Forum Archive Index - August 2000

["Matthew Darby" <mdarby@estaronline.com>]

I am writing in response to John Wedde’s question over music downloads via Napster type systems. The idea behind Napster is very clever; this is called Peer-to-Peer file sharing, where essentially everyone’s PC can act as a server. There is no doubt that this type of technology is gaining favour with US Analysts and Investors. The main reason for this is its wider applications, which would allow people to swap any file be it music or a simple document via communities that don’t require the high costs associated with large servers and of course an even larger pipe for users to access the servers.

 

The main problem at the moment is that there is no way of policing the distribution of the music. I applaud Chaos Music for devoting part of its revenue from advertising to pay the artists royalties, but unfortunately this is not were the problem lies, it is when the music is forwarded on to another user then no royalties can be collected, and hence the Napster problem. I agree with you John about adding a transactional component to the software. This software must travel with the file so it can register each time a new user wants to access the file. I am not in a position to comment on EstarOnline’s plans at this stage, but we hope to be able to make some announcements about this in the near future.

 

As for CDstar.com, this will depend on the announcements it parent company EstarOnline will be making. But when it comes to digital delivery EstarOnline has developed its own systems that provide for the transfer of music to digital files and is fully capable of digital delivery in any format through CDstar.com. We have licensed our transfer software to EMI, which I think speaks volumes about where we are in this area. Our policy has always been to work with the music industry for the growth of music, especially here in New Zealand.

 

The software that powers CDstar.com is called iSAMS (Internet Sales and Management System). This is our own proprietary software that has won acclaim from many companies. This software was designed to carry across different product categories and applications, including Business-to-Business. We have actively been licensing this software to companies here and overseas. This is part of our strategy to be an e-commerce service provider. It also provides EstarOnline with good revenue streams from hosting and upgrades.

 

John, I feel a bit like a politician, as I haven’t really addressed your question but if take the above as a whole, it may give you some clues as to where EstarOnline is intending to head with Peer-to-Peer transactional software applications and what implications it could have for not only CDstar but the music industry as a whole.

 

Matthew Darby

Chief Executive Officer

EstarOnline Limited