The Drama You've Been Craving

All those visions of Internet silver dollars have been replaced by nightmares of the Grim Reaper.
Trained seal? Napster founder Shawn Fanning on the Webnoize video screen. Photo by Michael Goldberg
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Monday Nov. 20, 2000

The Internet Music Ice Age

At Webnoize 2000, you could feel the fear.

By Michael Goldberg

Los Angeles — A cold wind has been blowing through the Internet music space for months now, and nowhere was its aftermath more apparent than at the Webnoize 2000 Internet music conference. Held in L.A. November 13–15, Webnoize is one of the two major annual events in the Internet music business, the other being New York's

"This thing is dead," one net-music-biz player said to me four hours into the first day. He was talking about the conference itself, but he could have been describing the current state of the Internet music business.

"Nothing is going on," echoed one of the few new-media execs from a traditional record company at Webnoize 2000.

For some time now, the Internet music business has looked a lot like a dog chasing its tail. What you have is a bunch of suits (some masquerading as groovy gearheads and new-media types) trying, often desperately, to figure out how to make money online before they run out of cash or lose their jobs.

Sadly, the Net music biz now seems about as revolutionary as a new formula for Coke.

The New Economy, Take Two

Outside the auditorium at the Century Plaza hotel where the conference is taking place, a stereo speaker in the lobby periodically squawks ""

Everybody knows everyone here. Everybody wants to know what everyone else is doing since they were last in contact, since they've all started a new company, moved to a new company or are about to move to a new company.

Whether you're moving to a new company, or staying at your old one, everyone wants to know what your latest business model is. You must have a new one, because everyone's business model has already changed or is going to change because their current one clearly isn't working. Or something like that.

One of the smarter guys in the Internet music space is my friend Rob Reid, CEO of Reid, who recently changed his company's business model (and who may yet be plotting another change), says, "Your business model doesn't matter as long as you've got the right team."

I think Rob means that if you've got some really smart people working for you, they're going to ultimately figure out some way for your company to make money. Hopefully before you go out of business.

I forgot to ask Rob what happens if you think you have the right team, but you're wrong. Maybe the answer is, a company that recently shut down, and whose assets is attempting to purchase.

Feel The Fear

You can feel the fear at Webnoize 2000. Too many Internet companies have gone belly-up, like Scour, D.E.N. and Pop. Others have seen their stock price drop, drop and then drop some more.

Things feel, well, anxious. Or maybe depressed. The "sky's the limit" optimism of a year ago has been replaced by the unhappy mumbling of net execs who can no longer quite recall what made them quit their six-figure old-school music-biz jobs for a web-music startup.

One Internet entertainment exec,'s Scott Sander, is focusing on digital movies now, rather than music. "Music looked like Vietnam," he said on a panel about "peer-to-peer distribution networks." "We'd send our boys in and they'd never come back."

Hey Shawn, Mind If I Rename My Cat Napster?

Of course all this will pass. The net is not going away. No matter how much the media want to will the dot-com world out of existence, all evidence shows that it is here to stay. Forty million Napster users can't be wrong.

That's little reassurance for music dot-coms whose burn rate will combust them when the next round of funding fails to materialize. No matter how many times the business models get revised, they never result in a positive cash flow. All those visions of Internet silver dollars have been replaced by nightmares of the Grim Reaper announcing "Time's up."

The current climate has cost thousands of Internet-company employees their jobs. Additionally, some really interesting companies have been shut down — either that, or changed beyond recognition by the old-school corporations that purchased them.

At Webnoize, it was more than disheartening to see young Shawn Fanning, the kid who created Napster, sitting like a trained seal onstage with Napster CEO Hank Barry and Napster's current sugar daddy, Bertelsmann eCommerce Group president and CEO Andreas Schmidt. Bertelsmann (one of the "big five" music corporations) has recently done a deal with Napster. This is kinda like the Navy convincing Captain Hook to join their ranks. I mean, Napster did once represent a kind of outlaw rock 'n' roll spirit.

Fanning explained how he "is included in the high level meetings" and has a lot of influence on what Napster does, even though he currently holds less than 7% equity in the company he founded. Despite his words, the scene onstage looked to me like the honeymoon was way past over.

I give ol' Shawn about a year before he starts running as fast as he can, as far away from Napster as possible. Either that, or soon he'll be wearing a suit to work and talking about market share.

In The Game

Frank Kozik, "Kozik's Inferno": My friend the rock-poster artist Frank Kozik has gotten into the Web animation business with the brilliant "Kozik's Inferno," his darkly hilarious take on Dante's opus. Take my word for it, you really want to head over to and check out this multi-episode serial.

John Hiatt, Crossing Muddy Water (Vanguard): I'm tempted to call this Hiatt's Blood on the Tracks. At a time when young singer/songwriters like Badly Drawn Boy are getting raves, leave it to an old-timer, the feisty John Hiatt, to show 'em all how it's done. You could stick this one off in the folk or folk-blues section, but that would be a mistake — this is as "rock" as a Neil Young or Cat Power album. Hiatt writes about love on the skids: "Do we call the kids /Or call the cops/ Can you hold me 'till this howling stops," he sings in "What Do We Do Now." From the album opener, "Lincoln Town," through the final notes of "Before I Go," this is as nearly perfect an album as I've heard in some time.

Michael Goldberg is the president of He founded Addicted To Noise in 1994.

© 2000 Michael Goldberg. All rights reserved.