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During Felser's brief tenure at AOL, his division ruffled feathers at TW regarding a difference in approach to copyright issues.

MERGER PROMPTS CHANGES AT AOL

Spinner/Nullsoft Head Is Out; File Sharing Probably Had Nothing To Do With It
As the proposed America Online-Time Warner merger gets closer to reality, Josh Felser, GM of AOL's Spinner/Nullsoft music division, has left his post.

A person familiar with the situation told the Wall Street Journal that the management change is part of an AOL effort to craft partnerships with record companies as it completes its TW merger even though it still isn't clear what role Spinner/Nullsoft will play in the merged company.

During Felser's brief tenure at AOL, his division ruffled feathers at TW regarding a difference in approach to copyright issues. The Warner Music Group has traditionally been very protective of copyrights and has supported the record industry's stand against Napster. The programmers at Nullsoft, which AOL acquired last year for $86 million, appeared to have different ideas about protecting copyrights.

In March, a few Nullsoft programmers posted music-sharing program Gnutella, which allowed users to swap music files in a similar fashion to Napster. AOL said the program was an "unauthorized freelance project" and it took it off the Web site the next day. In July, Spinner/Nullsoft began offering a search engine that allowed Internet users to locate MP3 music files, including pirated versions of songs, on the Web. Within a month, AOL took down that program, too.

The Journal reports that Spinner/Nullsoft spokeswoman Ann Burkart said there was no relationship between the incidents and Felser stepping down from his position. Burkart said Felser left to spend more time with his family.

Felser's departure comes at a time when AOL is building a music subscription service for paying subscribers that it hopes will offer a legitimate alternate to Napster.

Interim GM Chris Douridas, a former executive at DreamWorks, will succeed Felser.

In other AOL news, Chairman/CEO Stephen Case reportedly received about $1.85 million in compensation last fiscal year, an 18% increase. On top of that, the 42-year-old executive received 3 million stock options that could be worth $229.2 million if AOL's stock rises 10% a year or $90.4 million if the stock rises 5% a year, according to a filing Monday (10/30) with the Securities and Exchange Commission.

But the options carry an exercise price of $47.94 a share, which is just above AOL's closing price Monday of $47.75 making them virtually worthless until the stock rises above that price. The options expire Aug. 19, 2009.

In more direct compensation, Case was paid $725,000 in salary and awarded a $1,125,000 bonus during the fiscal year ended June 30, according to the filing. Comparatively, the CEO received $575,000 in salary and a $1 million bonus during the 1999 fiscal year.

Case also added to his wealth during the 2000 fiscal year by exercising existing stock options, acquiring 5,753,300 shares worth about $326.6 million, the filing showed. He also holds another 7.7 million exercisable, in-the-money options worth about $394 million and almost 14.4 million unexercisable options worth about $521 million, according to the filing.

Meanwhile, Case's deputy Robert Pittman received almost $1.8 million in compensation during the 2000 fiscal year, including $683,334 in salary, a $1 million bonus and $61,000 in other compensation.

In simple terms our readers can understand, Case is one rich mutha!

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