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To: tot15 who wrote (7852)	10/13/2000 11:12:30 AM
From: Catcher	Respond to of 65232

re rnwk...msft is bearing down on them

To: tot15 who wrote (7852)	10/13/2000 11:13:16 AM
From: Dealer	Read Replies (1) \| Respond to of 65232

RNWK--Media World Spells Doom for Video, Music on Web LONDON (Reuters) - Video and music on the Internet are spreading like wildfire, but entrepreneurs with plans for Internet media should not expect any funding for the next few years, bankers and analysts said on Thursday. ``It's a bad idea to approach a venture capitalist today,'' Ali Parsa, executive director of Goldman Sachs European High Technology Group, said at a conference here. ``Anyone in original content should shut down the business and come back in three years' time, unless they're in the adult entertainment industry,'' added Hans Stander, managing director of venture capitalists ETF Group. Their remarks seem in sharp contrast to the hard facts. With 60 percent of U.S. consumer web sites offering video or audio, up from 30 percent last year, and 23 percent of active Internet users accessing Napster (news - web sites) for finding and sharing songs, streaming media on the Internet is rapidly gaining ground. Research group IDC forecasts that of the 500 million worldwide web users in 2004, around one third could have broadband always-on Internet access. Forrester research shows that homes with broadband Internet consume three times more data than narrowband and dial-up Internet users. Market Specialists Join Financial Doom-Sayers But the financiers were not alone in cold-showering the Internet media market. One of the leading specialists said his industry was facing a meltdown as a result of lawsuits and flawed business plans. Internet media companies are typical web companies in that they are suffering from spiralling costs and disappointing revenues, but they add some problems of their own, said Martin Tobias, founder and chief executive of U.S.-based LoudEye which makes software to simplify webcasts. Some of these problems were already factored in share prices. Prices of publicly listed companies have fallen by 60 to 90 percent, Tobias said, who goes by the job title of Minister of Order and Reason. RealNetworks (NasdaqNM:RNWK - news), the industry leader in streaming media, has dropped from a high of $96 in February to $25 at Wednesday's close, its March-1999 level. Although 150 million Internet users have downloaded RealPlayer, which allows them to play most music and video files on their computers, only 15 to 20 million actually use it, Tobias said. Another indication that the streaming media industry is facing problems is the litigation looming over many of the main players because of copyright infringements. Chief executive Rob Glaser of U.S.-based RealNetworks said he would wait for lawsuits to settle before considering any industry acquisition, such as Napster. ``They're enabling people to share stuff that they don't have the rights to. There's a need for a legal framework.'' But even when ignoring legal threats, the Napster model was not going to fly, Tobias said. Offering music for free is not going to make anyone money, and other sources of revenue have proved insufficient to survive. Advertising revenues per click have only gone down in the past twelve months, and Internet bellwether Yahoo said on Tuesday the number of its advertisers had dropped. Internet Alone Can Never Pay For Compelling Programs A smashing hit like television show Big Brother, which was a sensation on the Internet and propelled hosting portals such as British broadcaster Channel 4 to number eight of most popular sites, could never have survived on the web alone, said Stander. Ad revenues on television paid for the series. ``You cannot depend on just one distribution channel,'' he said. ``Disney would have never become so big if it had relied on just one distribution channel. Instead it went for films, comics and theme parks.'' Besides, large audiences are best served by broadcast services, such as television, which offer better picture quality at a much lower price per viewer. Exclusive to the Internet is that it can address small crowds with similar, highly specialized interests, such as fly-fishing in Scotland, said Derek Norton from a Los Angeles venture group. The downside is that it would never be profitable to develop video programming for such small interest groups. ``There's just not a large enough audience,'' said Rob Martin, senior Internet analyst at U.S. investment bank Friedman, Billings, Ramsey & Co. Many investors and companies here repeated in endless variations that it did not make sense to invest in Internet media programs until the majority of homes had broadband web access. But in fact very few companies had figured out a compelling reason for consumers to switch to broadband, other than betting and gambling on live sports events which was uniquely possible by blending television and Internet. Said Goldman Sachs' Parsa: ``No one is going to get any funding until someone has figured out a way to make money.''