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10 Tech Companies That Totally Imploded


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Napster
Despite the controversy over copyright, Napster won a Webby award for best music site in May 2000. © CARLOS AVILA GONZALEZ/San Francisco Chronicle/Corbis
Despite the controversy over copyright, Napster won a Webby award for best music site in May 2000. © CARLOS AVILA GONZALEZ/San Francisco Chronicle/Corbis

Napster was different: It wasn't the bust that killed it, and the site re-emerged, albeit in an altered form. Launched in 1999, Napster was an early peer-to-peer music sharing facilitator that indexed sites of users who hosted music on the Web. It allowed users to easily search for and download all kinds of music for free. It was wildly popular in its heyday, reaching 80 million users [source: King]. The company ran afoul of the music industry and its major trade organization, the Recording Industry Association of America (RIAA), which tried to sue Napster out of existence for copyright infringement, but the company struggled on for a little while in litigation. A German media company called Bertelsmann paid millions to Napster for development of a secure music distribution system, which led to Bertelsmann being embroiled in some of the anti-Napster lawsuits for helping to keep Napster going. (Ironic twist: A music division of Bertelsmann was also suing to kill Napster.)

Legal injunctions finally made Napster shut down in July 2001. The company tried to stay afloat as a secure and legitimate file trading service, and had a purchased offer from Bertelsmann for $20 million, but internal politics nearly destroyed the company and the deal never went through [source: King]. The company was relaunched by Roxio as a monthly subscription service in 2003, and was purchased by Best Buy for $121 million in 2008 [sources: Pepitone, Reisinger]. In 2011, Best Buy sold Napster to Rhapsody, another music subscription service. Napster co-founder Sean Parker is now an investor and board member of Spotify, a Rhapsody competitor. Despite the fact that Napster allowed for illegal download of music, it single-handedly popularized the ability to download songs online, something we take for granted today. Napster ultimately helped usher in changes to the music industry that led the streaming and sale of music online through services like Rhapsody and Spotify, and retail sites like the iTunes Store and Amazon.


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