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systems similar to the envisioned new Napster, including the refurbished Scour.com, without drawing many users. (They also lacked major-label content, while the new Napster would have at least BMG.) And since pirate systems housed offshore were well ahead in popularity, some questioned whether a legitimized Napster was worth even $8 million.

“Free music created Napster,” Ritter said, “and free music will kill it.”

But now released from both his uncle and Hank Barry, Shawn was betting on someone he saw as a kindred spirit: Thomas Middelhoff. He would have to wait through the slow-moving bankruptcy process, but at the other side would be a boss who wasn't a walking disaster. Middelhoff did more than get the technology, as Shawn put it. He showed real courage.

And Shawn and Middelhoff had a secret plan. By then the two realized they weren't likely to get licenses from the other labels at a price that would allow them to offer Napster at a low cost to consumers. Instead, Middelhoff was planning to bet big on Napster's new technology. Even though the company had failed to meet the federal judge's deadline for a version that screened out unauthorized songs, Napster still had made dramatic progress. Over the objection of some of his advisers, Middelhoff was preparing to take a giant legal risk—that the system was so good that he could get away with letting consumers offer any songs they wanted, just like in the early days, as long as it got through a filter comparing the music to a database of copyright-protected songs.

If a record company complained that an unapproved song had gotten through, Bertelsmann's Napster would simply remove it—even though it already might have been downloaded by others. Given Napster's history in court, it was a virtual certainty that when such a song got onto the system, the copyright owner would not just ask nicely for it to be pulled. The offended party would sue the company all over again, and this time Bertelsmann's money would be at stake.

Middelhoff was convinced that the Napster acquisition would make good on his pledge to turn BMG into the top music company on the planet, and he intended to spread the technology to books and videos as well. But as the summer of 2002 rolled around, the time for such grand visions was fading. The AOL Time Warner merger had proved a disaster, and AOL shares had fallen 70 percent. First AOL chief operating officer