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Napster a model for music, AOL's Levin says
by Stephen Lawson, IDG News Service\Hong Kong Bureau
May 09, 2001, 00:30


HONG KONG - The Napster Inc. music-sharing service is a model for the next
generation of music distribution, AOL Time Warner Inc. Chief Executive Officer
(CEO) Gerald Levin said here Wednesday during a panel discussion at the Fortune
Global Forum.

Levin, along with other top executives on the panel, also expressed high hopes for
Internet and IT industry development outside the U.S. Levin pointed out that
wireless technology is better developed in Asia and Europe than in the U.S. and
China offers more freedom to quickly develop communications infrastructure.

In addition to Levin, whose Fortune magazine is hosting the three-day business
summit, the discussion featured Yahoo Inc. Co-founder Jerry Yang, Dell Computer
Corp. CEO Michael Dell and Computer Associates International Inc. Chairman
Charles Wang. Led by U.S. TV talk show host Charlie Rose, the executives
discussed a wide range of topics, including the aftermath of the stock-market
downturn, the future of digital devices and the "next big thing."

Levin said Napster has pointed the way to network-based delivery of content, which
will be the future direction of both music and other entertainment delivery.

"The value of Napster, now that it's being legally tamed and put in a box, is
essentially to be the first iteration of a new model for consuming entertainment
with a digital space that doesn't have a physical location, that I can access at any
time with any handheld instrument, and music is just the leading edge of where
we're going to take entertainment," Levin said.

The leader of one of the world's largest media conglomerates prefaced his praise
for the Napster model by saying that the peer-to-peer model runs afoul of legal
principles. He envisioned music being accessed from a user's "digital locker,"
probably on a subscription basis.

Levin said subscriptions are at the core of AOL Time Warner's businesses and may
be the best future model for broadband access and video-on-demand.

"The fundamental culture is all about subscriptions," Levin said. Following the
recent merger of AOL and Time Warner Inc., "We actually have 133 million
subscriptions," he added. That model will allow the company to rise above the
current woes of Internet advertising.

"It's all about delivering a message, providing the consumer with information that
can be activated into a transaction, all at one time. We used to call that direct
marketing. Now you have the best medium that's ever been invented for the
execution of that," Levin said.

Yahoo's Yang expressed confidence in his portal company's fundamental business
plan, which is primarily based on advertising revenue, but hinted Yahoo might look
to paid services in the future.

"Fundamentally, the advertising and interactive marketing proposition on the
Internet is as strong as ever," Yang said. However, he added, "Having a direct
relationship with the customer through a subscription model or billing model is
extremely powerful . . . we do need to think about ways to diversify our revenue
base." To do that, Yahoo already is beginning to offer paid services to small and
medium-sized businesses and ways for enterprises to develop better relationships
with their employees, Yang said.

Levin expressed hope for developing countries such as China to leapfrog to new
technologies.

"Here in China, for example, we know that the opportunity to develop broadband
capability through fiber directly to the home doesn't get caught up in a whole
patchwork of either historical development or antiquated regulations," Levin said.

Other panelists likewise said they see the greatest growth prospects in China and
other developing countries. Dell said his company's greatest percentage growth in
sales is coming from Asia today and is likely to continue doing so in the future.

Asked to name the "next big thing" in IT, Dell and Wang both touted wireless
technology. Dell said by year's end 30 million users will have wireless LAN
equipment using the IEEE 802.11 standard, meaning those users will outnumber
handheld computer users by that time. Yang named high-speed Internet access
available across many devices, and Levin identified anytime, anywhere access to
content on demand as the next major trend.

The forum continues here through Thursday.

More information on the event is available on the Web at
http://www.fortuneglobalforum.com.