, Shawn Fanning received numerous industry awards for technology, creativeness and marketing. In October 2000, the company Napster won several of the highest awards such as best Guerilla marketing, best music web site and best innovative start up. To every success, there is a downfall. With Fanning’s innovative idea of music file sharing, record company revenues are gradually decreasing. As the demand for music increases, purchasing CD’s at a price ranging from fifteen to twenty dollars is now being provided on the Internet for free. This in turn is causing record companies such as Sony, Universal, EMI and Warner to lose vast amounts of money for the simple fact that people are downloading their product for a cost of nothing. In relation to supply and demand, if the price of music decreases the demand for music increases. Napster has dramatically affected the annual sales revenue of some major artists such as Dr. Dre and Metallica, at the same time violating copyrights. Annual revenues of major record companies include 6.2 billion dollars (universal), 4 billion dollars (Warner), 3.5 billion (EMI) and 6.7 billion (Sony). These are astonishing numbers. Since the interference of Napster, many of these figures will drastically be affected in a loss of revenue for these companies. For example statistics have shown that for every five music listeners only one will actually purchase the CD. With approximately thirty-two million users, the format MP3 is used to exchange music files. “ There ain’t no such thing as a free lunch.” Napster members believe that the downloading of music is “free” but technically the “free music” is coming out of the pockets of the record companies that provide it to the public. Napsters officials have contemplated whether to be a “ free promotional music service” or “ one that would charge a monthly fee” to registered users. Earlier in the...
