Time and again, file-sharing services with a dubious past try to overcome their history by going legit, and they fail. Limewire is the latest one to try its hand, betting that it can build a business by going legit and selling music. Fat chance!
Making money selling tunes on the Net is a hard business. Even Apple (AAPL), which owns the biggest music download store, makes most of its money selling iPods. Of the $653 million generated by music sales, nearly 70% goes to the record labels. What makes Limewire so sure it can be a winner?
Others have attempted that and failed. Napster, Grokster (bought by Mashboxx, but no service yet) Morpheus, iMesh…. all are operations that built up a sizable user base, thanks to free music, and in the process built a brand. The problem is that these brands are associated with free music. Even companies like BitTorrent and Azureus, both of whom have gobs of venture funding, are navigating choppy waters.