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Fresh Look at Napster

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Nice overview of Napster history – did it really happen? – in LA Times excerpt from new book All the Rave: The Rise and Fall of Shawn Fanning’s Napster by Joseph Menn:

    It all began with a poor Boston-area kid who came west to Silicon Valley and started a revolution.

    Shawn Fanning and Sean Parker packed their bags for California in September 1999 because Napster’s first equity investor, Yosi Amram of Palo Alto, wanted to keep an eye on the company. Parker took what he could carry from Virginia and went to the airport. Fanning was to fly the same day from Boston, but he misplaced his driver’s license and couldn’t make the flight.

    When Parker arrived at the San Francisco airport and discovered his partner wasn’t there, he realized he was alone in a city where he had no friends, no support network and no place to stay. Fanning arrived a day or so later, exhausted. “I was in really bad shape, just from programming for eight months,” he said. “I was going to a strange place. I didn’t get a sense of what I was getting into or really much of an understanding for what it meant to start a company or raise money or any of those things.”

    They were relying on the experienced adults in the company, such as Napster CEO Eileen Richardson. But Richardson hadn’t done enough homework. She said that her first question to Amram before she signed on had been about copyright law. Anything as powerful as Napster, which took away so much music without paying any money to the labels, had to be illegal, she worried. Amram assured her it wasn’t, and he told her about a lawsuit-defense memo that had been prepared for the company. That was enough to convince her. She was foolish for not doing at least a modicum of due diligence and speaking to a lawyer. But she thought people would just use Napster to sample music, then purchase what they liked. CD burners were rare at the time–they would soar in popularity later, precisely because of Napster.

    Richardson decided to move fast to raise more money. After word about Napster had leaked out in June 1999, 100,000 users had downloaded a test version. When college students returned for the fall term, Napster had the potential to turn into the ultimate case of viral marketing, with word of mouth spreading it faster than any advertising could. But the usage was already straining Napster’s capacity, and the system kept crashing. If the positive buzz was replaced by griping about the crashes, Napster could die before its first official release.

Amazing story – included in the excerpt are bios of the key players:

    Shawn Fanning

    Raised in a blue-collar home outside Boston, Shawn came up with the idea for Napster while a Northeastern University freshman, then dropped out to work on the project. World famous by the end of 2000, he stayed at the company even after the site shut down, resigning in September 2002.

    John Fanning

    Shawn’s uncle played an active role in his nephew’s life, employing Shawn at his struggling Internet chess firm. He incorporated Napster and kept 70% of its stock, to Shawn’s dismay. As Napster’s first chairman, he drove away cautious investors and plotted a collision course with the record industry.

    Sean Parker

    A friend of Shawn’s from northern Virginia, Parker was more business-minded. He drafted the first strategic plans and introduced Napster to potential investors. Parker’s cavalier e-mails about Napster users exchanging pirated music help sink the company in court. He left Napster in 2000 and founded a software firm.

    Eileen Richardson

    Napster’s first full-time CEO was an experienced venture capitalist but had never led a company from the inside. Worse, she didn’t meet John Fanning or research the legal issues before signing up. Richardson played dumb with the record labels and managed to raise venture funding for the firm.

    Bill Bales

    Napster’s vice president of business development and one of its first employees, Bales was a Silicon Valley veteran. But he behaved erratically, clashing with his colleagues and allying himself with John Fanning against Richardson. After launching another file-sharing start-up that fizzled, Bales left California.

    Hank Barry

    A longtime corporate lawyer, Barry became a venture capitalist only the year before he recommended that his venture firm, Hummer Winblad, invest in Napster. Believing Napster would win in court, Barry replaced Richardson as CEO, taking a tough and unsuccessful line in negotiating with the labels.

    Thomas Middelhoff

    As CEO of German publishing conglomerate Bertelsmann AG, Middelhoff pushed the conservative firm in new directions, including controversial loans to Napster. He too failed to get a deal with the labels and was thwarted in his attempt to buy Napster’s technology last year before resigning from Bertelsmann.

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About Eric Olsen

  • http://www.stoicartist.com Frank Giovinazzi

    I’m curious where Shawn Fanning ended up? Did he get personally sued, or perhaps walk away with a couple million for fomenting the destruction of the global recorded music industry?

  • http://www.morethings.com/log Al Barger

    Uh, Frank, don’t you think that “fomenting the destruction of the global recorded music industry” might be overstating the case just a bit? I won’t weep for any major label that falls- they deserve pretty much whatever happens to them, but they still seem to be selling a buttload of their overpriced plastic.