Execs Express Awe Over Napster Generation

ByBruce Stanley

D A V O S, Switzerland, Jan. 29, 2001 -- 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 there’s 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 Napster’s 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 to“chat” by punching their keyboards, but were actually talkingthrough their PCs with telephone devices.

The flexibility of the PC made possible the Napster phenomenonof “peer to peer” communication, he said.

The necessary software for Napster came from a previouslyunknown developer, and it could be used because of the widespreadavailability and flexibility of the PC, Gates said.

Beyond the Net

Gates later took part in a discussion on the impact of diseaseon poverty, saying he was shocked by the small amount of moneygoing into research and treatment of diseases in the world’s poorercountries.

“There is a real market failure here — a failure of visibility,a failure of incentives, a failure of cooperation that has led to avery disastrous situation,” said Gates, who on Saturday donated$100 million to research into a vaccine against HIV.

He pointed to the huge problems of HIV/AIDS, tuberculosis andmalaria, especially in sub-Saharan Africa.

“Because it is constant and because it is large, it just simplydoesn’t get much attention,” Gates added.

Henry McKinnell, president of the world’s largest drug company,Pfizer, said the pharmaceutical company wanted to help solve theproblems, but there had to be an incentive to develop new drugs.

When work first began to treat AIDS, only one drug wasavailable. Now there are 50, with another 100 under development, hesaid.

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