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The Information Industry
oi! see also: digital music

The Napster Factor
Facing polls that show him falling behind Republican George W. Bush in the race for the Presidency, Vice President Al Gore talked with Red Herring Magazine.

In comments that are sure to receive wide play in the national media, the Vice President compared the openness of Napster and other new file sharing services to the fundamental strengths of the American political system with an analogy.

"Our democracy, our constitutional framework," Gore told the magazine, "is really a kind of software for harnessing the creativity and political imagination of the American people. The American democratic system was an early political version of Napster."

Continuing, Gore made an observation that could easily be applied to the Napster case, and probably will be, "Dictatorships, Communist countries, monarchies in the past all eventually collapsed because of their inefficiency in moving information and creativity to the places where it was needed."

In July, a US District Court issued an injunction that ordered Napster to shut down its servers. The Redwood City based company won a last-minute reprieve that allowed the service to stay online. The US Ninth Circuit Court of Appeals will hear the case in early October.

In the interview, which appears in the September 28th issue of the magazine and on the Red Herring web site, the Vice President again demonstrated that he is a man who knows what he is talking about, at least when it comes to Information technology.

This in contrast to his opponent, who may be best known in the industry for generic positions "I intend to use the Internet to empower citizens, to allow them obtain customized information from Washington when they need it " and remarks like the unsettling "Will the Highways on the Internet become more few?"

Although the Veep stopped far short of a direct endorsement of Napster, his comments certainly did nothing to hurt the file sharing company's cause. If anything, they probably added fuel to what has been a fiery hot topic for months since Napster broke into the public eye.

The Vice President also reflected on the future of politics on the Internet, cautioning that even in a best case scenario, a system which allowed US citizens to vote on national referenda directly over the Net might not be such a good thing. "...therefore if you had a completely wired nation, you still would not want pure democracy. You would still want representatives to be chosen who have the time to reflect and make considered judgments."

Last month, the White House filed a brief on behalf of the recording industry in the Napster case, arguing that allowing file-sharing services like Napster to continue operation could cause the economy irreparable harm - almost a mirror image of the recording industry's own argument.

News of the brief caused an uproar among Napster supporters and prompted Republican Senator Orren Hatch to send the Judge a strongly worded letter of his own, reminding the court that the opinions contained in the White House brief did not necessarily represent the views of the rest of the government.

Some observers have suggested that a Gore White House would probably side with the recording industry against Napster and the other file sharing services - a theory that gained adherents after the White House brief was made public. The fact that Tipper Gore is a close personal friend of RIAA head Hillary Rosen has also been viewed with skepticism.

Plenty of people still remember Tipper's campaign against indecent song lyrics - an unpopular personal cause that may have cost her husband the presidency last time around.

Fear and Loathing 2003
On September 19th Forrester Research announced that it thinks piracy on the Net, driven by new file-sharing services like Napster and Gnutella, will cost the US music and publishing industries $4.6 billion by the year 2003, as control of digital content collapses.

Forrester expects the music industry to be the hardest hit, predicting that piracy will cost the major labels $3.1 billion by 2003. Book publishers will fare only slightly better - they are expected to loose $1.5 million by the same date. The movie and game publishing industries, marginally less exposed, will have more time to react, allowing steps to be taken to control the damage.

According to the report, titled "Content out of Control" the losses will be part of a larger trend, as control of digital content shifts from established players into the hands of smaller labels, independent publishers and artists. In what Forrester called "a historic transfer of revenues", musicians will gain $ billion, authors $ 1.3 billion and third party service companies $ 2.8 billion by the year 2005.

Eric Schreir, one of the Forrester analysts behind the report, said that attempts by content providers to block the growth of the file-sharing movement using encryption technology and litigation will fail.

"Consumers have spoken -- they demand access to content by any means necessary. Neither digital security or lawsuits will stop Internet theft of content. Regardless of whether they consider Napster right or wrong, traditional publishers must focus on beating Napster at its own game. They must create compelling services with the content consumers want, in the formats they want, using the business models they want."

Forrester interviewed fifty entertainment companies for the report, and talked with five different types of content providers. Distributors of music, movies, books and television were contacted by the company. The research firm concluded that the DRM (Digital Rights Management) tools content providers are relying on to control the unauthorized distribution of copyrighted material are an inadequate solution to the problems posed by file-sharing.

DRM technologies include the implementation of security practices like watermarking and encryption. Such measures attempt to stop music piracy by making it dangerous or technically impossible for pirates to share copyrighted material, a goal many critics in the technology sector have argued is impossible in light of rapid advances in file sharing technology.

Similar efforts to control and restrict access to content by magazine publishers and newspapers failed in the mid nineties. Most magazines and newspapers have since abandoned efforts to limit access to their content and adopted new business models. Some, like the New York Times and the San Jose Mercury, have benefited, using the increased exposure the web provides to increase circulation and develop new revenue models. Other have not been as lucky. While many publishers have succeeded in drawing traffic to their web sites, not all have figured out ways to profit from the transition. Developments in other sectors of the content industry are likely to follow a similar pattern, with some players benefiting from the changes and others struggling to find ways to adapt to the new environment.

In late September, the discovery of #Bookwarez, an underground file-sharing service which allegedly allowed Internet users to find and download electronic copies of best-selling books like the Harry Potter Series and Stephen King's "The Green Mile" with Napster-like efficiency sent a spasm coursing through the publishing industry.

(For more on #Bookwarez click here for a Wired News Article about the site.)

The last report I can remember that was even half as sweeping or as negative as this: GartnerGroup's November 1999 prediction that 75 percent of e-businesses would eventually fail or be abandoned.

That report, it turned out, was horribly prescient.
Faced with vocal opposition from critics, web sites catering to women are being forced to rethink the relationship between e-commerce and an audience that just might be a little more sophisticated than executives would like to think it is.

The message to Internet companies?

Be who you say you are - or we're gone

[ Full Review ]

Akamai Technologies
The experts told us that bandwidth problems would make the Net irrelevant. That was before companies like Akamai, Inktomi and Sandpiper Networks began coming up with solutions.

Connecting with a 56,6k modem still sucks but the Net is getting faster every day

[ Full Review ]
The web is crowded with companies claiming they'll help take your e-commerce site to to the top. Net Incubators, Application Service Providers and do-it yourself-financing companies are all clamoring for your attention.

The same rules apply here as in the real world, even if they don't always seem to make sense.

Rule Number One?

Know who you're dealing with. The company you're talking to may well be something other than what they say they are. In which case, things could get really nasty in a hurry

[ Full Review ]

America Online
First there was that business about the commercialization of the Internet. Then the complaints about lousy service. Now comes the merger with Time Warner. Love 'em or hate 'em AOL is here to stay

Et tu Mountain View?
The beloved browser that forever changed the way we would look at the World Wide Web is a distant memory.

Fans complain that new versions just don't feel the same any more.

Navigator's market share has plummeted as increasing numbers of surfers move to Internet Explorer.

It didn't have be this way

The Industry Standard
How's this for an understatement? The Net is changing the way we get our news. The rapid pace of events has many journalists struggling to stay on the ball. Some fall by the wayside. Others are excelling. Publishing is changing. Meet one of the winners.

The Standard

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