Don Dodge gets an editorial into News.com

“We had a plan. We just didn’t get a chance to make it work.”

Uh huh. What plan?

“We made one last effort to convince the labels that they should do a deal with us. If the labels didn’t do a deal with us, and instead put us out of business, then Gnutella and its derivatives would become unstoppable. If we worked together now we could convert the market to a paid-subscription model. If we didn’t do a deal, chaos would ensue. The labels didn’t believe us and didn’t really understand what this Gnutella threat was.”

So the plan was to threaten your customers without appealling to your customer’s needs. THe plan was to bribe them. To claim that they and yourselves would be destroyed by Gnutella just because it was better than Napster? …Oh wait, you were going to sell subscriptions but with no DRM? You never worked to develop your own DRM? How were you going to collect or enforce subscriptions? The labels didn’t believe the threat: shouldn’t you have believed that you were operating illegal and would be shut down? Shouldn’t you have believed you did not have a plan beyond extortion, that you didn’t appeal to those you’d be doing business with?

“It is now clear that they couldn’t have made a deal with Napster even if they wanted to. Their existing contracts with the artists had no royalty provisions for digital distribution of individual songs.”

Yeah, the problem was the lack of digital provisions in artist contracts even though at the same time as you were getting sued under, others were developing legal music services with studios and artists with or without digital provisions in their contracts. Uh huh. Suck up some of the blame… most of the blame.

“What lessons can be learned from this experience?”

Plenty, but you apparently learned nothing.

“• Never get too far ahead of the market. Creating new markets, business models, and value propositions is very risky and takes lots of time and money. ”

Get ahead of the market, but know where it’s going. Don’t think it’s heading to some pie in the sky utopia that is not a business.

“• Understand who your customer is, what problems you need to solve, and how much they are willing to pay for it. ”

Also understand who your business partners are, what problems they need solved, and what they are willing to pay and make off of it.

“• Never start a business focused on solving a big company’s problem. They don’t know they have a problem…and they are probably right. ”

Start a business focused on solving a big company’s problem, but actually solve it rather than just trying to be every teenageer’s best friend.

“• Test your assumptions. Interview your potential customers. Understand their top 10 problems. Don’t try to convince them that you have a solution to a problem they don’t know they have.”

Don’t try to convince them; actually solve their problem.

“• Marketing and image matter. Provocative challenges make good headlines but don’t make good business. ”

This is a funny one. He almost gets it right: marketing and image matter, but not as much as actually having a business model.

“Napster changed the world.”

Briefly and has kept the world mostly using mp3 unfortunately.

“Millions of people rediscovered their love of music through Napster and created a whole new way to enjoy it.”

People always enjoyed music, we jsut want to take credit for it.

“We made mistakes, but we learned valuable business lessons.”

We still haven’t learned our lessons. We got killed off, and a different company and vision bought the name and started over from scratch.

“The business lesson of the Internet is that you can attract a much larger audience–and generate more revenue–with a “try it for free and buy it if you like it” approach.”

We still haven’t learned how to create a business. We still are living in the bubble myth that revenue without profit is good enough. We still think being liked is more important than having real paying customers.

“Five years later, the music industry is still struggling with how to capitalize on the Internet business model.”

But others are because they focused on the business problems, and they are moving forward while we will never make a profit.

It was not possible to write the whole story, and our plan, in a short editorial. There is a lot more to the story. We had DRM ready to go, and we had a royalty tracking system.

We made mistakes for sure. As management we had to deal with the situation as it was. We couldn’t back up and start over again. There were many behind the scenes meetings with major artists and record label executives. Thomas Middlehoff at BMG was a big supporter and we had former record label executives working for Napster as well. We tried, and almost made it happen.

It is easy now, five years later, to say we should have done this or that. Those other companies you mention who were trying to do it the “right” way with the labels…were are they now? Hmmmm. They are dead too.

We were making history on the fly, with all the good and bad that comes with it. That is the fun thing about history…years later people still have debates about why it happened. The editorial was just one perspective.

Don Dodge

“It was not possible to write the whole story, and our plan, in a short editorial. There is a lot more to the story.”

Tell the relevant parts then. That editorial was fluffy and absurd. It sounded like a very weak rationalization of a complete failure.

“As management we had to deal with the situation as it was. We couldn’t back up and start over again.”

You were doomed from the beginning then? (Couldn’t back down and the path you were on failed?) So how could it have almost have gotten down if you put yourself into a strategy that could not even be changed?

“There were many behind the scenes meetings with major artists and record label executives.”

And what were the results besides getting some money from BMG? If there were no results, I could care less about meetings.

“Thomas Middlehoff at BMG was a big supporter and we had former record label executives working for Napster as well.”

So what?

“We tried, and almost made it happen.”

You didn’t get close. You got sued into the ground and sold your name. In fact, you left your buddies at BMG with a big chunk of the tab.

“Those other companies you mention who were trying to do it the “right” way with the labels…were are they now? Hmmmm. They are dead too.”

Umm, you went under in 2001. Bertelsmann was getting sued in 2003. There’s a little company in Cupertino that between 2001 and 2003 had a little strategy at work… Last time I checked they were still “alive.”

“We were making history on the fly, with all the good and bad that comes with it.”

Mostly bad though. Particularly from a business perspective. I personally find it pathetic that a completely failed business (that created a strategy that could not be altered even when it was coming apart at the seams) can claim to have learned or have any business advice that’s useful. Moreover, most of your lessons seem like half-heartened rationalizations for your failure or completely limiting, useless advice that could easily be avoided by more successful plans.

“That is the fun thing about history…years later people still have debates about why it happened.”

I don’t know anyone who debates why you failed. It’s pretty clear.

“The editorial was just one perspective.”

Clearly.