On January 6, the man who led the Napster digital music service for the last 10 years, Chris Gorog, announced he was leaving the company, along with president Brad Duea. There were conflicting reports at the time about whether his departure was voluntary or whether he was forced out. In this exclusive interview, an excerpt of a much longer conversation Billboard will print next week, Gorog clears the air on his decision to leave the company, offers some thoughts on the direction Best Buy is taking Napster, and speculates about his future plans.

Set the record straight for us on the circumstances around your departure from Napster. Did you step down or were you pushed out as some have reported?
After we understood the approach Best Buy was taking with Napster, it became clear the company didn't need a CEO, a president and a COO going forward. So Brad Duea, Napster's president; Christopher Allen, Napster's COO; and myself recommended to Best Buy in October that they eliminate the CEO and president positions and give Christopher Allen the ball to run the business. It was mutually agreed by all concerned as the right approach, and very cooperative and amiable.

What elements of the "approach Best Buy is taking with the company" led you to this decision?
Suffice it to say it didn't require three C-level executives in Los Angeles to execute.

Why now? Best Buy has owned the company for more than a year. Why did this not become clear until October?
It's been challenging over the first year. It's a bit like bringing a dinghy up to dock next to an aircraft carrier. Best Buy is an extraordinarily well-run brick and mortar retailer. But I think they've been a bit schizophrenic to date with their goals in digital. They'd probably admit this. They have an incredible opportunity going forward, and they're a very talented team, so I'm sure they'll sort it out.

Was your leaving inevitable once they bought Napster?
Best Buy was very intent to lock me and the others up for three years. Quite frankly, at the time of doing the deal, I presumed it would be result in a year-ish transitional situation, and that's exactly what it's been.

What is this "schizophrenic approach" to digital you referred to?
The overall premise to do the deal in the first place is that Best Buy is in an extraordinarily powerful and positive position to be an important player in the sector of delivering digital entertainment. I think the device integration strategy, where Best Buy works very closely with their key hardware partners around the world, is a superb strategy and the most significant opportunity, particularly for Napster. I think the schizophrenia comes from how one makes sense out of aggressively selling the products of direct competitors like iTunes while also trying to build a business like Napster. Imagine Pepsi trying to grow its business while simultaneously marketing the hell out of Coke. That's a very challenging tightrope act that Best Buy needs to execute well on.

How do you feel this device integration strategy resolves the challenges that have faced the music subscription market to date?
It really is going to be enormously helpful in penetrating the paid streaming model. Once consumers enjoy these experiences, they remain users for some time. Napster's tenure is well over a year for an average subscriber and that's pretty good for a subscription industry. The question has always been how to get the opportunity in front of consumers, and certainly being deeply integrated into hardware devices is the very best way to do that. Secondarily, the price point has finally gotten down to an intelligent level. Naspter is currently marketing a catalog for $5 month for unlimited access to the catalog and 5 downloads. Immediately on its release, it reversed a negative growth trend for the company and began propelling growth.

With all the negative press the paid subscription model has received over the years, how do you account for the resurgence of the model through such newcomers as MOG, Spotify and others?
I frankly feel vindicated. We said for a decade it was about unlimited access -- owning nothing and having everything. You very clearly see that trend now. It's notable Apple bought Lala after previously saying nobody wants to rent music. People love this model once they really understand it. The whole concept of owning content on your hard drive in the digital age will become irrelevant over the next decade.

What's changed that made subscriptions more appealing?
The only thing that has changed of any great significance is a very critical thing, and that's pricing. For us to sell a product for $13 to $15 a month versus $5 to $7 a month is simply an enormous difference to consumers.

But Yahoo Music Unlimited tried that same $5 price point when it first launched and it didn't make a difference.
But I think that goes to my second part of my answer to your question. These ad-supported free streaming services--imeem, you name it--were really effective about teaching people about the opportunity of on-demand streaming. So while they were not successful business models, most all of them were very successful from a consumer uptake perspective, and I think that had a lot to do with educating consumers about what it meant to have on-demand streaming.

