Once upon a time, a little Internet startup called Napster had the world in the palm of its hand. It was a giant among giants in the peer-to-peer software industry, with over 60 million people using their file swapping services at its peak in 2001 – twice as many all the other P2P services combined.

The courts and a string of music industry lawsuits shut the service down almost two years ago, despite Napster’s attempts to convert it into a pay service and buy off the music industry with a billion dollar signing bonus.

It was a sound business plan.

If even 10 per cent of their users agreed to pay for the service, either by song or by bandwith use, that would result in an immediate customer base of six million.

The music industry wasn’t biting however, apparently deluding themselves that they could shut down every P2P service on the market, and put a stop to illegal music swapping. They couldn’t – more than a billion illegal music downloads still take place every month.

Meanwhile, Apple went out and proved there was a market for downloading songs off the Internet, putting together a library of more than 300,000 titles for the leading five music labels and offering them through an iTunes music store. With less than five per cent of the home computer market share, Apple users are now downloading more than $1 million worth of music every week.

Although that alone has vindicated Napster’s plan to become a pay service more than two years ago, and companies are probably wishing they didn’t shut down a service with a built-in customer base of 60 million music fans, 20-20 hindsight is not going to help Napster now.

This week Napster, purchased by CD burning software giant Roxio, announced that it will finally rejoin the ranks of P2P pay services with a library of 500,000 songs available for $1 each. Because Sony and Universal labels own a 15 per cent stake in Roxio, it’s a safe bet that this latest incarnation of Napster will be litigation free.

But it’s far from a happy ending. The new Napster will enter a market already saturated by pay services with a brand name that has been dead to music fans for two years.

Napster also made the choice to offer files in the Windows Media Audio (WMA) format, rather than MP3, AAC, or any other mainstream music compression format. That makes Napster incompatible with the Apple iPod and most portable MP3 players on the market, without first putting the music through conversion software – an extra step some users may resent.

Teaming up with Samsung, Napster will also release a special digital media player designed to work with the WMA format to compete directly with iPod.

Now, in addition to competing music services, people will have to choose between competing music players. People will have to compare price, file format size and quality, song availability, computer compatibility, and ease of use before they make up their minds what product to buy – and which companies to ally themselves with. It’s not an easy choice to make.

It will take years to sort out the winners and losers in this battle for market superiority.

People are really going to miss the good old days, when there was one P2P in Napster, and one format in MP3. Things were a lot simpler.

Code theft delays game

One of the most anticipated games of the 2003 season, Vivendi Universal’s Half-Life 2, is being pushed back until spring of 2004 after about a third of the original game code was stolen.

Built primarily for online multiplayer gaming, the code would essentially allow online players to cheat, which would in turn ruin its playability, and lessen its appeal to buyers. It’s been proven time and time again with other online games that when a few people cheat, everyone else stops playing.

To make the stolen code worthless to cheaters, the programmers will spend the next several months making the stolen code worthless. It’s an expensive and time-consuming proposition to say the least, but well worth it to prevent the game being tainted on release by suggestions that players can cheat the system. The original Half-Life sold more than five million copies. Half-Life 2 is expected to do even better.

The way the game was stolen is almost more interesting than the fall-out from the theft.

It seems that the thief or thieves hacked into a programmers’ e-mail account and used it to get into an important part of the system. First they made a copy of the HL-2 source tree. Next the hackers installed keystroke recorders on several machines at Valve that was invisible to the user.

The keystroke recorders, based on RemoteAnywhere, allowed the hackers to steal some of the game code as it was written.


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