MP3s are so natural to the Internet now that it’s almost hard to imagine a time before high-quality compressed music. But there was such a time—and even after “MP3” entered the mainstream, organizing, ripping, and playing back one’s music collection remained a clunky and frustrating experience.
Enter Winamp, the skin-able, customizable MP3 player that “really whips the llama’s ass.” In the late 1990s, every music geek had a copy; llama-whipping had gone global, and the big-money acquisition offers quickly followed. AOL famously acquired the company in June 1999 for $80-$100 million—and Winamp almost immediately lost its innovative edge.
Winamp’s 15-year anniversary is now upon us, with little fanfare. It’s almost as if the Internet has forgotten about the upstart with the odd slogan that looked at one time like it would be the company to revolutionize digital music. It certainly had the opportunity.
“There’s no reason that Winamp couldn’t be in the position that iTunes is in today if not for a few layers of mismanagement by AOL that started immediately upon acquisition,” Rob Lord, the first general manager of Winamp, and its first-ever hire, told Ars.
Justin Frankel, Winamp’s primary developer, seems to concur in an interview he gave to BetaNews. (He declined to be interviewed for this article.) “I’m always hoping that they will come around and realize that they’re killing [Winamp] and find a better way, but AOL always seems too bogged down with all of their internal politics to get anything done,” he said.
The problems began early, since Nullsoft wasn’t interested in being a traditional corporate unit. For instance, in 2000, just a year after the acquisition, Frankel released (and open sourced) Gnutella, a new “headless” peer-to-peer file-sharing protocol that understandably steamed the bigwigs at AOL corporate headquarters in Dulles, Virginia.
By early 2004, Rolling Stone dubbed Nullsoft’s founder the “world’s most dangerous geek”—but companies like AOL aren’t good fits for dangerous geeks. That same year, Frankel resigned, writing on his website a few lines that were later removed: “For me, coding is a form of self-expression. The company controls the most effective means of self-expression I have. This is unacceptable to me as an individual, therefore I must leave.”
Today, Winamp continues to be updated; AOL released its first Android version in 2010 and a Mac version in 2011. Amazingly, given all the time elapsed, AOL still makes a decent amount of money on the site and on the program—while the company has declined to release official figures, former employees who worked on Winamp estimate its current revenue at around $6 million annually. And Winamp still has an estimated user base of millions worldwide, a small fraction of which live in the United States.
However, references to the application’s storied history, both good and bad, have been scrubbed or omitted from the Winamp current site—it’s just a big blank page. (Update: An Ars reader points out that the history page has moved, but the link to the alumni page still reverts back to the home page.) So how exactly did Winamp squander the incredible head start it had on most other Internet music businesses? Here’s how.
Out of the desert
Like most companies, Winamp was created to solve a “pain problem.” That problem? Two decades ago, it was pretty difficult to organize and play compressed music, which had just started to enter mainstream usage.
The German scientists behind the MP3 format released their first encoder in July 1994, but for the next three years, it remained difficult to share and find the resulting music files. Frankel has always created software “because it was software that I wanted to be able to use,” as he told the Digital Tools blog in 2008. “Winamp grew out of wanting a good, enjoyable way to listen to MP3s on a computer. It wasn’t the first MP3 player, but the MP3 players around before it were hard for me to want to use.”
Prior to Winamp, there wasn’t much available beyond Windows Media Player or RealPlayer. But none of those players could, in the mid-1990s, do something as basic as playlists, much less visualizations and custom skins, nor were they as tightly and efficiently programmed as Winamp. Even today, the Mac version of the Winamp installer is only 4.2MB; by comparison, the iTunes Mac installer comes in at a whopping 170MB.
The Windows Advanced Multimedia Products (WinAMP) player was released to the world on April 21, 1997. The next year, when its parent company Nullsoft formally incorporated, Winamp became $10 shareware. But no one pays for shareware, right? Wrong.
“Nothing ever was broken [if you didn’t pay], there was no feature that was unlocked,” Rob Lord told Ars. “In that year before we were acquired, we were bringing in $100,000 a month from $10 checks—paper checks in the mail!”
