📸 Photo

man told a nervous Jerry Yang, founder of Yahoo!, who also had been offered the chance to meet or beat AOL’s alleged bid. After talking things over with Bronfman, Yang passed as well.

When the preliminary injunction came down and was stayed and the AOL interest evaporated, Bronfman expected Barry to return to the bargaining table and offer the labels something better. But on the Monday after the ruling, Barry e-mailed Bronfman and suggested that the record companies split 50 percent ownership of Napster, without the right to vote on the company’s strategy. While more palatable than a $2 billion price tag, the offer was still less attractive than the Sun Valley summit terms, before a federal judge had concluded that Napster was probably breaking the law. It didn’t make sense. “Things went backward from there,” Bronfman said. Barry, who called Bronfman a visionary, said he doesn’t know what went wrong that summer as he pitched variation after variation of a settlement, only to be rejected each time.

But Bronfman thinks he knows what happened between Sun Valley and the watered-down proposals after the injunction: Intel’s Andy Grove. Bronfman had multiple conversations with Grove, who believed that Napster was the unstoppable way of the future. More important, Grove had multiple conversations with John Hummer.

“Andy was virulent that Napster was the next great thing, that under no circumstances would intellectual property be protected on the Internet,” Bronfman said. “He was as close to God as anyone who existed in Silicon Valley, and John was going to listen to Andy harder than to me or anyone else.” Bronfman is convinced that Grove persuaded Hummer not to give up control of Napster. “The two people who forfeited that opportunity were John Hummer and Andy Grove,” he declared. Hummer agreed that Grove was a major booster but said it made sense not to let the record industry win the power to change Napster’s direction. “They always wanted to figure out a way to tax every individual transfer, and it just wouldn’t work,” Hummer said. “Either you believe that Napster is super-radio, or you don’t. In the end, these guys just don’t believe that Napster was the best promotional tool they ever found.” Hummer’s own sense of high purpose couldn’t have helped: His quote “I am the record industry’s worst nightmare” appeared in Fortune around the time that the negotiations collapsed.