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Napster Nearly Zeroes Out

NMC/Radio and Records eChart main column as published in the 5/24/02 issue of R&R It could have been the courts. It could have been the RIAA. It could have been a general yawning by users expecting the Napster of old. In the end, the near death of Napster came down to good old fashioned human greed.

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Although now off the respirator due to Bertelsmann's paltry $8 million dollar buyout, Napster nearly exited from the land of the corporate living last week after their CEO, Konrad Hilbers, had had enough. Sean Fanning's uncle, John, the original funder of the company, was at odds with two of the venture capitalists that took 15 million of the dot.com boom's most infamous dollars and, in turn, Napster to the next lofty level. And that $8 million dollar buyout figure? Half of what they offered just a few days earlier.

Hilbers, installed by Bertelsmann to shepherd their investment, found himself at the helm of a ship that was now $100 million in the hole, with an evaporated audience to show for it: dark, silent and litigating for over a year, any of the estimated 50 to 80 million people that was the Napster fan base were long gone, now hanging out on the second generation of music piracy sites like Morpheus, MusicCity, Limewire, Bearshare, Audiogalaxy, and the latest darling of that universe, KaZaA.

With no audience left and several deepening holes from which the company was trying to dig their way out, with no prospect of ending the vicious litigation that had held them hostage in the courtroom of Judge Marilyn Hall Patel, and with their plan to go legit in peril as they chose to defend their existence and charge the RIAA and its member labels with fraud and to question whether the copyrights they claimed were really theirs, Napster was a company in serious trouble. Internally, it was becoming a nightmare whose funds were drying up. Employees were handed a choice last week: work for free from now on, in the hopes that Bertelsmann and the board could come to an agreement, or take your last week's salary and get out. One worker resigned in disgust rather than work for a company that the employee said was taking advantage of a dedicated worker base.

In the end, Bertelsmann picked up for pocket change what once was worth billions of dollars on paper. Now that Hilbers and Sean Fanning are back, the employees may return, but the Napster of old will not. No matter how you slice it, Napster is a brand, a brand that to its millions of fans meant "free," not "reasonably charged for." That meaning persists today, and whatever incarnation of Napster comes next, it will be a severe disappointment to its users, and they are not shy about being vocal: Sean Fanning is being treated to a heavy dose of the venom Metallica got when they sued his company.

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