Today Napster was shut down. Was this the only solution? Here's what it boils down to: digital downloading is a legitimate format for music, just like cassettes, vinyl, CD's, DVD's, and 8-tracks. The music industry has yet to embrace it. The public has for a long time now, and sites like mp3.com and Napster gave people what they want.
The big question: Was Napster hurting the music industry? No. The music industry hurt itself by not including digital download sites as part of their elite club. Here's a simple solution: (presented it to Napster, but a little too late...) Napster keeps a log of downloaded songs, just like a radio station. Each day, they submit a report to ASCAP, BMI, and give a royalty to the publishers of each downloaded song. Same system as radio. Suddenly, everything changes - instead of Metallica getting ripped off 300,000 songs-per-day, it's as if they had 300,000 songs getting airplay. Labels, online CD stores, and bands would be wise to advertise on Napster at this point, and the advertising monies would cover the royalties Napster would be paying to the artists. This could have been the biggest step in acknowledging digital downloads as a new frontier for the music industry. And everybody wins.
Who did benefit from Napster? The public of course, but also indie bands. Let's say you're an unsigned band with a website, and you've sold 1000 CDs online and at gigs. If you got 10,000 people to swap your music on Napster, you just made 10,000 people aware of your band. It's not like you lost 10,000 CD sales by them swapping your music - they wouldn't have known you existed! If 10% of those people like your music enough to buy your CD, you just doubled your sales, and created 10 times the awareness for your band.
Who was hurt by Napster? All those that resisted change, and didn't want to make the evolving world part of their's. Ya can't fight progress. Napster downloads were considered piracy only because the industry didn't make the effort to include download sites as part of their evil empire. Which surprises me. When there's money to be made, the industry finds a way to get it. Whether it's by buying up indie music sites (AOL buys Riffage.com, then merges with EMI/Warner) or by their legal raping of MP3.com, the #1 indie music site. *The more power we, the people have as indie artists, the less control the industry has over their continued theft of signed artists' services. Be aware that every time you settle for a bad record deal with a label, you're taking value and power away from all the indie musicians that are taking responsibility for their own lives and careers. Our ancestors spilled alot of blood to abolish slavery. Don't shit on their graves.
I agree with Lars that Napster was aiding piracy. But don't blame Napster for existing - blame a music industry that wants everything for itself.