What about mobile phones solving the portability problem for subscription tracks by streaming from the cloud rather than porting over "tethered" downloads?
We all underestimated how successful on-demand mobile streaming could be, and I don't mean from a consumer perceptive but from a technology perspective. Even a couple of years ago, many in the industry felt the networks were not up to a high-quality, on-demand streaming experience. We found that to be obviously untrue. It's going to be a huge part of the story. The explosion of Pandora's growth because of their iPhone app is very, very exciting for the industry, and it's fun to watch.

Napster stated a few months ago that it wouldn't offer an iPhone app because the cost of streaming to mobile is too high.
Napster actually has had a fully functioning iPhone app for about six months and hasn't released it yet because there's ongoing negotiations with the labels. The fundamental tension there is that the labels view it as an opportunity to charge users more for what they view as an additional value, whereas it's my point of view that [consumer] access to their Napster account should be ubiquitous.

The labels worry that streaming to portable devices could cannibalize download sales.
But I think this is an opportunity for labels and music publishers to get ahead of the curve. This is where consumers want to go. Go back seven or eight years ago. Labels were excited about a world where tens of millions of consumers would pay a monthly fee for unlimited access to their libraries.

You now have consumers who are really interested in doing that. So I think we're at a pivot point here where if the labels are really wise about pricing structures, they could finally move paid streaming into mass adoption.

What's the difference between accessing Napster via a phone's Web browser and accessing it from an app?
Right now, the labels take the view that digital music providers do not have the right to offer on-demand streaming on a mobile handset. They take the view that those rights are limited to the PC. So it's not a technical issue. It's a deal issue. What the labels are saying is that it's not allowed under the contract.

Looking over the last 10 years, what would you have done differently? With respect to the labels, certainly the most critical mistake was not licensing in the MP3 format many years earlier. Had they done that, companies like not only Rhapsody and Napster, but huge companies like Yahoo and AOL and Microsoft and MTV would have been able to compete with iTunes because they could have sold downloads that would play on the iPod. By not doing so, it ghettoized every other player in the marketplace, which is why

iTunes was able to get an 85% market share almost overnight. That was very destructive to creating a healthy marketplace.

What mistakes did you make during that same timeframe?
I would say first as a disclaimer, because we didn't have downloads that people wanted, you are forced to innovate around what consumers wanted to do. One of our solutions was the portable subscription business. It was heavily DRM-ed with licenses expiring every 30-40 days. Quite frankly, I don't know what we would have done if we had not gone down that path. But that path was fraught with peril. The technology was not ready for prime time. I admire what eMusic did during the same timeframe, which was to say "consumers want MP3s; we can't get MP3s from the major labels; so we'll simply sell the MP3s we can get access to." That was a courageous and bold approach, and one that ultimately helped move the industry.

How would you assess Napster¹s efforts to market subscription services?
Napster really was challenged to come up with that perfect way to teach consumers about what that product was. I think all of our competitors were in the same spot and were unfortunately equally unsuccessful.

I gotta ask about that 2005 Super Bowl ad.
The much-maligned Super Bowl ad [which featured Napster's trademark cat holding up a sign comparing the cost of iTunes downloads with Napster's subscription fee] propelled the hell out of Napster's business. If you look back at our public reports, the Super Bowl launch worked very well, hundreds of thousands of subs were added over the next six to nine months.

What's next for you?
I've formed Gorog.net, which is just a foundation for me to start looking at things. I think there will be a number of opportunities and I just want to process through them. I may get involved in buying a company or two. I may get into being a CEO again. I may get into taking something public. I just want to look around, see what's out there, and enjoy this respite.

Would you be interested in getting involved in another digital music service?
Possibly. One of the things that's most interesting to me now is the future of television and IP connected TVs and what that means to the ultimate disintermediation of the huge entrenched players currently delivering TV into the home. That model is also going to be going to an Internet-connected orientation where consumers have an enormous amount of power to create their own channel selection, pay for just the product they want, etc. I think it makes some of these huge investments in satellite and cable not as valuable as they once were. But truthfully I don't really know.