Napster servers provided lists of music files (some of which were copywrited) that were available to be copied from participating Napster users. It is important to note that Napster did not provide the music files. Rather, it provided information—the location of users who were willing to share specific music files. Once a requesting user had the location of the files, he or she would contact the provider directly and did not need to remain in the Napster network.
When the music industry charged Napster with violating copyright laws, Napster responded that they did not provide the music files, noting that they only provided information. The courts ruled against Napster citing that Napster facilitated the illegal copying of copyright materials and the Napster sites were shut down. Once the servers were shut down, the Napster system fell apart.
To learn more about how Napster worked, click the link below and view the animation.