A rchive Date
[ 11-10-2000 ]
Category
[ Information Technologies ]
sub-Categoy
[ Networking ]
|
[If Napster survives legal assault, expect it to thrive
By MARK EVANS
Tuesday, October 10, 2000
It's quite likely that Napster's future will be decided in a courtroom this week when the 9th U.S. Circuit Court of Appeals decides whether the company is guilty of copyright infringement or simply providing consumers with cool technology to share music.
While the music industry and the 30 million Napster users anxiously wait for the court to make its ruling, there already appears to be a number of alternative scenarios emerging surrounding Napster's future.
Of the rampant speculation being tossed about, the most intriguing is that Napster has been holding separate negotiations in recent months with two Internet service providers looking to purchase Napster and its ultra-popular technology.
Of course, these rumors are vehemently denied by Napster's executives, who say that no talks have been held - although the company is always prepared to maximize shareholder value.
It would be silly to believe they would say otherwise given that the company's future hinges on a three-judge panel that could soon make a landmark decision. It would be public relations suicide to admit that Napster's ownership is being negotiated at a time when the legality of its business is, at best, ambiguous.
Then again, where there's smoke, there's usually fire. Aside from its legal troubles, Napster is an extremely attractive company with killer technology. More than any of its file-sharing competitors, Napster makes it so easy for computer users to share digital content. That goes a long way explaining why venture capitalist Hummer Winblad invested US$15 million in May, even as the titans of the music industry were launching legal attacks on Napster.
If Napster can convince the court that its technology is no different than videocassette recorders, it could be an irresistible target for a company looking for a large audience of consumers captivated by the service.
If you believe that this scenario is possible, the speculation surrounding Napster's futures makes complete sense. An ISP would love to buy Napster because it would provide them with an ultra-powerful competitive tool.
Take Earthlink, the second-largest ISP in the U.S. behind America Online. Earthlink has an enormous problem: it can't figure out how to make a profit at a time when the margins on Internet access are shrinking. The answer to its woes could be acquiring Napster, and charging its users a monthly subscription fee.
Before striking the deal, Earthlink would convince the music industry that it is more than willing to share the wealth. That would make the music industry happy, while providing Earthlink with a lucrative revenue stream and a way to compete against AOL.
Critics will argue that there are two flaws in an Earthlink-Napster marriage. First, the music industry would be reluctant to cut a deal with Earthlink. Second, Napster users would balk at paying a monthly subscription fee - even it were as low as US$4.95.
Despite the music industry's aggressive posturing, it realizes the digital exchange of information - be it music, movies, software and books - is an unstoppable force. It would much better move to strike a win-win deal with a friendly party than watch Napster carry on as a user-friendly - but business destroying - tool.
As for Napster users, many of them will be happy to pay for the service. While a big part of Napster's success is that you can get music for free, it is also popular because it makes music extremely easily to acquire. It has allowed music lovers to consume music without the hassles of visiting a store or the pain of buying a CD and discovering that only one of the 13 tracks is any good.
When you take all of these factors into consideration, the rumors of Napster's sale are completely logical. All it has to do now is dodge a legal bullet to the head.
Mark Evans is director of communications with Toronto-based Blanketware Corp.]
|