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    Home / College Guide / Popular Napster replacement Sold
     Posted on Friday, May 24 @ 00:00:13 PDT

    Although Sharman has yet to be sued by the media coalition, the company is not exactly flying high. That's because Sharman still has to find a way to make money. So, in characteristic dotcom fashion, Sharman is giving away its most valuable product -- the file-sharing software -- and trying desperately to wring money from the millions of Kazaa users. So far, that has meant bombarding them with pop-up ads as they search for music. The ads are annoying, but few people are bothered enough to stop using the service. In addition to other glitches -- like software "worms," which look like songs or movie clips but can actually damage your computer files once they're downloaded -- the ads are considered a small-enough price for access to free music. Last week alone, according to CNET's (CNET) Download.com, there were 3.5 million downloads of Kazaa's software. Like other dotcoms, though, Sharman has found that selling pop-up ads doesn't bring in enough cash to create a viable business model. So the company is taking the next step: selling search terms to advertisers and content owners. For instance, if Britney Spears's record label were to buy the search phrase "I Love Rock & Roll," a link to her version of the song would come up first, along with, possibly, the option to pay for it or buy the CD it is on.

    What's even more ominous is that Sharman is planning, in conjunction with one of its partners, Brilliant Digital Entertainment, to take advantage of the unused processing cycles and storage capacity of millions of Kazaa users' computers and resell that capacity for distributed-computing applications. Sharman would do this through a system called Altnet, which was designed by -- guess who -- the same Dutch programmers who came up with Kazaa: Niklas Zennstrom and Janis Friis. The idea behind Altnet is to build a parallel peer-to-peer network by exploiting users' computers in the existing Kazaa network. Selling search terms is one thing, but there's something insidious about Altnet borrowing your computer when you're not using it. If Sharman or Brilliant Digital wanted to, they could even take over a Kazaa user's computer without asking (although they promise not to do that). But whether you pay by being an advertising pincushion or by donating the excess cycle time of your computer, the point to remember is that there are no free rides. And that fact, in turn, underscores the problem with most of the file-swapping services -- there's no compelling online alternative that's also legitimate.

    Most people aren't thieves by nature, and most reasonable music consumers understand that artists should be paid for their songs. A substantial number of people who once used Napster, or now use Kazaa, would likely pay for music downloads, assuming the music industry could ever reach some kind of accord with the peer-to-peer players. In fact, the industry needs to come to such an accord, and soon. Sure, there's nothing stopping it from continuing to sue these peer-to-peer startups, but music fans everywhere -- also known as customers -- are demanding something else. The recording industry needs to think of file-swapping as akin to radio: a free communications medium that can be a huge promotional vehicle. And it would be wise to give up its own paltry digital music efforts. (The record companies don't run their own radio stations, after all. Why should they run their own digital music services?) But to get people to pay for digital music, they need to offer something better than what people can already get for free on Kazaa and other peer-to-peer networks. That wouldn't even be very hard. Record companies could take advantage of tools like Altnet by offering exclusive tracks or information to make digital music collection more convenient for fans.

    Or they could release free MP3 files encoded with links to buy the CDs or to sign up for a service that would automatically e-mail fans new tracks from their favorite bands the first day they get released. There are hundreds of new products or services they could try. The great virtue of anything digital, after all, is that it can be manipulated in infinite ways. The only thing stopping media companies from taking advantage of this new medium is a knee-jerk reliance on lawyers to fight their battles -- and a serious lack of imagination. The music and movie companies can't fight the onslaught of digitization forever. Rather than continuing to try to litigate peer-to-peer companies out of existence, they would be wiser to strike deals with startups that are showing traction. Millions of consumers can't be wrong. Treating them like criminals is not going to win them over. It just forces those consumers to make a thieves' bargain with services like Kazaa, when all they really want is access to digital tunes. If media companies don't give consumers what they want, all the legal victories in the world won't be enough to save them from a mass migration to other -- no-fee -- means of accessing digital content.

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