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.

The final piece of the puzzle is wireless. In the past year, networking in homes, campuses, and cafes using low-cost Wi-Fi, or wireless fidelity, has taken off. This summer, a high-speed cousin, compatible with the previous version, is coming out. Known as 802.11g, it's five times faster than its predecessor.

"It's not just one fight," says Clay Shirky, a tech consultant and professor at New York University. "The entire [technology industry] is playing against music and movie companies."