Word: napster
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...late August, Middelhoff decided to go after Napster himself. Ironically, he came to that conclusion after a meeting with Seagram chairman Edgar Bronfman Jr., a staunch Napster foe, in which they discussed ways to resolve the Napster question. "We walked out of Edgar's office, and Thomas and I looked at each other, and it just clicked," says Andreas Schmidt, president of the Bertelsmann E Commerce Group, who orchestrated the partnership. That day Schmidt got on the phone to Napster CEO Hank Barry and began eight weeks of intense transcontinental negotiations, from San Francisco to Miami, New York City...
...cautious approval of the Bertelsmann move, there is considerable resentment. Indeed, it took intense negotiations last month and, ultimately, management fiat for Middelhoff to get the support of top executive Strauss Zelnick at his own BMG. So far, nobody has indicated any willingness to drop the legal action against Napster. "We're still not on Napster's side," says Zelnick, laughing. "We're suing Napster. But we are also on the side of creating an array of legitimate distribution alternatives...
...sticking point now is the new business model, which nobody at either Napster or Bertelsmann is certain of. The main reason is technology. So far, it just isn't clear how to track every digital file out there and put a user name and a price on it. And there are huge questions about what a reasonable price would be. Barry has suggested a monthly fee of $4.95. But websites all over cyberspace burned furiously last week as Napster fans threatened to ditch the service if it charged as much as a nickel for music-file access...
...convinced we can preserve the values of the community while having something that will be supported by the industry," says Barry, though he has no clue as to how Napster will be profitable. But that's what Bertelsmann's millions are all about--a vast new effort to overcome the technological and fiscal hurdles. Napster, which has been in a hiring freeze while it fought the court action, now is one of the few places in Silicon Valley with a HELP WANTED sign on its door. Fanning has big plans for a next-generation service with enhanced file-sharing...
That is a long way off, particularly if the courts rule against Napster in the next several weeks. No matter, says Middelhoff. "I am always an optimist," he insisted to Fanning last Tuesday, as they walked briskly along Manhattan's Central Park South to announce their new partnership. "It's a beautiful, clear day, I think really a good day for a new beginning...