at the 2019 Academy Awards Roma by
acclaim director Alfonso Cuaron took
home three Oscars but the film's
significance wasn't merely measured in
trophies for many it marked a turning
point for the American motion picture
industry roma is a Netflix streaming
platform production one few people saw
an in action cinema that really sparked
a debate in Hollywood as to what
constitutes a film there's a lot of
traditionalists that seen a film is
something you go to a theater you see it
on a big screen the Napster experience
for the music business shows the
futility of trying to fight a innovation
that people are clearly embracing the
year was 1998
Will Smith and Shania Twain dominated
the pop charts Ben Affleck and Cameron
Diaz were the big draws at the box
office and tens of millions tuned in for
the final episode of Seinfeld and in a
dorm room at Northeastern University in
Boston a freshman named Shawn Fanning
had an idea for a computer program I
first started engaging with Sean online
/ Instant Messenger through his username
Napster the conversation went something
like Shawn saying hey I've started
creating this service to help people
find music he was insistent that this
was going to be huge and he might make a
lot of money out of it my response to
him was you need to just concentrate on
your studies Fanning didn't follow
Hightower's advice he dropped out to
focus on the program and partnered with
fellow teenage programmers Sean Parker
to release a beta version as it started
to spread through chat rooms they
traveled to the Bay Area
to grow the business initially I was
skeptical that gosh I'm sitting across
from two eighteen or nineteen year olds
I changed my tune once I learned that
there are already forty thousand people
using this thing Fanning called the
program Napster after his online
username over the Internet it allowed
users to access music files stored on
the hard drives of fellow Napster users
forty thousand wasn't a big number but
it was bigger than what I thought it was
going to be initially which was zero
because people weren't willing to open
up their hard drives what I realized was
that people's emotional ties to music
their general interest in music was more
than enough to overwhelm any kind of
security or privacy concern it was on
college campuses with high speed
internet that Napster really took off in
the fall of 1999 so how many mp3s you
have on your computer about six hundred
sixty seven thousand Napster Napster
Napster
it's called file-sharing seen by some as
the wave of the future but not everyone
was cheering Napster's rise college
students are making good use of the
Internet the latest software makes it a
bit too easy for students to access
their favorite tunes no longer do you
have to go to a store and plunk down
money from 84 to 2000 the music industry
means so much freakin money selling CDs
if first it was hair bands and it was
grunge bands and then it was boy bands
[Music]
it was a great time to be in the
business
1899 you know you had two or three
records come out and one week sell a
million records you actually had to
drive your car to the Tower Records and
buy a CD for $18 to get to one song a
light and so that was a good model it
made the industry tons and tons of cash
selling millions of Chumbawamba albums
with one good song was an economic food
it didn't take long for the music
industry to take notice something was
afoot months after Napster's rise
industry executives began a legal battle
to stop it they are waging a war in the
courts over who controls what artists
create to record companies whose artists
range from Tony Bennett to Metallica
this new technology in the wrong hands
is simply stealing Napster hijacked our
music without asking the business model
built on infringement is not only
morally wrong but legally wrong
illegally downloading music is the same
thing as going into a studio store on
the seas we felt pretty strongly that
digital distribution was going to bring
the industry closer to its customer and
instead of killing it
they would take advantage of the value
that it brought we've heard that we
couldn't survive before when we had
700,000 members and when we had 17
million members a chorus of studies show
that Napster users buy more records as a
result of using Napster we wanted it to
be an industry supported service that
would be a successful business we tried
to make sure that the record industry
could understand how this could be
beneficial to them but it was very clear
to me from the early going that they
were really loath to license Napster
anybody with enough money could go and
make a record that didn't guarantee you
getting into stores which was the only
place that you could actually buy that
record that was the power of the music
business the distribution the industry
went wrong in trying to hold on to that
distribution channel and though
and not trying to find a solution to
what was obvious was coming in the
future in July of 2001 after more than a
year of legal battles the record
industry got its wish the free music
service run by Napster was ordered to
stop the music
Napster which at its peak had about 70
million registered users was shut down
due to court orders but while the
industry may have defeated Napster the
idea had taken hold a flurry of other
downloading services took its place
desperate to stem the tide the labels up
the stakes and sued almost 20,000 people
for using illegal downloading software
do you feel like you're being made some
sort of a test case here yeah but CD
sales continued to plummet shuttering
record stores across the country an
industry in turmoil so when Steve Jobs
came to the table with plans for a new
online music store the major labels
finally surrendered you had only two
choices either you don't do a deal with
Steve in which case people continue to
just email the mp3s to their friends or
you do a business with him and he has a
store and then you can sell things and
his online streaming services like
Spotify and YouTube gained popularity
the music industry realized it was
better to partner than fight them in
recent years streaming revenues have
provided the industry's first real sign
of positive growth since the pre Napster
days and even how much is made but for
mid-tier artists who once benefited from
album sales the payouts from streaming
can be slim
the top 1% generate most of the revenue
hopefully more will be able to earn a
living as time goes on but it is ever
more challenging and as for record
labels the opportunity for them to be
leaders in online distribution had long
past they didn't take the time to really
understand what was going on and think
about the future implications of it
because it was clear to us if we didn't
exist something else was gonna exist the
whole reason why there are so many
people using this service is because
this is how people want to access their
music the lessons of Napster are
resonating today as another established
industry television and film faces the
same existential challenges when the
music industry was in the depth of the
legal fight with Napster smart people
were looking at the film and TV
industries and saying you're next just
wait till the internet speeds and
capabilities get fast enough so that you
can distribute a movie or a TV show that
day is here nearly 70 million American
households now stream movies and TV
shows from an Internet connected device
what Napster introduced America to was
the idea that you could have a very
large menu of content at your fingertips
and you could hit a button and get that
delivered in Hollywood the move toward
direct-to-consumer business models has
been incredibly disruptive you're
talking about an industry that has
functioned basically the same way for
about a century and a new study predicts
revenues from online streaming services
like Netflix and Hulu will outpace movie
theatres box office receipts in 2019
there's a tendency to be so engrained in
an industry that you don't see the
potential for innovation for improvement
right now Hollywood is in the throes of
a very kind of fast and furious reaction
to what's clearly been embraced by
consumers about the Netflix model Disney
is taking on Netflix with its own
streaming service and it's called Disney
Plus
today with TV and film companies
navigating the internet revolution in
real-time Napster's impact on the music
industry is a reminder of the peril of
taking too long to embrace the future
we've had a massive change massive
haven't seen anything like it since you
know the invention of the printing press
there are going to be many many new and
wonderful ways to exploit enjoy
distributed creative works we just have
to be open to it
[Music]
you