Word: napsterized
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Dates: during 2000-2009
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Even before Napster, Bertelsmann's e-empire spanned global Web brands, including partnerships with giant search engine TerraLycos, music sites CDNow and GetMusic and a 40% interest in Barnes&Noble.com Middelhoff claims that as of July, Bertelsmann was ahead of every competitor except the Walt Disney Co. in visitors to its online sites. "Speed, speed, speed" is the Middelhoff mantra. "The world is changing fast," he said over dinner in Germany last June. "Companies must continually reinvent themselves and not be tied to one structure...
...Middelhoff, Napster was a natural solution to his long-standing pledge to make Bertelsmann king of the music-content world. "I realized that we had to pursue music from two sides," he said last summer. "There is content, but there is also online file sharing. We could not get ahead without file sharing." Bertelsmann's technology arm had been working on its own file-sharing system for months. "But we realized that all the technology gave us was an illegal way to distribute files," says Middelhoff. "We had to make it legitimate, and Napster already had a base to work...
...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...