At the time, Lord already had staked his first claim to fame: co-founding the (recently revived) Internet Underground Music Archive, the world’s first online legal music repository, while he was a student at the University of California, Santa Cruz. Today, Rob Lord works for his own startup, Sherpa.io, based in the Hatchery, a SoMa (South of Market) co-working space in San Francisco, just a five-minute walk from Twitter’s original offices, alongside a plethora of tech and tech media companies. Developers and entrepreneurs rub shoulders on sunny days in South Park, an adjacent outdoor space that features a gourmet grilled cheese outfit, a taqueria, and a French restaurant with killer quiches. In short, it’s a long way from Sedona, Arizona, Frankel’s hometown and the birthplace of Nullsoft.
Seated on a couch in a Hatchery conference room and dressed in a T-shirt, shorts and sandals, Lord told me about his role at Nullsoft that began in May 1999.
“My title was director of online strategy, although we didn’t know what that meant,” he said. “It was a lot of strategic and tactical decisions, around everything except the coding of the app itself. Justin was the one coding on it and he was the only one who had access to source code. I was being helpful by [looking at] product features [on a] business level—I initiated the first monetizing of the website.”
It was Lord’s job to figure out how to make the company money. Like most 1990s startups, the plan involved banner ads and possible partnership deals with other startups. Lord, then in his late 20s, moved from California to join the 18-year-old Frankel, still living at his parents’ home in Sedona, Arizona—where his father, attorney Charles Frankel, acted as the company’s counsel and chief financial officer.
This 10,000-person community in the Arizona desert attracts millions of tourists per year, and for decades has been home to people seeking to enjoy the state’s natural beauty and to take in the “spiritual” side of the place.
“You have this rugged individualism and a very rugged spiritual set and [Frankel] came from that,” Lord said. The Sedona ethos came through while making business decisions; Lord recalled one moment when there wasn’t enough information to confidently come to a decision. “’We’ll just do x and let the universe decide,’” he recalled Frankel saying. “I think it describes the mode we were in—things happen for a reason.”
Finding a buyer
The universe decided that Winamp was awesome. In the first two years that Lord worked with Nullsoft, Winamp’s user base quadrupled from 15 million to 60 million users—and the acquisition offers arrived. “There was no meeting that was ever turned down,” Lord recalled.
Few companies said it outright, but they would couch their queries in phrases like, “Do you guys have future plans?” Before long it became hard to resist valuation offers in the neighborhood of $100 million.
In June 1999, Nullsoft was acquired alongside Spinner (in a deal worth $400 million for both), a streaming media player startup based in San Francisco. Charles Frankel, Justin’s father, took in the second largest portion of the AOL acquisition deal, receiving around $15 million in stock at the time. Frankel himself got AOL stock worth nearly $60 million at the time.
Lord now says Nullsoft was “acquired at the sweet spot of insanity,” less than a year before the January 2000 merger announcement of AOL and Time Warner, which eventually failed in spectacular fashion.
AOL consolidated both properties into Spinner’s offices, a single warehouse-turned-office on Alabama Street in the Mission District. The move to San Francisco certainly provided a change of pace for tiny Nullsoft. “I felt this juxtaposition of [our new environment] with [previously being in Sedona with Frankel and] operating out of his bedroom and us having meetings at his dad’s offices, on the one road in town,” Lord said.
Everyone involved in the deal expected big things to result.“The thesis at that time was that AOL could be really big in music, create within its four walls the next MTV—and that meant something in music in the 90s,” Fred McIntyre told Ars last month. McIntyre started off as a vice president at Spinner in 1998 and worked directly with Winamp until 2004, staying on at AOL. He returned to Winamp in 2007.
“The general logic was that Spinner had built a service and had a pretty well seasoned management team in place,” McIntyre added. “Winamp had built a product and a platform that was capable of generating meaningful user adoption.”
“AOL, without telling either of us, bought us both,” recalls Josh Felser. Felser was co-founder and president of Spinner from late 1997 until mid-1999, and later became an AOL vice president in charge of both units. Today, he’s a venture capitalist at Freestyle Capital. “They threw us together and I was in charge of both brands. It was obvious that our cultures were different, but it wasn’t obvious that they would clash.”
At first, Winamp kept riding high. “[Winamp.com] was doing hundreds of millions of page views a month in late 1990s,” McIntyre said. “We were just pushing display ads through those. That was in and of itself a lucrative business—not a sexy business, but a lucrative business nonetheless.”
But problems quickly became apparent.