Napster’s lessons for the AI age

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The writer is director of the AI and geopolitics project at the Bennett Institute for Public Policy, Cambridge university and author of ‘AI Needs You’

Twenty-five years ago, a college student’s file-sharing programme sparked a war that nearly destroyed the music industry. In 1999, while record executives were focused on the lucrative CD market, Shawn Fanning’s Napster unleashed a digital revolution. Its rise and fall is a cautionary tale for the creative industries and artificial intelligence companies at war today.

Napster offered music fans something irresistible. Digital music meant not only instant access to virtually any song but the ability to choose how they heard it. Listeners could build playlists across a range of genres. It was a forerunner to the streaming experience we know today.

But record executives largely dismissed the potential of digital music, failing to innovate or compromise. At one point there was a deal on the table for major labels to equally share a 60 per cent stake in Napster. But the deal fell apart and the companies eventually sued Napster into bankruptcy. 

Record companies won the battle but they did not win the war. Their intransigence left a vacuum. Even after Napster was shuttered in 2001, digital music piracy continued. Then came Apple’s iTunes. For record companies, charging 99 cents a song was better than pirates giving it away for free. But labels received nothing from lucrative iPod sales, which skyrocketed on the back of the newly available legal digital music. One music journalist said “labels [gave] away their digital music business to Steve Jobs”. 

AI companies and creative industries currently battling over the use of copyrighted works should take notice.

Generative AI companies claim a legal concept called “fair use” applies to the content they use. Microsoft chief executive Satya Nadella compares the training of AI models with the way humans learn from textbooks and then use that knowledge to create new ideas.

But artists argue this breaches their intellectual property, and want compensation for the use of their work by companies that train generative AI models. Recently, over 30,000 artists, including ABBA’s Björn Ulvaeus and Radiohead’s Thom Yorke, signed an open letter that called the use of unlicensed training data for the models “a major, unjust threat” to artists’ livelihoods. Artists like Ulvaeus and Yorke are innovators themselves, and have long embraced new technology. The tech sector’s failure to consult and understand the creative economy has turned potential allies into adversaries.

Unlike the Napster-era, this time it’s not just music affected. The New York Times is suing OpenAI, as is the Authors Guild. Penguin Books has announced it will begin adding a warning to copyright pages that prohibits their use in AI training data. But in a sign of how divergent attitudes are, News Corp has struck deals with one AI company, OpenAI, while suing Perplexity, another AI company.

Robert Downey Jr is preparing legal protections against AI impersonation after his death (though as the announcement of an AI-generated Michael Parkinson podcast shows, celebrities who have already passed away have missed the opportunity to set similar boundaries). 

Governments across the world are also taking radically different approaches to this fight. Singapore has allowed some AI training without copyright restrictions, while the US government is so far letting the courts decide. The UK is trying to keep both sides happy with plans for an “opt-out” model, but in doing so it may please neither.

Some market solutions are emerging. Organisations, including the FT, are attempting to work with AI companies, striking licensing deals and experimenting with the technology. Artists and their representatives can also use existing contracts and update them for the generative AI era.

As these issues are worked out through contracts, courts and legislatures, both sides should resist the temptation towards polarisation.

Creativity and technology have always gone hand in hand. The tech industry can learn from Napster’s hubris and meaningfully engage with creators. In turn, the creative industries can take their own lessons from the saga by reckoning sooner with the irreversible change that generative AI has brought and embracing the new technology.

The alternative is a repeat of the music industry’s lost decade — years of lawsuits and missed opportunities that benefited neither side. The best answer for today’s creative industries and AI companies is to try to build the future together.