Re: [microsound] napster shut down

[david turgeon <david.t@xxxxxxxx>]

> this might sound like a stupid question, but i really don't understand how
> napster makes money at all.  I mean, it's obvious that they are making
> money, but the software is free to download, there are no visible ads on
> the webpage, etc.  Where do profits come from?  can somebody give me the
> run down?

you are right, they are not "making money".  they are being gambled on
by investors, which is where their revenues come from.  investors see
this piece of software as potentially valuable in the near future,
either from sheer popularity (eyeballs, as they call them, which can be
converted into information for marketing purposes), or strong branding
(which can then be used for marketing plans however unrelated to the
original intent of the brand).

it's always a bit nebulous why these things happen before the big buyout
makes it obvious.  there was no immediately sensible reason why a "free"
program such as icq, for instance, got bought out by aol for god knows
how much.  however, knowing that they have their own messaging system
(aim), the buyout of mirabilis/icq makes sense as a "buy the
competition" sort of move.  as for the geocities buyout by yahoo, it
makes sense as a move to increase yahoo's user base (already a massive
pool of information, thanks to the yahoo pager, my yahoo & other such
futile "services")

it's interesting to see how a pseudo-corporation such as cdnow (&
shortly amazon, by some accounts) is currently being milked dry after
having been at the top of the game for such a long while.  as i said,
this is essentially a dog-eat-dog, gambling game where every move is
allowed.  if cdnow were to, oh, inadvertedly lose all their capital,
then you can bet there'll be a corporation to put its money on the
established brand name & user base.

~ david