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Answer by Ali Aydar, first nonfounding employee of Napster:
There were three distinct phases of Napster, and working there was different in each one.
Phase 1: Preinvestment from Hummer Winblad (before Q1 2000): At this point we were a small team, made up mostly of engineers. Our CEO was an energetic former venture capitalist named Eileen Richardson, who was primarily working on raising money. A successful money raise was predicated on growth of the service. At the time I joined in September 1999, there were only 40,000 registered users and only a few hundred connected simultaneously at any given time.
There were concerns about whether we'd be able to scale given the available technologies in 1999. Our only focus as an engineering team during this phase was scalability of the back-end systems to support potentially millions of simultaneously connected users. This was no easy feat in 1999, but our corporate culture led us to completely exceed anybody's expectations. We were all very young at the time and very excited about what Napster could become, so we worked our tails off and had a total blast. And it wasn't just the engineers—it was the business side, too. I remember our first company meeting after I joined started at 11 p.m. and went until around 2 a.m. We had one room in our office with all of us youngsters, which included myself, Jordan Ritter, Shawn Fanning, and Sean Parker. We were joined a couple months later by Jordan Mendelson.
We were there at all hours of the day and night, sometimes sleeping under our desks as we tried to keep the servers up. To keep ourselves awake during marathon coding sessions, rap or cheesy hip-hop music would blare through Jordan Ritter's speakers. We even had cases of Red Bull, which had only recently launched, delivered directly to our office. It was absolutely the best time in the entire Napster experience. Everybody was excited about the future, happy about what he was working on, and free from any corporate or legal constraints. The intrinsic value of what we were doing was so high that we would have all probably worked for free. It's no wonder that we were able to overcome significant technical challenges to build a scalable service.
As I've grown and matured as a manager and now a CEO, I've come to understand that the right corporate culture is critical in creating an environment that incites the creativity necessary to achieve disruptive innovation. That's what we had at this time, and it was nothing short of awesome.
Phase 2: Post–Hummer Winblad investment until service shutdown (Q1 2000 to Q2 2001): The lawsuit from the major labels was filed in December 1999. Things really didn't change that much when the lawsuit was filed, because as engineers we were still focused on scaling, and as a business we were still focused on raising money. Of course raising money was a bit more challenging with a lawsuit hanging over us, but there was still a significant amount of interest, and we ultimately closed a round with Hummer Winblad. Hummer immediately installed one of their partners, Hank Barry, as CEO. At that point, we moved into this phase of Napster's existence.
Hank (and John Hummer, who took a board seat) was completely focused on resolving the lawsuit. Hank brought in others to help manage the day-to-day aspects of the company while he worked with the labels to try to resolve the dispute. For all of us internally, there wasn't much we could do. Product changes were minimal to none—purposely so as to not disrupt our legal efforts. We were in a wait-and-see mode.
It was discouraging because we didn't know what was going to happen, and we didn't know what to expect. Communication to the staff about progress of negotiations was minimal, mostly because discretion was perceived to be critical. We were continuing to grow organizationally, so it was exciting to be part of something that was getting bigger. And the service itself was scaling like crazy. At our peak we had more than 70 million registered users with 2.5 million connected simultaneously at one point. The statistic that blew me away the most was that the average registered user connected to Napster once every other day. (This is, of course, now completely blown out of the water by Facebook, but for the year 2000, this was astounding.)
However, on the whole, this phase was characterized by lots of ups and down. We didn't know what was going on with the lawsuit, and there was a tremendous amount of uncertainty. The uncertainty led to total product stagnation, which for engineering and product management was very frustrating. At the same time, we were growing like gangbusters, so it was exciting. Then we got the court order to shut down followed by a stay of the order two days later. It was like going from total devastation to absolute jubilation. The emotional roller coaster was draining. Then during the stay, we got the $60 million investment from Bertelsmann, which at the time was the owner of one of the record labels suing us, so we really thought this whole thing was really going to work. But ultimately the court ruled that we needed to shut down. I've later been told by multiple people that I had the dubious honor of shutting down all the server processes, though to be totally honest I have zero recollection of doing so. Repressed memories, I guess.
Phase 3: The Bertelsmann era (Q2 2001 to Q3 2002): After the Bertelsmann investment, Hank began looking for his replacement. Ultimately, Bertelsmann installed one of their own executives, Konrad Hilbers, as the CEO. This was the worst time at Napster, but it wasn't Konrad's fault. The truth is that Napster was over, but nobody was willing to admit it. It was like trying to get an old horse with tired legs to jump over a fence. And one of the legs was broken. And the fence was 1,000 feet high. It wasn't going to happen. Napster, as we knew it, was dead.
The strategy was to try to build a legal Napster, something that works a lot like Spotify does today. But the labels just weren't going to license a company named Napster in 2002 with subscription licenses. That didn't stop Konrad and Bertelsmann from trying. In this era, the company was really split in two: the engineering and product side versus the business side. The business side was telling the other side: Just build the service and don't worry about the licenses—we'll get them, trust us. The engineering and product side was saying, Yeah, we'll build it, don't worry. But this sucks. This isn't really Napster. And we built it. I led the development of many of the systems for the "legitimate Napster." And they were all ultimately ready to ship. But there weren't many on the engineering side who thought this would work as a product. The world was used to the original Napster, and we felt like they would hate this product.
It was an absolutely dreadful time trying to build a product that you didn't believe in, 180 degrees away from what the first phase of Napster was like. There was also mistrust between the two sides of the company. There was always skepticism from the business side about our ability to build the service, while there was similar skepticism from the engineering side about whether we would procure licenses.
Ultimately, we didn't get the licenses. But it really wasn't anybody's fault—the industry just wasn't ready for it. This was a dark time. The lesson for me here was that when your instincts tell you that it's over, you're probably right, so just call it like it is and move on. Doing so would have saved a whole lot of time, heartache, and money.
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