All the Rave: The Rise and Fall of Shawn Fanning’s Napster

In this definitive look at the revolutionary music-sharing site, Menn follows Napster’s trajectory, from its founder Shawn Fanning’s bedroom in Massachusetts to his relocated headquarters in California, and from the company’s challenge of copyright laws and its stand against music industry behemoths to the federal court injunction that paralyzed it.

Using interviews with key players, emails, court papers and internal documents, Menn, who covers Silicon Valley for the LA Times, reveals a union of youth, hype, rash decision-making and groundbreaking technology. The company beloved by young music fiends and bored office workers all across America had its share of problems during its meteoric rise: the shady background of the major shareholder and self-appointed co-founder, Fanning’s uncle John; the never-ending search for funding and executive staff; the lack of a concrete business plan; and, of course, piracy charges.

For several years, though, Napster was bolstered by public opinion and independent bands at odds with the record industry. “Napster dominated the market,” Menn contends, “both because of its damn-the-torpedoes approach to business and its flawlessly easy-to-use technology.” But when a judge ruled against the company’s sale to Bertelsmann and Fanning failed to raise enough money for his own bid, Napster filed for bankruptcy and the young “ungeeky geek” whose hair gave Napster its name moved onto a new idea-one, he maintained, that would respect copyright laws.

This story of hacker versus record giant is already a classic dot-com age tale, and Menn does it justice in this worthwhile read.

Napster was a great programme when it came out that allowed me to find obscure artists, and get popular songs that weren’t worth buying the entire album for. The book had a great story tracing the history of Napster and serves as a good case study on how people can fuck up a revolutionary idea all in the name of greed. The main culprit for Napster’s fall first was John Fanning, an ambitious and unethical businessman who pressured Shawn Fanning to sign over 70% of Napster Inc over to him and vetoed nearly every business decision as majority shareholder that would have legitimised the company and brought in new partners and cash injections. The later culprits were the venture capitalists who were driven by greed to aggressively seek more financial backers and failed to work with their engineers to develop a feasible business model for Napster.

Exerpted from All the Rave:

John Fanning bears little physical resemblance to his solidly built and nearly-shaven-head nephew, sporting thinning brown hair and a bantamlike forward stance. He graduated from vocational high school in Hanover in 1982 and took courses at Boston College on and off for eight years without graduating. He wanted to be a contractor and worked in construction. A stint at Boston-based Fidelity Investments sounded better. Fanning, who declined to be interviewed, says through an attorney that he worked there as a “senior trader,” handling high-risk investments. He also spent time in Fidelity’s “telecommunications group,” which the lawyer says dealt with holdings in the telecommunications industry.

Fidelity says something different. According to spokesman Vincent Loporchio, Fanning worked as a console representative for two years. Console representatives do not make trades. “They are responsible,” Loporchio says, “for watching customer call volume and routing customer calls appropriately.”

In the early 1990s, John Fanning bought a struggling computer business on credit, and it failed after two years. His next try at business began with his love of chess. A staff of Carnegie Mellon University graduates got small equity stakes in Chess.net, with Fanning keeping majority control of the online games firm. Fanning’s dominant position was “an invitation to disaster,” says software engineer Brian McBarron. Coworker Matt Ramme says the team was too inexperienced to know that the balance of power should have been different; the staff had initially been overly influenced by what they thought was Fanning’s past success. “We were working for free, essentially,” Ramme says.

John Fanning did some things right, including making a deal for referrals from America Online that brought in thousands of online chess players. The internal management was another story. The programmers soon discovered that the office rent and other bills were going unpaid, and even paychecks were erratic. Numerous lawsuits from the late 1990s show that Fanning’s troubles extended beyond Chess.net. He lost two default judgments totaling about $44,000 for bad debts in 1999, and he was charged with assault with a deadly weapon after he attacked a maintenance man at his Hull condominium complex. Fanning later got the default judgments vacated on the grounds that the creditors had his address wrong. The assault charge was dismissed after Fanning completed pretrial probation.

In January 1999, Shawn dropped out of college to concentrate on writing the program that would become Napster. In May, John Fanning filed papers incorporating the company. At first, Shawn was pleased by his uncle’s participation. But then John Fanning told Shawn that he would be getting only 30 percent of the company: John Fanning would keep the rest. Fanning explained to his stunned nephew that the company needed an experienced businessman like himself in charge. Besides, when it came time to sell part of the company to new investors, John Fanning said, he would unload some of his shares, reducing his percentage of the company. Less emphasized was the obvious corollary: that Fanning would be the first to get money out of the project to which his nephew was devoting every waking hour.

It was appalling that John Fanning decided to take credit for all of Napster’s successes while blaming all the failures on everyone else. According to the book, Fanning founded NetCapital, which created subsidiaries that copied elements of Napster’s original business model but only used them to generate cash from venture capitalists during the dotcom boom. Fanning’s website is located at

All the Rave: The Rise and Fall of Shawn Fanning’s Napster is a worthwhile read for anyone who is interested in the P2P revolution, intellectual property law, dotcom mentality and business ethics.

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