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Summary Article: PEER-TO-PEER
from 100 Ideas that Changed the Web

And justice for all?

In 1999 Shawn Fanning created a downloadable program that allowed him to share music with his friends. He called it Napster. Within days the 19-year-old had a lot of friends – 1,500 of them. He had created the first peer-to-peer (P2P) network.

A computer network that allowed the sharing of resources without the need for a central server was a radical departure from the model that had dominated the computer industry for 50 years. Shawn's uncle John Fanning invested in the fledgling company and Shawn's friend Sean Parker committed himself full time to the project. The three of them relocated to Silicon Valley, where they were treated like rock stars. Napster looked set to rewrite the rules for the digital era. Except the Recording Industry Association of America had other ideas and sued. The rules had not changed after all, at least not yet.

Metallica discovered that their entire back catalogue was on Napster and joined the fight. Drummer Lars Ulrich was sickened ‘that our art is being traded like a commodity rather than the art that it is.’ In truth, whether it was art was not the issue – it was all about getting paid for the commodity. Dr. Dre followed suit, piling on the pressure by suing 300,000 fans who had illegally downloaded his music. It was too much for Napster. Despite support from some bands such as Public Enemy and Radiohead, it shut down in July 2001 and declared itself bankrupt in 2002.

It was the end of Napster but it was not the end of P2P. Open-source developers set about creating a second generation of P2P software products without the central indexing function that had been Napster's downfall. Mainstream players also took note, AOL, Yahoo and Microsoft all adding file-swapping ability to their instantmessaging products. Eventually, a dominant P2P protocol emerged. It was called BitTorrent, and with 150 million active users it is now responsible for 10 per cent of all internet traffic – more than Facebook and YouTube combined.

Napster provided a radical new model for file distribution, the impact of which has spread far beyond the music industry: using the same decentralized model, Airbnb has become an accepted part of the short-term property rental market, and Buzzcar looks to do the same for vehicle hire. Perhaps the most surprising sector to be shaken up by the P2P model is the financial industry. Bitcoins, a peer-to-peer currency, are exchanged without an intermediate financial institution, and P2P lenders such as Zopa provide loans to small business, offering decent returns to investors by distributing the risk across many lenders.

Shawn Fanning went on to develop Rupture, a social network for gamers, and Path, a social network that limits connections to 150. Sean Parker was the first investor in Facebook and is now a board member of Spotify, a legitimate music-streaming platform based on the P2P software model. Not bad for a couple of college drop-outs. In the end, it seems the rules have changed, and even Lars Ulrich recognizes it. At a recent press event, he shook hands with Sean Parker and agreed to put Metallica's back catalogue on Spotify.■

‘Our art is being traded like a commodity rather than the art it is.’

Copyright © 2014 Laurence King Publishing

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