This has been driving my wife nuts ever since we downloaded the music trading program last week. She is convinced that it is part of an insidious plot by the governemt to get into our computers.
She has a good point. Here is a program where users can get into each others computer hard drive and extract files. Yet, while downloading songs, there are NO banner ads! And I sure as hell am too busy stealing mp3 files to click on anything else on the site.
Yet Napster.com has enough money to sponsor concert tours?
My theory is that
Napster has deals with certain friendly record companies (thus their new artists links
Napster will eventually sell ads on its downloads once the court brew hah ha is settled (or if it is settled). Right now it is trying to buid a following to sell advertsing with later.
Napster is banking on legitmacy from the Big 5 record companies currently suing it, leading to profitbale business deals with them later. This strategy may have backfired.
Napster is funded primarily by those venture capitialists fearful that they will miss out on “the next big thing”.
In real terms Napster is real neat technology with no (real) business model other than the fervent belief that there’s a pony in there somewhere. Interestingly, I would be willing to pay anywhere between .25 to 1.00 a song to download stuff I really like and avoid the annoyance of being cut off mid DL or getting some poorly encoded, garbled song. I would have (gladly) have paid well over 200. - $ 300. (incrementally) for the collection of music I have DL’d to date. Music that I thought was lost to memory, or too expensive to purchase by the album or never bothered to try. Napster is a literal miracle insofar as it has given me the opportunity to find and grasp shards of half remembered tunes that have given me endless hours of enjoyment.
There is a raging torrent of potential cash flow there for the taking if the content media companies and net deliverers can get over the control issues and figure out how to make it pay.
Napster will only make money if:
1: They can make net based micro-payments work
2: Make peace with content providers
If you go to Ktel.com you can either order a custom CD or download songs for approx a dollar per song. (I think you can buy a “package” of 20 for $14.99 or something.) Haven’t tried it yet, but Ktel’s gotta have a HELL of a library.
In fact almost ALL web based businesses lose money. Even http://www.amazon.com - millions and millions.
Let’s see Napster has assets - like your e-mail address and probably postal address - they can sell that.
The only other thing they have is potential. That is what people are investing in. Although potential for what is anyone’s guess, as is supposed to be a free service. Why should anyone pay for a service that is free? And who reads ads on websites anyway?
The only search engine worth using is http://www.google.com because it doeasn’t waste time with loading ads or pointing you to paid sponsors. I know it’s owned by http://www.yahoo.com , but it seems to free of their interference.
Napster can make money by having artists pay them to put thier music on thier servers, ads on the web page for Napster or that are pushed to the clients. They also had plans for actual music distribution (selling CDs and so on) as well as other merchandise. Lots of $$ potential there.
The thing I think most people get wrong about the net and its money making potential is to not think of it like radio. Radio is free and just makes money from playlist kickbacks and ads. And radio station expenses are a lot higher than a websites overhead. Add to that the potential audience for a website is a lot larger than any radio station.
ICQ is a good example of how to make money on the internet.
If you have a good enough product, find some venture capitalists to back it. Then put it on the internet for free knowing it will lose money. Having adds in your product would help keep it afloat. Build it up and promote it until as many people as possible use it. Millions in ICQs case. THen find some cash cow to fork over millions of dollars to buy it from you.
Napster, if it makes peace with the recording artists, has a technology that could be put to a wide use in more legitamite fields. At least one persom has said that it could be used to make a database of scientific papers on line. The owners of Napster could make a bundle off of it if they realize this.
Where did you hear that Google was owned by Yahoo? I haven’t heard anything like that, and a quick glance around their web site didn’t turn it up. I believe Yahoo is using Google’s technology, though.
In fact almost ALL web based businesses lose money. Even http://www.amazon.com - millions
and millions.'
You know Colin, this brings to mind another thing. In my area of mid california, the prices of real estate are about 40% higher than '99. The dot com people are buying 2 & 3rd houses.
So, if the dot coms don’t make money, how come people working for them make so much???
It’s somewhat of a house of cards based on the premise by investors and venture capitalists that with so many people excited about and involved with something (ie the net) that there’s got to be some way to make it pay. Some net based businesses, large and small, are making plenty of money.
Examples:
Net Porn - was only passed this year by B to B transactions as largest flow of cash on net from buyers to sellers.
The aforesaid B to B transactions. This category is a little bit under the radar and is not as sexy as net retailing, but trust me, it’s huge and it’s highly profitable.
Micro sellers such as some large Ebay sellers. There are folks who make six figure incomes selling on Ebay.
Some (not all) net based auction and liquidation sites are highly profitable.
Web sites that bring together buyers and sellers. A group of commercial real estate brokers I am familar with started a broker to broker / broker to investor investment properties clearinghouse and this venture has been quite successful and without the net would have been impossible to implement.
There are many other examples, so no one should assume all web based businesses are losing money. Taint’ so.
>> So, if the dot coms don’t make money, how come people working for them make so much???
I hope this is not a serious question but just in case…
Employee remuneration is dictated by market not by how the company is doing and the more money an employee is paid, the profit is decreased (or loss increased) by the same amount.
I think it is pretty clearly established that the dot coms are losing money by the bucketful. Their hope is they can make a profit operating in the future or be purchased like ICQ was.
ICQ was started by Israeli company Mirabilis and was later purchased by AOL for some amount slightly larger than what it takes to buy a gallon of gas these days.
#7 on the googel supplied reasons to work for googel is to get pre IPO stock options. That seems to mean that
googel is a private company. It also means that the employees have not gotten rich yet. They hope to when the
company goes public.
You always hear that 9 out of 10 new businesses fail. I wonder if the dot com businesses are doing better or
worse. It is probably to soon to know.
This is always a fun site to go to it shows what the insiders of a company are doing. Insiders in this case are big
shareholders and corporate officers. So it is wrong to say that amazon is not making money. These people made
a lot of money. The public is falling all over themselves to give it to them
Napster is a small company with only 15 million in funding. Napster is just to cool a program with a huge user
base to not try and see if a real business can be built around it.