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Napster will kill software industry - Microsoft

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Napster users are more likely to buy CDs than people who don't use the MP3 sharing software, a report from Internet-oriented market researcher Jupiter Communications claims.

The Recording Industry Association of America (RIAA) isn't going to like that one, guys. It will, however, love comments from Microsoft's Jack Krumholtz, director of the company's federal affairs and associate general counsel, who yesterday told a US Congressional committee that Napster is a threat not only to the music industry but the wider software business, too.

Jupiter's take on the case is essentially that "Napster users are music enthusiasts, [so] it's logical to believe that they are more likely... to increase their music spending in the future," company analyst Aram Sinnreich told Reuters.

The company's survey of users found that many claimed that sampling music by downloading songs via Napster resulted in their buying more CDs.

Mind you, that's exactly what you'd expect them to say, whether they do buy more CDs or not. However, with music sales rising last year by around eight per cent, it's hard to gainsay Jupiter's findings. The RIAA, however, will just point to its own surveys that show the opposite - that CD sales from stores around US universities have fallen off (this despite the fact that the data was collected before Napster's launch).

The real test will come next year, when music sales from a time after Napster was launched have been collated and published. Even then it's going to be hard to extract from the data a true picture of the Napster effect.

Microsoft's Krumholtz believes the news will be bad. "We've seen our software on Napster [we assume Jack actually means Gnutella here, since Napster only swaps MP3s, either that or he means the Wrapster hack] and we anticipate this trend to continue," he told the House Subcommittee on International Economic Policy and Trade.

Later, speaking to Computer Reseller News US, Krumholtz said: "We're beginning to see software programs shared and traded over Napster. It's not to the degree that we see music shared because music files are a lot smaller. But as broadband technology comes in and more and more people have access to a broader pipe, I think you're going to see all forms of digital content shared over technology like Napster. So it becomes a significant concern."

Krumholtz' solution is more action from government, particularly when it comes to funding anti-piracy agencies. Kind of ironic, that, given Microsoft's attempts to get the Department of Justice anti-trust division's budget cut, but Microsoft has never been a 'you scratch our back, we scratch your' kind of company.

Whatever, Krumholtz' point - and that of the Business Software Alliance on whose behalf he was speaking to the Subcommittee - is that software like Gnutella and Napster will have a profound effect on software piracy if nothing is done about it now.

Unlike Napster's music enthusiasts (if Jupiter's research is to be believed), software users are not likely to buy the real thing having downloaded a working version for free. But are they likely to download hundreds of megabytes of data at a time? If the response to multi-megabyte Quake III demos and Windows Service Packs are anything to go by, the answer is yes.

Which is, of course, why Microsoft reckons its 'download and rent' software sales model will work. Ahem. ®

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