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Napster's legal worries might have been resolved and the company might have gone public.

Amram was stunned. “They were trying to string us along and retain the option, sitting on the sidelines. They didn't want to be associated with it because of John Fanning and the copyright issue.” A half hour after Lynch's offer, Amram replied, copying Fanning, Richardson, and Tim Draper of Draper Atlantic's much bigger affiliate, the Draper Fisher Jurvetson firm in Silicon Valley. “Jim: I think we are miles apart,” Amram began. “The company does not believe we have an agreement that was ever executed between DA [Draper Atlantic] and Napster. Even if there was one, according to the alleged agreement DA had the right to participate in the financing offering but chose not to do so.” Amram said he could offer only $25,000 worth of shares at 80 cents, or perhaps at 20 cents, if he could legally do so without tripping over antidilution provisions protecting the Series B shares already sold.

Tim Draper didn't appreciate getting put in the middle. “Either don't involve me, or get me the documentation if you want me to mediate,” Draper wrote in an e-mail to all sides. “It is the first time in 11 years of working with Jim Lynch that he has gotten this kind of grief for a deal, so signs point me at the entrepreneur.”

The saga continued through the Series B and into February, when Amram tried to end it once more as the stakes rose. “Napster is beginning to approach [venture firms] for our next round next week and I think that having to discuss the DA history will not be beneficial to either of us,” Amram wrote, relatively cordially. He was right about that: Reasonable VCs would be less eager to invest in a company with a large chunk of ownership still in dispute. Sensing a timing advantage, Lynch stuck with his most recent offer, warrants to buy four hundred thousand shares at 80 cents over the next five years, or 2 percent of the diluted stock. Amram came back with an icy rejection. “I guess we all have our own judgment and standards that we live by,” he wrote, offering half as many shares. Without a deal, he said, Napster might sue and launch a public-relations war. And, Amram suggested darkly, individuals might sue Draper and its principals personally for defamation, misrepresentation, and “usury laws and unconscionable acts (I will let your imagination continue here).”

Amram heard no response for nine days. When he asked why, Lynch

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