A Man Who Pictured the Future and an Industry Stuck in the Past

On this day in economic and financial history...

The Recording Industry Association of America has long had a difficult relationship with technology. In the 1970s, it fought against cassette tapes that could record its copyrighted songs. In the late 1980s, it killed Digital Audio Tape technology by copy-protecting the format to death. In the 1990s, the RIAA finally met a technology it couldn't control: digital audio. But the RIAA threw its considerable power into fighting it, and the landmark case of the digital-music age was filed on Dec. 7, 1999: A&M Records v. Napster, also known as the RIAA v. Napster case due to the large number of record labels listed as plaintiffs.

Napster was one of the originators of modern peer-to-peer file-sharing services. It had come online only six months prior to the RIAA's lawsuit, but its immediate popularity and its focus on the free transfer of music files put it squarely in the music industry's crosshairs. The lawsuit only served to make Napster a household name, and at the peak of its popularity Napster had 25 million active users. However, in 2002 a judge ruled that Napster was liable for copyright infringement, and the site was forced to shut down. Its assets were quickly purchased by German media giant Bertelsmann, which later found itself on the hook for more than $300 million in music-industry claims against Napster.

The Napster case contributed greatly to the RIAA's unpopularity, particularly after the organization began suing individual file-sharing users en masse for copyright infringement. File-sharing programs were far easier to build than to be taken down by the RIAA, and in the decade after the Napster case, the music industry's revenue dropped by nearly 60%. The RIAA's general helplessness against file sharing also contributed to the growth of Apple's (NASDAQ: AAPL  ) iTunes, which came online in 2001 and sold a billion songs within its first three years of operation.

Napster itself lives on -- sort of. Best Buy (NYSE: BBY  ) bought the service in 2008 for $121 million and merged its Napster assets with Rhapsody, at the time the largest on-demand music service in the United States, in 2011. Sean Parker, one of Napster's founders, later earned far greater fame as the first president of Facebook (NASDAQ: FB  ) . Justin Timberlake played Parker in The Social Network, the Oscar-winning 2010 film about Facebook's early years.

Shake it like a Polaroid picture
The first instant camera was made available to the public for the Christmas shopping season of 1948. That camera, the iconic Polaroid Land Camera, got its first real public attention on Dec. 7, 1948, when Polaroid's Washington representative and a member of the FTC gave President Harry Truman a Land Camera as a gift. The instant-photo era had arrived.

Edwin Land, the camera's inventor and the co-founder of Polaroid, was similar to Apple co-founder Steve Jobs in many ways and was one of Jobs' heroes as a young entrepreneur. Both men had a vision of technology transforming the world -- Land with his cameras, Jobs with computers. An article by Christopher Bonanos in The New York Times the week after Jobs' death captured the similarities perfectly:

Both built multibillion-dollar corporations on inventions that were guarded by relentless patent enforcement. (That also kept the competition at bay, and the profit margins up.) Both were autodidacts, college dropouts (Land from Harvard, Jobs from Reed) who more than made up for their lapsed educations by cultivating extremely refined taste.

Most of all, Land believed in the power of the scientific demonstration. Starting in the 60s, he began to turn Polaroid's shareholders' meetings into dramatic showcases for whatever line the company was about to introduce. In a perfectly art-directed setting, sometimes with live music between segments, he would take the stage, slides projected behind him, the new product in hand, and instead of deploying snake-oil salesmanship would draw you into Land's World. By the end of the afternoon, you probably wanted to stay there.

Although Land all but single-handedly built the era of constant photography that we're familiar with today, his company never toppled Eastman Kodak (NYSE: KODK  ) , which was a member of the Dow Jones Industrial Average (DJINDICES: ^DJI  ) for 74 consecutive years, from 1930 to 2004. Polaroid fought a contentious battle with Kodak over instant cameras that ended in victory in 1986. Polaroid was awarded $909 million in damages, which remains one of the largest such awards in American patent history.

The award couldn't save Polaroid, which had been in decline since Land's acrimonious departure in 1982 -- an exit that also bears similarities to Jobs' 1985 ouster from Apple. The company now named Polaroid is connected to Land's innovative enterprise in name only.

By the way, that first presidential Polaroid, taken by Truman himself in 1948? It might have been better with an Instagram filter. According to The New York Times, "The consensus was that the picture made of Mr. Truman by Mr. Mason [the FTC member] was better than the one made by Mr. Truman of Mr. Mason."

Apple's founder helped spread the PC to the masses. Then he came back and did the same for the smartphone and the tablet. Can Apple continue to thrive without Steve Jobs, or will it face the same fate as Polaroid in the near future? The Fool's premium research service has our best tech analysts dedicated to all things Apple, and they can help answer your questions. Don't be left in the dark -- subscribe to our Apple research reports now for the information you need to make the right decisions.


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