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21st Challenge
21st Challenge No. 33 Results
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Books
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[05/04/00]

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[05/03/00]

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Come on, Eileen
Napster CEO Eileen Richardson is walking on sunshine. But with lawsuits piling up, is she really dancing on a grave?

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By Damien Cave

May 8, 2000 |  With burgundy-tinted hair, a love of club music and a son whom she tends to mention, regardless of the conversation topic, Eileen Richardson isn't a typical CEO. But Napster isn't a typical company. Eight months ago, it didn't exist; now it's becoming a contender for most rapidly adopted software in Internet history.

It's also one of the most beleaguered. By offering a free, downloadable application that lets users temporarily turn their computers into servers for the purpose of swapping MP3 files, Napster has attracted lawsuits like the Beatles attracted fans. The Recording Industry of America filed suit late last year, Dr. Dre tacked on another case last month and just last week Metallica drummer Lars Ulrich appeared at the company's offices in San Mateo, Calif., to drop off an amendment to the band's own lawsuit.

Richardson has tended to take this all in stride. She was an early investor in Napster and became CEO in September, only a few months after 19-year-old Northeastern University student Shawn Fanning developed the program. After 10 years in the world of venture capital, Richardson seems happy to be leading her own band. She has good reason: A new version of Napster is in its final-testing phase, the company is hiring like mad and artists like Chuck D. and Limp Bizkit have come out in Napster's defense. But the company is far from clear of its troubles. How is she handling the heat?

When I chatted a few weeks ago with some of your employees, spirits were high and there was sense that Napster might soon come out from under the cloud of all these lawsuits. But since then, a lot has happened: Is it tough to maintain employee morale?

No, not at all. As with any start-up, you experience your highest highs and your lowest lows -- the whole range of emotions. This is no different. Maybe the highs are higher and the lows are lower, but it's still that roller coaster and that's what makes it exciting and fun. Every employee knew the opportunities that they had here at Napster, so I think they all understood that this was going to be a roller coaster.

But not every start-up gets to see Metallica's drummer hand deliver a 60,000-page lawsuit. Are you surprised by how dramatic this has all become?

It's not a shock. I guess once I heard that [Lars] Ulrich was coming, I was just like, "OK." I think we believe -- certainly I believe -- that there are better ways of handling it, better ways of getting us information, like using the Internet maybe. That would have worked.

What do you think Ulrich's stunt says about the band? About their opinion of their fans?

It's a bit crazy. It just shows, though, that they're not that familiar yet with the Internet as a medium. They're unfamiliar with how their fans are using it, and how it could benefit the band in the future. And so that's just an education process. I don't know that it's any different from what happened with radio when it was a new medium. Everyone then was up in arms, "Oh my God, how are people going to get paid; it's free and it shouldn't be." We're running into some of those same issues here.

Another analogy is the movie industry. Today, Blockbuster, and the video marketplace in general, is an $18 billion marketplace; and movies, the box office, is only a $7.4 billion marketplace. When the VCR first came out, everyone said "Oh my God, nobody's going to see another movie." But it never ended up happening because there is a market for going to movies and there is also a market for renting them and bringing them home. The effect of that was that the movie industry grew by two and a half times. And we believe the music industry will grow much larger because of us.

Next page | Raising money, "educating" Metallica and cloning Celine Dion