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found that the other services were too good to give up. Hilbers declared the beta test a success. Privately, he thought a full release needed six months and $30 million.

By now, many were arguing that all of the industry’s antipiracy efforts, from the Secure Digital Music Initiative to the litigation, were essentially pointless. Even if technology to prevent copying were put in place everywhere, someone could always just play the music and record it on another device, then post it to one of the Gnutella derivatives. “Copy protection on computers has been shown again and again to fail,” conceded Dan Farmer, the record-industry consultant Patel used to supervise Napster’s compliance efforts. “Napster has shown two things: that people don’t give a rat’s ass about the quality of the sound when compared to the availability and that the avarice of consumers is not bounded by sound ethical reasoning.” Other industries began worrying that they were next to be Napsterized. But many were frozen in the headlights, unable to decide between taking something like the record industry’s failed hard-line stance and offering something small that might keep a lid on the willingness of consumers to cheat. “We’re the canaries in the coal mine,” warned EMI’s Jay Samit.

WITH THE OLD, unrestrained Napster gone, it made sense for the labels to help a new, legitimate service arise in its place. And the tone of the negotiations with the labels improved considerably with Barry’s departure as CEO. But he and Hummer still had two of the four board seats, and they weren’t helping to get a deal. In September 2001, Bertelsmann eCommerce CFO Bill Sorenson wrote to his boss Andreas Schmidt, complaining that Barry and Hummer were wasting Bertelsmann AG’s investment. “They have done nothing to forward the business plan. They have successfully alienated the entire recording industry . . . they have failed repeatedly to deliver the project on time,” Sorenson wrote. “They have wasted millions upon millions of dollars (BAG’s dollars) in pursuing a strategy of litigation, litigation, litigation.” Schmidt resigned in November as his eCommerce Group was merged into the Direct Group, which includes book and record clubs and electronic retailer CDNow. The Direct Group adopted responsibility for the Napster effort.