The week in review: Pay to play Napster?

It?s the end of the Napster as we know it.

Steven Musil Night Editor / News
Steven Musil is the night news editor at CNET News. He's been hooked on tech since learning BASIC in the late '70s. When not cleaning up after his daughter and son, Steven can be found pedaling around the San Francisco Bay Area. Before joining CNET in 2000, Steven spent 10 years at various Bay Area newspapers.
Expertise I have more than 30 years' experience in journalism in the heart of the Silicon Valley.
Steven Musil
5 min read
Is it the end of Napster as we know it?

German media conglomerate Bertelsmann formed an alliance with the online music-swapping service this week, signaling a significant shift in the so far hostile face-off between the major record labels and Napster.

The two companies are developing a new subscription service to let Net users swap songs copyrighted by the recording giant. Members of the proposed service would be able to search and download songs--legally--from Bertelsmann's entire catalog of artists. In addition, Bertelsmann said it will drop its lawsuit against Napster once the service successfully launches.

It is unlikely, however, that the deal will derail the lawsuit that threatens to close the music-swapping service in the short term.

In other music news, Listen.com agreed to buy the assets of file-swapping company Scour, which filed for bankruptcy protection last month. Privately held Listen.com, which helps Web surfers locate and download legal MP3-encoded files, filed the so-called asset purchase in U.S. Bankruptcy Court, where Scour filed for Chapter 11 bankruptcy protection. By purchasing the assets without Scour's corporate shell, Listen.com would not take on financial liability for the pending lawsuit against the file-swapping company.

Like Bertelsmann, Listen.com will have significant technical and business questions to answer in merging its core media service with a software business brought down by the concerns of heavyweight copyright holders.

Vote-swapping sites are turning bipartisan as Tuesday's elections near. Votepact.com suggests that Republicans and Democrats hook up and agree to support a third-party candidate--a tactic devised to provide a protest vote that will not upset the outcome between Al Gore and George W. Bush.

Regulators may have a hard time shuttering online vote swapping, however. Legal disclaimers on some of the vote exchanges describe the Web sites as akin to matchmaking services. Many even warn participants to avoid offering or taking money in exchange for a vote, a clear violation of election laws. Federal law aside, each state dictates its own election rules. In California, trading votes is apparently unlawful.

Separately, get-out-the-vote email campaigns are heating up. Stung by so-called spam scandals in the past, candidate supporters are no longer sending bulk email messages in attempts to sway voters. Instead, they're tapping friends to send email to friends, family and supporters.

In an eleventh-hour push, Democratic Party staff members said, some 30 million people will send emails on Gore's behalf. For its part, the Republican National Committee (RNC) has accumulated an email list of more than 80,000 addresses of party faithful.

Dot-com dilemma
Mortgage.com, a publicly traded loan processor, announced it will lay off 518 of 618 employees as it exits the online lending business. The company said it plans to sell assets including the current pipeline of mortgage loans, the "www.mortgage.com" address, and its loan processing software.

Beauty products e-tailer Beautyjungle.com cut its staff of 70 employees by nearly 60 percent in an effort to reduce costs. Beautyjungle was one of several beauty stores that came online last year during the e-tail boom. Despite high hopes for the sector, the subsequent bust has all but obliterated the start-ups in the nascent beauty market.

Priceline.com said it plans to lay off 87 employees and that its chief financial officer will leave. The announcement came as the company reported a narrower third-quarter loss that met analysts' expectations , while airline ticket sales sagged.

Dot-coms are mostly dropping their big-budget, showy advertising campaigns this holiday season, focusing instead on online and direct marketing to drive sales. Last year Internet retailers spent lavishly on brand campaigns through television, radio, billboards and print. But this year, under extreme market pressures, online retailers have become penny-wise and are focused on reaching sure-fire customers already savvy to shopping via the Web.

"Big box" retailers such as Wal-Mart, Kmart and Target are making a major push online to capture holiday sales, with redesigned Web sites that aim to overcome last year's online retailing woes. Walmart.com recently launched its revamped site after it had been closed for about a month for remodeling. Kmart's BlueLight.com and Target.com have also unveiled redesigned looks.

Despite the dire warnings that have induced investors to abandon dot-com companies, many other high-tech businesses are expanding exponentially--and they can't find enough people to hire. Even as some high-profile areas such as e-tailing undergo difficult consolidation, less glamorous fields like Internet infrastructure are creating jobs faster than failing Web companies can eliminate them.

Brave new world
Palm and Hewlett-Packard's VeriFone division said they will develop wireless payment technology for handheld computers, with an eye toward tapping the growing wireless commerce market. The two companies intend to work together to create the secure transfer, via infrared technology, of financial and payment information from a Palm handheld to a VeriFone point-of-sale payment terminal and then into the networks of existing financial institutions.

Compaq Computer and Microsoft introduced a new version of their Web-surfing appliance, this time offering a lower price and a traditional monitor instead of a flat-screen display. The $499 iPaq Home Internet Appliance IA-2, which is sold at RadioShack, is basically free with a $100 rebate from Compaq and a $400 rebate from MSN when buyers subscribe to three years of its Internet service.

Sun Microsystems formed a new business unit and a $100 million venture fund for the wireless market, but IBM is matching Sun's plans almost step for step. Sun also announced a new server for telecommunications companies along with beefed-up software and services. With the move, Sun is trying to take advantage of its status as the top seller of Unix servers, a key product that allows telecommunications companies to offer Internet services such as email or online shopping via their cell phones.

WorldCom's woes
WorldCom is the second long-distance provider in a week to announce a company division and assign that business a tracking stock, as it seeks to reverse a continuing decline in its stock value.

Bernie Ebbers, WorldCom's chief executive, told investors the long-distance provider will separate its consumer services from the parent company to reverse its stock decline--but it didn't have that effect on Wall Street. In a demonstration of Ebbers' determination to target WorldCom's stock, he told investors the board chose to issue a tracking stock rather than spin off MCI because "a spinoff is a much more extended process."

Also of note
IBM has suspended a project geared toward releasing a ThinkPad notebook containing Crusoe processors from Transmeta...Just days after the FBI warned that the cyberwar raging in the Middle East between hackers from both sides of the conflict could spread to the United States, Lucent Technologies confirmed that its Web site was the victim of at least one attack by pro-Palestinian hackers...eBay and Krause Publications have decided to discontinue the auction magazine eBay Magazine after the upcoming December 2000 issue.