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May 16, 2002
It's Dead Now
Two years ago, I wrote a column about Napster which appeared in the Industry Standard with the headline, "It's Not Dead Yet." A federal court had just granted an injunction against Napster, which was thought to be on its last legs.
As I predicted, Napster wasn't done in 2000, because it and the music industry needed each other. Bertelsmann's investment was the surest indication of that fact. In the end, though, Napster fell victim to an enemy more powerful than the music industry: its own board.
This week, talks for Bertelsmann to acquire Napster collapsed, resulting in the company's CEO and founder resigning and making bankruptcy a near-certainty. Reportedly, the sticking point was investor Hummer-Winblad's insistence on a better price and/or indemnification from lawsuits. Napster wouldn't be at this point if the record industry hadn't dragged out licensing its catalog to the new, paid Napster service. But delays in that process were to be expected.
The old Napster was pure. Love it or hate it, you knew what it represented. Once it took venture money and an investment from a multinational conglomerate, Napster became just another dotcom startup struggling in a difficult environment. Its death says less than might be expected about the future of online music, and more about the challenges for any startup today.
Posted by Kevin Werbach at May 16, 2002 9:47 AM
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