Second Life for Napster Execs

By Sean Wolfe and Ken Schacter

 

A planned mash-up of social networking and hard-core gaming by the founder of Napster could find an avid-and perhaps a paying—audience, a computer game analyst said Monday.

 

Napster founder Shawn Fanning has reportedly raised funding for a startup that mixes social-networking and massively-multiplayer gaming. The move comes after Mr. Fanning found a second life playing a sword-wielding paladin on Blizzard Entertainment’s popular online role-playing game World of Warcraft.

 

Mr. Fanning’s new burning crusade is to make the user-experience aboard massively-multiplayer online role-playing games (or MMORPGs for the short of breath) significantly easier, by allowing players to communicate with one another more seamlessly, and bringing other social-networking features to the table.

 

“The average Warcraft player probably plays 30 hours a week,” said Michael Pachter, an analyst for Wedbush Morgan Securities. Fanning is “exploiting the addictive nature of the game.”

 

In November, Blizzard announced that the game had amassed 7.5 million players worldwide. With a user base, greater than the population of Finland, Mr. Pachter said Rupture could indeed be a hit with its expected launch next year. Details of the expected rollout, reported in BusinessWeek, remained sketchy.

For Mr. Pachter, however, a central question is how Mr. Fanning plans to “monetize” his network. The network could be supported through advertising, subscriptions or even a marketplace for World of Warcraft paraphernalia, he said.

 

Over the past 18 months, Mr. Fanning, who also founded digital music firm Snocap, where he remains on the board, has been getting deeply involved in World of Warcraft, working his way up the level-ladder, and joining a guild for other players.

Frustrated by how difficult it often is to organize other players he has coded a piece of software that pulls and organizes game information, to publish on a personalized site. Dubbed Rupture the service will also track each member’s playing information as they level-up. Moreover, it will allow players to chat in groups, or person to person—ideal when a group of players take on a hard-to-beat in-game monster.

“Affinity” branding ventures like Rupture could extend far beyond the World of Warcraft, Mr. Pachter said, reaching other avid networks. “You’ll probably see a Florida Gator networking site and an Ohio State networking site,” he said, citing the football teams primed for a showdown in January’s Bowl Championship Series game.

Mr. Fanning typically shuns media requests for interviews, a spokeswoman told the Red Herring, and as of press-time the Red Herring is still trying to get him on the phone. In the meantime, Rupture is now in beta, and taking selective signups. Visitors to the site are being told that qualified WoW guilds may be allowed to participate in the service’s closed beta.

Former Napster CEO Joins Law Firm
Another Napster exec, Hank Barry, also announced a second act today. Mr. Barry, a lawyer and venture capitalist at San Francisco-based Hummer Winblad announced Monday he’d moved on to take a position as a member of the law firm Howard Rice Nemerovski Canady Falk & Rabkin, where he will join its business department and intellectual property counseling and transactions group. Hummer Winblad confirmed that Monday was his last day at the firm.

Mr. Barry had served as Napster’s CEO and a board member between May 2000 and May 2002, when he was also a partner at Hummer Winblad.

 

That was a sensitive time to have anything to do with Napster, embroiled as it was in a series of lawsuits. That litigation prompted Hummer to enter into a Common Interest and Defense Agreement with Napster as part of its investment.

Later that year, deposition and document subpoenas were issued for Hummer officers John Hummer and Mr. Barry, which called for all communications, electronic and otherwise, that concerned Napster. The subpoenas prompted founding partner Ann Winblad to distribute an email to select employees, Mr. Barry included, reminding them of the firm’s document retention policy, noting “we do not retain e-mails, it is your responsibility to delete your handled e-mails immediately.”

 

That drew argument from plaintiffs Universal Music Group, Capitol Records, and Jerry Leiber that the VC had a duty to preserve Napster-related emails, and alleged that it willfully deleted all Napster-related emails.

 

In October, U.S. District Court Judge Marilyn Patel ruled that while “Hummer deleted emails which it had a duty to preserve and produce to plaintiffs,” the venture capital firm had “shown that they took steps to preserve Napster-related communications, albeit inadequate ones,” and that it’s behavior did not constitute a pattern of deliberately deceptive litigation practices—denying plaintiffs default sanctions against Hummer Winblad.

 

After six years of litigation, Mr. Barry appears to be well-positioned to advise other companies on how not to practice email retention, and if they do run afoul of the law, how to win.

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