Music obtained on the Internet and downloaded to a personal computer or music player. The downloading of music in the form of MP3 files from Web sites began with the release of a free music player (called WinAmp) in 1998. In 1999, a peer-to-peer file-trading program called Napster was created by a US student, Shawn Fanning, which allowed Internet users to find and share music located on each other's computers. This was so successful – it had 60 million users by 2001 – that the US music industry took legal action against Napster, whose Web site acted as a central hub for the file traders, and the service was forced to shut down. Other file-trading programs took its place and legal downloading services were established by the music industry, though these were less popular as they required a subscription and restricted the use of the downloaded music tracks.
In April 2003, Apple Computer licensed the catalogues of the major music companies and launched its iTunes Music Store in the USA. This was a legal music download service, initially only for users of Apple's Macintosh computer but soon extended to Windows users. Users of iTunes paid 99 cents per track, and could transfer the music to an iPod or similar portable music player. Unlike competing services, iTunes allowed its users to burn (copy) tracks to CD and was not subscription-based. The service sold over 3 million tracks in its first month of operation.
In October 2003, Napster 2 was launched (under different ownership), selling single tracks for 99 cents and albums for US$9.95. Competitor music services soon cut their prices per track.
In the UK, Coca Cola launched the Windows-only MyCokeMusic download service in 2004. Music tracks cost 80 pence and albums cost £6.40.
At the same time as the legal download services were being established in the USA, the Record Industry Association of America (RIAA) – the trade body of the major music companies – took legal action against students who shared music files illegally. Many industry observers felt, however, that the association was being heavy-handed and alienating its main audience of young people, who believed that CDs were expensive because of the music industry's greed. The low prices charged for tracks by the online music services tended only to reinforce this belief.
As 3G mobile-phone services become established throughout the world, music downloads to smartphones and personal digital assistants (PDAs) are likely to overtake those to desktop and laptop computers.