From: Adam Rifkin -4K (adam@XeNT.ics.uci.edu)
Date: Tue May 02 2000 - 15:43:05 PDT
I love it: "Not only does Napster have no profits, it has no revenues.
Not only does it have no revenues, it has no business model." The MTV
of the Internet, indeed.
Beberg, we may have *finally* created a venture capital environment in
which VC's don't care about anything except whether the *idea* is cool.
"I would get Napster as a feature of some service that costs money, in
the way that instant messaging is a free feature that enhances AOL."
Capture their imagination, and like Tomwhore says, you may just get what
you want, Beberg buddy... you know I'm rooting for ya...
> Napster: Show Me the Money
> By Rob Walker
> Posted Tuesday, May 2, 2000, at 2:23 p.m. PT
> It's easy to see why college kids love Napster, but why do venture
> capitalists seem to love it so much?
> Napster is a small California company that distributes via its Web site
> a much-ballyhooed piece of software that makes it easy for music fans to
> swap songs over the Internet. In yesterday's Wall Street Journal, Kara
> Swisher's "Boom Town" column noted that VC's are "giddy" about Napster,
> though perhaps are wrestling with ethical dilemmas, since the software's
> main attraction is that it allows consumers to stockpile music they
> haven't paid for.
> In the May 1 Fortune, venture capitalist J. William Gurley becomes the
> umpteenth onlooker to declare that Napster simply cannot be stopped.
> After all, he notes, Napster has snagged 9 million users in six months,
> and "it took America Online 12 years to reach 9 million users." Six
> weeks ago, Fortune's other VC columnist (what's up with that, anyway?),
> Stewart Alsop, publicly mulled over whether he would invest in Napster,
> seeing as how it's the future of the music business and so on.
> I get why Napster is a cool thing for music fans. But there is a problem
> with Napster as a business: So far, there's no money involved. None. Not
> only does Napster have no profits, it has no revenues. Not only does it
> have no revenues, it has no business model.
> Yes, Napster is popular, but it is also free, and emphatically so (which
> kind of suggests a little problem with Gurley's comparison to AOL). It's
> popular, in fact, because it is free, and because it lets you get things
> for free. The entire brand identity of Napster is "free-ness." Why would
> the kids who have made it popular pay for it? Meanwhile, Napster's
> "proprietary software" has apparently proved pretty easy to copy --
> several imitators already exist.
> Napster's CEO has asserted that the software maker is "the MTV of the
> Internet," so perhaps the thinking that ad sales will be the cash cow,
> or that record companies and/or artists will partner with Napster to
> sell artist merchandise. That's possible, I guess, but Napster so far
> has been sued by the Recording Industry Association of America,
> Metallica, and Dr. Dre, so the company doesn't seem to be doing a great
> job racking up future allies.
> Again, I understand that Napster is popular, and that it is a real
> threat to the back-catalog portion of the record business. So I get the
> potential downside. And in fact, I would get Napster as a feature of
> some service that costs money, in the way that instant messaging is a
> free feature that enhances AOL.
> I do not get why anyone would want to fund Napster. It's one thing to
> spot a trend, but it's something else entirely to figure out whether
> that trend will result in big profits, and for whom. Right now, betting
> on Napster seems like betting on casual Friday, or the tattoo -- sure,
> it's more popular than it used to be, but where's the money in it?
> Napster as an investment only makes sense, really, as one of those
> pie-in-the-sky "concept plays," a dot-com that will "aggregate eyeballs"
> and figure out how to "monetize" them later. But I thought we did away
> with all that silliness after the most recent Nasdaq tumbles, didn't we?
TrueSAN is on its way. An IPO is likely later this year or next, but it has to happen by 2002 or Isakovich won't achieve his goal of beating Michael Dell's IPO age record. Dell was 24 when his computer company went public in 1988 and Tom Isakovich is still only 22. I have suits older than that. -- Robert X. Cringely, April 7, 2000
[Rohit, is Cringely talking about clothing suits or lawsuits? :]
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