BW Online | March 10, 2003 | A Real Hollywood Horror Story

It was a compression innovation called MP3 that opened the Internet to music-sharing in the late '90s. That technology transformed songs into files small enough to send over a dial-up connection. Now comes MPEG4. This compression standard shrinks audio and video by a factor of two to three, and it will be programmed into most computers, stereos, and DVD players by yearend. "It's the MP3 of video," says analyst Lou Latham of Gartner Inc.

Thanks to breakthroughs in high-density storage, there will be loads of room to warehouse those videos. When Napster surfaced in 1999, a gigabyte of storage--enough to hold around 250 MP3 songs--cost $12.27 wholesale. Now, it's down to $1.15, according to IDC. With storage this cheap, it's easy for RCA to stuff 20 gigabytes into its $400 handheld personal video recorder, which can handle 80 hours of video.