfil Dre’s dreams and make him hip-hop’s first billionaire, but Forbes estimated he took out $500m from the Apple deal.

It is all a terribly long way from multi-millionaires dragging Shawn Fanning through the courts because he unleashed something that threatened to pull the metaphorical Pearl Carpet Of Baroda from under their feet and, if not quite tumble them into penury, then at least force them to tighten their Dior belts a little.

It is a 21st century parable about how to respond to a crisis and also what to do when you realise that litigating against technology is like throwing a tampon at a tsunami. Metallica were the obstinate old guard who dribbled out three albums this century but played over 700 shows across 13 different tours in that time. Touring was how they began and touring became their coping mechanism and survival strategy.

Dre meanwhile has played a handful of shows (most, it seems, at Coachella) and released one album (2015’s Compton) in all that time. But he was awake to the fact that the business had changed completely and that the old ways of working and thinking was wholly incompatible with this new world they all had been dumped into. Rather than try to fight technology, he opted to gamble on it and came out with the jackpot.

This is also a reminder that the disgustingly rich are unlikely to ever lose their shirt in a crisis. Money cocoons the wealthy and neither Dre nor Metallica were ever at risk of having to move into mom’s basement and get a zero-hour contract sweeping the streets. Everything is a matter of scale and of perspective. From the same starting point in a blizzard, Dre and Metallica just ended up at different points on their ascent of Cash Mountain.

Eamonn Forde’s book The Final Days Of EMI: Selling The Pig (Omnibus Press) is out now. You can buy it here

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