The Napster Controversy
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Case Details:
Case Code : BECG007
Case Length : 07 Pages
Period : 2000
Pub. Date : 2002
Teaching Note : Available
Organization : Napster.com Recording Industry Association of America
Industry : Media, Entertainment & Information
Countries : India
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Background Note
Napster was developed by two students of Northeastern
University, (Boston), Shawn Fanning (Fanning) and Sean Parker (Parker).
One of Fanning's friends had been searching in vain for digital music on the
Internet. Fanning, who had an interest in computer programming, decided to help
him by writing an Internet-based file-sharing program.
Once the program was developed, Fanning and Parker began collecting funds from
their friends and families to set up Napster as a start-up...
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The Arguments
Napster supporters claimed that the recording industry was over-pricing its
products and that file sharing was the only legitimate way to get music cheaper.
RIAA argued that if customers felt the merchandise was over-priced, they were
free to decide against buying it. RIAA supporters cited the case of global
diamond prices, which were being artificially inflated because they were
controlled by an international cartel. They countered that by Napster's logic,
it would be ethically right for a person to steal diamonds...
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The Future of Napster
Towards the end of September 2001, Napster agreed to pay $ 26 million to
music publishers to end the litigation. Napster also agreed to pay $10
million to the Harry Fox Agency, the licensing arm of the National Music
Publishers Association for the future use of copyrighted material.
In
addition, Napster agreed to pay music publishers one-third of the
revenues given to content owners. It was reported that Bertelsmann was
providing Napster the money for these deals... |
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