Nefarious Napsters?

National | Online directories panic the music industry, e-tailers go broke, and other technology news

Issue: "Cracking the code," April 29, 2000

Online racketeering?
A once-obscure piece of software called Napster is putting the music industry in a panic. It lets people collect directories of their favorite songs and trade them with thousands of others. They can search for and download music directly off other people's hard drives. Napster is a big hit on college campuses. Schools have started restricting the software because of copyright fears and the massive amounts of data that it transmits. San Mateo, Calif.-based Napster Inc., which gives the program away for free, disclaims any responsibly for what users do with the software. Still, the Recording Industry Association of America has sued the company. It wants a massive $100,000 for each song traded using Napster software. This month the heavy metal rock band Metallica entered the fray, accusing Napster and three universities of copyright infringement and racketeering. The group claims the University of Southern California, Yale University, and Indiana University encouraged users to trade copyrighted material without permission. "We take our craft-whether it be the music, the lyrics, or the photos and artwork-very seriously, as do most artists," Metallica drummer Lars Ulrich said in a statement on the Elektra Records website. "It is therefore sickening to know that our art is being traded like a commodity rather than the art that it is." Even if lawsuits destroy Napster, this issue isn't going away. A group of America Online employees created a program called Gnutella, which lets people trade any file on their hard drives. This raised fears of everything from hacking to virus distribution. Such products aren't illegal, and the cacophony about them will only get louder as the software gets more sophisticated. E-tailers log off
The shakeup is on. Today's dot-com retailers are getting ready to combine and consolidate as the world discovers the winners and losers of e-commerce. The decline of many speculative Internet stocks fueled the recent Nasdaq tanking. Analysts predict that this shakeup will cause many e-tailers to close down or merge. A report from Forrester Research says most will be out of business by 2001. No one knows exactly how this will play out. The field is too crowded, with too many companies offering too many products. Millions were wasted on extravagant marketing campaigns of the we-must-succeed-now-or-die mentality. It was all too much, too fast. While millions of people are on the Internet, many of them still aren't comfortable doing business there. And dot-coms burned through cash with little thought to the future. Add the fact that many managers had little experience in the world of retailing. But this is the beginning of e-commerce, not the end. Many of the deaths will be in overplayed areas like music, books, and pet supplies. Traditional retailers will gobble up some of the stragglers for a quick leap onto the Internet. In the meantime, more dot-coms will be born. The barriers to entry are low, since a business anywhere can sell to the world. Lots of scrappy upstarts will always be popping up trying to take out leaders. Cyber-television
Who needs a modem when you have a TV? That's the sort of question being raised by broadcasters who want to send Internet services over the airwaves. New TV standards let stations squeeze more information through their transmitters. Even after pumping out a super-sharp HDTV picture, there's plenty of room for more. As TV and Internet service converge, such a setup would help keep TV stations from becoming just another destination in cyberspace. Several experiments are already underway at making it work. GeoCast and iBlast already plan to send data over the air. GeoCast's system, set for release next year, would involve buying a special receiver that would download data from various stations and save them for future use. Users would also be able to receive data on demand. Right now, the standard 56K modem is going the way of the LP record. High-speed connections reduce that proverbial "world wide wait" and let people download faster, enjoy audio and video, and save a phone line. Usually the options are cable modems or DSL lines, and operators are scrambling to deploy service from coast to coast. Throwing data-over-TV into the picture adds competition, increases options, and may help keep prices down. Yet this new format may be too little, too late. Using two connections to surf the Web will probably confuse many nontechnical people. Wireless data, which won't require an additional modem, is on the horizon. What may come of this are special services, like pay-per-view movies, shopping, and video games, that can take advantage of the physical TV set. Either way, massive changes are coming. In just a few years, local TV will be radically different.

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