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
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