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head Jack Valenti, who had testified against Napster. After Apple Computer sued over the name AppleSoup, Bales changed it to Flycode. The suit was easy press, and Bales said then that Apple had done the little-noticed start-up a favor.

Bales and Fanning also had frequent discussions about Fanning’s attempt to get into distributing Internet videos, which Fanning called NetMovies. NetMovies was part of what Fanning was describing as an Internet incubator, NetCapital, which claimed Napster as just one of many ventures, another being an Internet-games firm evolved from the old Chess.net. Early in 2000, Fanning hired a Bain & Co. entertainment-business consultant named Martin Kay to help him start NetMovies. Together they called Kay’s old boss at Bain, who had left to take control of Artisan Entertainment Inc., a movie studio best known for the raging success of The Blair Witch Project. Mark Curcio was interested in leaving Artisan, and he was vacationing on Martha’s Vineyard in Massachusetts. Fanning and Kay flew to the island and spent three hours talking about NetMovies. Fanning said that NetMovies would be similar to Napster, only with fees for usage and copyright control. Curcio thought he was being snowed. “It wasn’t clear he had any money whatsoever,” Curcio told another entertainment-industry figure. And when he went to inspect the operation in Los Angeles, “it was two guys in a closet. It was like the Wizard of Oz.” The code wasn’t even written yet, and Curcio passed.

The two guys in the closet were Csaba Fikker and Gerald Bagg. Earlier in 2000, Fanning had called Fikker, the old production expert from Bales’s ON24, and asked him to help. Fikker was still kicking himself for not following Bales to Napster, so he signed on as VP of operations, and Bagg joined as CEO. Fanning raised money from Napster investors Jim Gidwitz and Sung-Bu Kim, a contact of Bales’s through his girlfriend, Holly Shin. Bales also met with some prominent Hollywood figures, including actor-director Danny DeVito and Jon Avnet, the director of Fried Green Tomatoes. Fanning and Bales wanted money for NetMovies; the directors wanted to reach Napster’s audience to test scenes or promote new releases. “John promised DeVito he would be able to deliver a Napster deal,” Bales said. When he couldn’t, one director who had invested demanded and eventually got his money back.