File sharing allows one computer to connect anonymously with others, sending and receiving files. Most files were single-track MP3s of copyright music.
Background
The original theory was that because mixtapes were legal then noncommercial “sharing” of any music was legal. The legality of mixtapes, a collection of songs from other tapes, stems from a US law, the Audio Home Recording Act of 1992. As long as the tapes were noncommercial, Americans were able to share them with friends.
However, creating a mix-tape took time and each was customized for the recipient: young lovers often created tapes for one another. Furthermore, they contained a collection of songs. In contrast, MP3 “file sharing” took little time to create or download. The songs transferred between strangers and were almost always single-tracks.
Napster
The Napster software itself resided on a centralized server but connected computers directly together to actually transfer the files. That is, the files did not exist on the Napster servers. They were on the sender’s computer which the Napster software, in effect, turned into a server for the purpose of transmitting files.
Then teenager Shawn “Napster” Fanning wrote the Napster software. His goal was circumventing hosting MP3 music files on a central web server. MP3 websites were quickly shut down by the music industry.
Fanning and co-founder Sean Parker came up with the peer-to-peer file “sharing” scheme. Napster put an easy to use interface on this system that looked like music shopping and facilitated the uploading and downloading of MP3 music files for those without technical skills. It became wildly popular.
To Every Action…
The music industry freaked out.
On Dec. 7, 1999, the empire struck back. Countless music industry participants sued Napster the company, the founders, their investors, and even many users of the system. The lead lawsuit was captioned Metallica v. Napster Inc. Altogether, the Recording Industry Association of America (RIAA) filed over 30,000 lawsuits against Napster users and even one of the music publishers, Bertelsmann, that leant Napster money.
Napster eventually shut down and sold. However, the “sharing” technology continued to evolve.
Eventually, Kazza, another music sharing technology, took its place. Rather than rely on individual servers, Kazza connected ordinary computers to one another leaving no central server or company to shutter. The RIAA continued to fight the myriad of file “sharing” services.
The launch of Napster was also, not coincidentally, the peak of revenue for the music industry. The industry refused to accept their former business model, selling entire CDs to users who wanted a single song, was no longer viable. Furthermore, the lawsuits alienated an already feisty audience.
Eventually, starting about 2016, music industry revenues reached a bottom and started increasing thanks in large part to streaming music. Additionally, many bands reoriented their commercialization plans away from music sales and towards live concerts that could not be pirated.
Parker would go on to work as an early employee of Facebook. In 2019, Fanning remains unrepentant. The makers of Kazza eventually created Skype.