Execs Express Awe Over Napster Generation

ByABC News
January 29, 2001, 9:30 AM

D A V O S, Switzerland, Jan. 29 -- Bill Gates marveled at the explosion of young people using computers to talk and to share music, but other business leaders here worried today over the new power that the Internet has given consumers.

Corporate leaders on a panel at the World Economic Forum including major companies that own the copyrights to music being shared for free on the Internet documented the growth of the phenomenon. The head of Sony said it represented a danger to legitimate companies.

The forum, an annual six-day meeting of about 3,000 company,government and cultural leaders, turned to business issuesfollowing a weekend that focused on peace prospects in the Balkans,Middle East and Africa.

In the past year theres been an explosion in real-timecommunication, such as the exchange of music over the Internetfostered by Napster Inc., said Gates, the co-founder and chairmanof Microsoft.

Daunting Power Shift

Napster allows people to share music without paying copyrightfees, a development that terrifies many industry chiefs. Under thesame principle, people could share videos, movies and even books indigital form.

The Internet is a kind of power shift, said Nobuyuki Idei,chief executive of Sony, which has extensive music copyrightholdings. Now the consumer has more power than the company.

Jean-Marie Messier, head of Vivendi, which last June acquiredthe Universal movie and music studios, said Napsters key tosuccess was community and free access.

Thomas Middelhoff, head of Bertelsmann AG, which has beenworking with Napster to assure payments to artists, said theInternet upstart already has 56 million clients, with 1.6 millionexchanging digital music at any time. Napster expects furthergrowth to be rapid, he said.

Gates said young people are not just using the Internet tochat by punching their keyboards, but were actually talkingthrough their PCs with telephone devices.