Anyone know? Is it a stock market thang? Napster certainly doesn’t have banner advertising. What gives?
Having outside advertisements would make the Napster operation a “commercial” venture, which would weaken its case in court that it is only abetting file sharing, not making money off it.
But I am as puzzled as you about where their revenue comes from to pay the salaries (several dozen employees), the lawyers, the hardware servers, the office space, etc. A friend who follows dot.coms says that investors have been so overeager to get into dot.coms from the ground floor that they are willing to take the risk.
But says I, what risk? Without a promise of return on investment, it’s not a risk, it’s a black hole where your investment goes, never to return.
Hank Barry(CEO) and Shawn Fanning(Founder) talked to my Econ class for about an hour a few weeks ago.
Here’s the basic gist:
A Venture Capital firm is funding Napster right now, somewhere in the area of $12 million IIRC. Hank Barry works for the VC and Napster apparently accepted him as CEO when they decided to accept the money. He said that he feels that Napster will be a profitable business in the future(he should hope so), hence the funding.
His main proposal was to charge a monthly fee to use Napster. $5US/month was the term he threw out. Interestingly enough, he said that they’re paying a huge amount in legal bills, $3 million a month?
As a previous poster mentioned, advertising would make Napster something that had a chance of actually making money, and might hurt its image as an “innocent tool of the people”.
You could try [or [url="http://boards.straightdope.com/sdmb/showthread.php?threadid=35951"this one](http://boards.straightdope.com/sdmb/showthread.php?threadid=44531"this discussion[/url)
both of which had exactlty 
the same title as your thread.
Check this out:
**Napster to Develop Fee Service **
http://www.wired.com/news/business/0,1367,39891,00.html
Napster doesn’t make money!
And what’s even more erie is that they have the same number of replies!
By selling a chunk of their company to one of the organizations (Bertelsmann) that is sueing them in court. That’s how.
For more information please see this article in the BBC news. Be sure to click on some of the links in the menu at the bottom of the page for more information.
::furiously downloads more favorite tunes::
I’m going to shamelessly restate my 8/6/00 Great Debates thread here, where more Napster users will see it.
** I think there is a way to end the Napster problem, and it has worked with song lyrics**
If Napster evolves into a fee-charging service, they solve two problems – they have an income stream and they can pay for the rights to the songs. It’ll be a good situation for everyone. Napster was floating a $5 a month fee, which would make it affordable.
Of course, it doesn’t answer the bandwidth issues. Napster is a hog, and will always have that problem. ISPs will eventually have to begin throttling use to make sure their system isn’t overloaded.
For your information…Napster is right on schedule. Soon to be the largest music distributor on earth funded by monthly subscription. Already loaded and in use on most potential customer computers, the competition will never catch up. Directv did this letting hundreds of thousand systems operate with the pirated access card. Directv had to pay no one for programming, but when they finally pull the switch on the fixed cards, wala who’s system is in place
ready to start collecting for programming…
Napster makes money the same way that 95% of Internet companies make money - from their investors.
Same way with Amazon - they lose money with every book that they ship, but the investors poured enough money into them to make up for it. What I’m not clear about is how the investors expect to get their money back - do they think the people who bought books are going to return some money to them?
CurtC, I saw the kid who started Napster on the news & he said it doesn’t make money.