Napster’s original file-sharing service ended after a court ordered its transfers disabled under a modified preliminary injunction. The Ninth Circuit affirmed that shutdown order in March 2002, but it never finally adjudicated Napster’s ultimate copyright liability. The company later failed to launch its planned licensed service and filed for bankruptcy in June 2002.
What Napster was—and how it worked
Napster made it easy to find and exchange MP3 music files. The U.S. Copyright Office described a hybrid system: Napster maintained a centralized index that helped users locate files on participating computers, while the files themselves were copied and transferred directly between users. In other words, Napster did not simply store every shared song on its own servers; its discovery system connected users to files held on one another’s computers. The Copyright Office’s amicus brief describes the system and the parties’ legal arguments.
That combination explains both the service’s appeal and the legal focus on Napster’s role. Users could search a shared index rather than track down music files one computer at a time, while Napster’s centralized indexing and facilitation of exchanges became important to the infringement claims against it.
Why Napster faced a lawsuit
Record companies sued in December 1999, alleging copyright infringement by users and secondary liability by Napster. Napster disputed the allegations and raised defenses, including one based on the Audio Home Recording Act. Those positions appear in the Copyright Office’s litigation brief as arguments advanced by the parties; they should not be confused with final findings by a court.
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In February 2001, the Ninth Circuit substantially affirmed a preliminary injunction against Napster while sending the case back for the injunction to be modified. A preliminary injunction is an interim order, not a final decision after trial on ultimate liability. The later Ninth Circuit record expressly states that Napster’s ultimate copyright liability was never adjudicated. Read the 2001 Ninth Circuit opinion.
How the injunction led to the shutdown
The modified injunction set out a notice-and-filtering process. Copyright owners had to identify a protected work, its artist and ownership, and at least one filename in Napster’s index containing the work. Napster then had to search its music index and block the identified material. The order also required both sides to address reasonable variations in filenames and spellings.
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After monitoring the service for three months, the district court found Napster’s compliance unsatisfactory and ordered file transfers disabled until the service met the injunction’s requirements. In March 2002, the Ninth Circuit affirmed both the modified preliminary injunction and the shutdown order. This was enforcement of the interim order after the court found compliance inadequate—not a final trial judgment establishing Napster’s ultimate copyright liability. Read the 2002 Ninth Circuit opinion.
Napster’s original file-sharing service had already shut down in July 2001. The later appellate decision affirmed the order disabling transfers after the modified injunction’s requirements were not met.
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What happened after the file-sharing service closed
Napster sought to move from free file sharing toward licensed digital music distribution. At a House hearing, the company’s proposed membership model—publicly unveiled on February 20, 2001—was described as a subscription service intended to pay rights holders. The hearing record includes company statements about the plan, but those statements are not independent measurements of user demand or proof that the service was fully operational. The House Judiciary Committee hearing record documents the proposal.
The Ninth Circuit reported in 2007 that Bertelsmann loaned Napster about $85 million between October 2000 and October 2001 to support the planned transition. Napster did not fully launch the licensed service before filing for bankruptcy in June 2002, and Bertelsmann did not obtain Napster’s assets through those bankruptcy proceedings. The same 2007 opinion notes that ultimate infringement liability was never adjudicated. Read the Ninth Circuit’s 2007 opinion.
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Napster’s story in three stages
| Stage | Technology or business model | Legal posture |
|---|---|---|
| Original service | Centralized index for finding MP3s; direct transfers between users’ computers. | Record companies alleged infringement by users and secondary liability by Napster. |
| Modified injunction | File-sharing service remained subject to notice-based identification and blocking duties. | The 2001 appellate ruling addressed a preliminary injunction; the modified order required Napster to block identified works and reasonable filename variations. |
| Attempted transition | Proposed subscription distribution intended to pay rights holders; the licensed service was not fully launched. | Napster filed for bankruptcy in June 2002; ultimate infringement liability was never adjudicated. |
What the record does—and does not—establish
The court decisions establish the injunction, its modification, the shutdown order, and the later bankruptcy and loan history. They do not establish a final ruling on Napster’s ultimate copyright liability. Nor should commonly repeated user totals or song-sharing figures be presented as settled measurements here: the cited materials do not establish an independently verified peak-user or songs-shared statistic.
The Ninth Circuit’s 2007 opinion describes an estimate of 40 million users as an allegation by the parties in that litigation, not a court-verified peak-user count. Likewise, the House hearing record includes Napster’s contemporaneous claim that 70% of its users would pay to continue using the service; that was the company’s statement, not an independent survey result.
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