What product, launched with $400 million in funding, shut down after just six months when users discovered they could simply download the content for free instead of streaming it?

Question

Accepted Answer

Pressplay

In December 2001, Sony and Universal launched Pressplay with the kind of confidence only a half-billion-dollar war chest can buy. The pitch was simple: legal music streaming before Spotify made it cool, with downloads you could keep. The execution was spectacular self-sabotage.

The service limited users to streaming each song just three times before requiring a purchase. Downloaded tracks expired if you canceled. And in a stroke of brilliant irony, the record labels—terrified of piracy—insisted on DRM so restrictive that users literally couldn't play their paid-for music on most devices. Meanwhile, Kazaa and LimeWire offered unlimited everything, instantly, for free.

But here's where it gets delicious: the labels had negotiated the right to burn streams to CD as a compromise during licensing talks. So users quickly discovered they could stream a song three times, burn it to CD, rip it back to MP3, and own it DRM-free. The pirates had built a better product than the people trying to stop them.

Pressplay merged with a competitor in 2003 and eventually became the bones of what we now know as Spotify. The lesson? When your anti-piracy strategy requires users to pirate your own service to make it usable, you might want to rethink the business model.

the product launch that killed a $400m company in 6 months