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Summary:

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 […]

limewirelogo.gifTime 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.

  1. Limewire will most likely lose all their users if the content isnt free. Thats what people know Limewire for. Free everything, some dont even know its “illegal”.

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  2. I still use Napster. I think they have one of the best methods – allowing you to listen to songs multiple times.

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  3. I agree that Limewire will have a very hard time charging for a service users are used to getting for free. Very few web services have done this succesffully. In face, Match.com is about the only one that pops to mind.

    I downloaded Limewire to my home desktop and not only did it slow it down, but I am convinced it was single-handedly responsible for crashing my machine all together.

    I say when life hands you limewire, make some limeade…and then go get your music somewhere else.

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  4. yeah. so NOT a suprise.

    when you’re on a level playing field with itunes, you’re toast. especially when your front end is inferior AND you don’t play on an ipod.

    when drm is gone, there will be 100 companies rushing into this market. the only thing that will separate them is the front end user experience.

    pipes become a commodity.

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  5. Carolyn Pritchard Tuesday, August 14, 2007

    Amen to that David, appreciate that you are putting it so succinctly.

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  6. Janko Roettgers Wednesday, August 15, 2007

    It’s interesting though that they want to offer an MP3-based subscription package. Emusic seems to do quite well with that business model …

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  7. eMusic is the second biggest music store on the net behind itunes .

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  8. Napster’s doing OK. It’s not iTunes, but it looks like it could be a viable business.

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  9. [...] succeeding where so many other P2P operators have failed. As Om Malik notes, plenty of them have gone down this path, and none of them have really seen any success. Their user bases simply shrug and move on to the [...]

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  10. The Napster that is a paid service today is an unrelated company to the peer-to-peer service.

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