Napster
The new buzz word of the internet is P2P. This stands for peer-to-peer,
and refers to the swapping of information between two people connected
to the internet via their personal computers.
P2P follows B2C (business to consumer), in which consumers were expected
to buy large amounts of just about everything over the internet. B2C's
best success was bookseller Amazon.com. Amazon is today a wilting memory
of its past glory. Its shares are worth a fraction of their former value
and it has made enormous losses every year of operation.
Then came B2B (business to business) electronic “market places”, where
corporations and their suppliers trade electronically. That means looking
at catalogues, comparing prices, agreeing to terms and conditions, placing
orders, issuing invoices, booking transport, handling payments and tracking
delivery. That's a huge range of business processes to concentrate in one
place, and not surprisingly it does not work well. The large corporations
can't agree on who should run the marketplace. One major B2B player, VerticalNet,
provides marketplaces for dozens of industries. A year ago, its shares
were worth around $200. Now, they trade at around $4.
The search for profitability on the internet is unceasing. The best
known P2P application is Napster, which people use to swap music with each
other over the internet. Napster has been found guilty in a US court of
breaching the music corporation's copyright to the music swapped. The case
was led by the industry's “big 5” — Sony, Warner, EMI, Universal and BMG.
In normal circumstances this would have meant the end of Napster. But
the company has attracted more customers in a shorter time than any other
business in history (55 million to date). Even if these customers are all
receiving a free service, the numbers are still hypnotising the internet
profiteers.
First to break ranks was the giant German media corporation Bertelsmann.
It gave its backing to Napster last October. Together they are promising
to generate $1.5 billion in extra revenue for the record industry if the
lawsuit against Napster is dropped.
Whether the 55 million Napster users are going to pay for its music
service is an open question. When Yahoo started charging for its on-line
auction service a few weeks ago, the number of items auctioned daily dropped
from several million to a couple of hundred thousand auctions. In a period
of overproduction of internet services, users have become used to free
services.
BY GREG HARRIS
<gregharris_greenleft@hotmail.com>
