Six months after Napster launched, more than 2 million people had downloaded the software. Realizing they had tapped into something explosive, Mr. Fanning joined forces with his uncle, John Fanning, and the pair formed a company and moved to San Mateo, California, to be closer to Silicon Valley investors.
The company even entered into negotiations with members of the Recording Industry Association of America (RIAA), which represents the biggest music companies in the United States.
Although the RIAA was aware of the growing popularity of the MP3 file format as early as 1997 and had spent the preceding years chasing down and shuttering as many MP3 blogs and websites as it could, it faced a different animal in Napster. The speed at which Napster spread around the world and the volume of content passing through its servers was the biggest threat the industry had ever seen.
Click here to read entire report where Matt Hartley talks with Shawn Fanning about file sharing, the music industry and where Napster got its name