Online Music's Hired Guns Mean War

Writer Ken Auletta's new book about the Microsoft (Nasdaq: MSFT) trial bears the intriguing title of "World War 3.0." If the Microsoft case is a war, the two main opposition generals have left the battlefield and joined the Bertelsmann AG and Napster camp.

What does that mean? Simple. It means get ready for World War 4.0.

There are two ways to read the news that former U.S. assistant attorney general Joel Klein, who led the government's case against Microsoft, has been tapped to head Bertelsmann's U.S. division, where Microsoft slayer David Boies is already on board as a lawyer and adviser.

Napster's longtime foe, the record industry, chose the positive spin, saying that Klein would help Bertelsmann get Napster into compliance with all the rules that the labels say the company has been violating since Napster founder Shawn Fanning dreamed up the idea in his dorm room.

But it's much more likely, even obvious I would argue, that we are on the verge of all-out war.

Ethics-Go-Round

Klein's hiring has already prompted cries of ethical lapses from some corners. Critics are asking -- in the usual veiled way -- whether Klein's respite from private practice at the Justice Department amounted to resume building.

But jumping back-and-forth between government and industry is nothing new. Moreover, Klein is not going to make arguments or negotiate with the Justice Department's antitrust division he previously headed. And government work is a proven way to increase earning power.

Still, any conflict of interest issues that Klein brings with him to the private sector are dwarfed by the hornet's nest of controversy he's been hired to help Bertelsmann wade through.

Making His Presence Felt

Klein's primary role, it appears, will be to advise on and perhaps lobby for Bertelsmann's desired purchase of EMI Records. But his presence so close to the whole Napster situation can't be ignored.

Maybe Klein will steer Napster into calm waters. It's on the verge of become a paid service anyway, so how much of a stretch is it to get it to a place where it can make all of the labels happy?

But I don't see that path being taken. Sure, it's an option, but do you need Klein and Boies on your side to do that? Of course not. You need a kinder, gentler image if you plan to extend an olive branch.

Make War, Not Peace

Hiring Klein and Boies is not a preface to peace talks. It's a prelude to battle. And it's a completely different kind of war than the one fought up until now.

A year ago, Napster was the American militia, running an underground, guerrilla war against the record companies, keeping itself hidden and jumping out only to steal copyrights.

But now it's got the mettle and might of a media giant behind it. It may not have the bomb, but it's got a whole bunch of conventional weapons.

Underground Militia

Napster does still have its guerrilla roots. In fact, that may be Napster's strongest asset -- and the one that Klein is being brought on board to protect.

The Napster users I know are downloading their fingers off these days, burning CDs like they're going out of style in advance of the pay-as-you-go or buy-a-monthly-membership days coming to the Napster site this summer.

Now some of them will stay and pay. They're hooked on the technology, how easy it is to use, its portability. But even more will go elsewhere. And if Bertelsmann loses Napster's core audience of young, sophisticated Web users, it loses the franchise.

The reason for buying the site, for striking the surprising deal in the first place, will be gone.

Duck and Cover

Enter Klein. Now, his most recent experience isn't with copyright and Bertelsmann never even mentioned Napster in announcing his hiring.

Klein knows monopoly issues and government regulation. Think about it: He's also a guy who knows how to fight corporations. He's the guy who fought the biggest corporation in the entire technology world. And at least to this point, he won.

So Napster fans, rejoice. Maybe your precious network isn't going to roll over and sell out like Aerosmith on the Super Bowl halftime show after all. Maybe it's going to go down with a fight.

Take shelter and get a good seat. This one is going to make the Microsoft "war" look like a game of touch football.

What do you think? Let's talk about it.