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users in eighteen months — more than had voted for either can-
didate in the preceding U.S. election! — and discovering, via sur-
veys, that a sizable portion would happily pay between $10 and
$15 a month for the service. What’s more, Napster’s architecture
included a gatekeeper that could be used to lock-out non-paying
users.
The record industry refused to deal. Instead, they sued, bring-
ing Napster to its knees. Bertelsmann bought Napster out of the
ensuing bankruptcy, a pattern that was followed by other music
giants, like Universal, who slayed MP3.com in the courts, then
brought home the corpse on the cheap, running it as an internal
project.
After that, the record companies had a field day: practically
every venture-funded P2P company went down, and millions of
dollars were funneled from the tech venture capital firms on Sand
Hill Road to the RIAA’s members, using P2P companies and the
courts as conduits.
But the record companies weren’t ready to replace these ser-
vices with equally compelling alternatives. Instead, they fielded
inferior replacements like PressPlay, with limited catalog, high
prices, and anti-copying technology (digital rights management,
or DRM) that alienated users by the millions by treating them
like crooks instead of customers. These half-baked ventures did
untold damage to the record companies and their parent firms.
Just look at Sony: they should have been at the top of the heap.
They produce some of the world’s finest, best-designed electron-
ics. They own one of the largest record labels in the world. The
synergy should have been incredible. Electronics would design
the Walkmen, music would take care of catalog, and marketing
would sell it all.
You know the joke about European hell? The English do the
cooking, the Germans are the lovers, the Italians are the police,
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