Industries go digital to remain in tunes

Music: Recording and technology companies seek online dominance.

July 05, 1999|By Michael Stroh | Michael Stroh,Sun Staff

This week could mark the biggest upheaval in the music industry since the introduction of vinyl.

A coalition of the world's largest record labels and technology companies is expected to endorse a blueprint for taking the music industry from the discs that have delivered music for the past century to electronic bits delivered online.

What's at stake? Nothing less than how you'll buy, listen to and record your favorite tunes in the years to come. And you'll start seeing evidence of the music industry's new score as soon as Christmas.

The industry says its plan, the Secure Digital Music Initiative, is intended to ensure that record labels can deliver copyrighted music to home computers and a new breed of portable digital music players without fear of bootlegging and lost royalties.

But analysts say it's also a desperate bid by the Big Five record companies -- Universal Music, BMG Music, Sony Entertainment, EMI Group, and Warner Music Group -- to regain their iron grip on the business: who gets to make recordings, what songs consumers can hear and how much they'll pay to listen to their favorite artists.

It's a $38.7 billion fiefdom that has begun to unravel over the past year, thanks to an upstart technology known as MP3.

MP3 is a digital audio compression technology that allows music enthusiasts to transfer a song from an audio compact disc to a computer while retaining near-CD quality sound. Because MP3 files are relatively compact, they are easily trafficked over the Internet.

As a result, the technology has caught fire among listeners in wired college dorms and corporate cubicles around the world. Millions of audiophiles have downloaded free MP3 software players onto their PCs and are using them to play songs they've taken from their own CDs or, more commonly, from the Internet.

In fact, MP3 has replaced "sex" as the most common term that users enter on the Web's search engines, according to ranking service

Boosters of MP3 technology argue it has democratized the business, making more music available to more people than at any time in history. And they're not just talking about illegal bootlegs. The technology has allowed talented but unknown garage bands around the world to publish and sell their music online -- and even snag record contracts.

Its detractors say MP3 has made the Internet an illegal dumping ground for thousands of hours of copyrighted music, free for the taking without paying a cent to the record label or the artist who created it.

The dispute came to a head last fall when Diamond Multimedia, a maker of specialty circuit boards, unveiled a pager-sized portable MP3 player called Rio. As does a Walkman, the device allowed MP3 enthusiasts to tote their tunes anywhere.

The record industry, caught off-guard by the grass-roots enthusiasm for this new format and the rampant piracy it has sparked, has been lumbering to catch up ever since.

The industry filed an unsuccessful lawsuit against Diamond, but more importantly, it formed the Secure Digital Music Initiative (SDMI), an effort involving more than 100 music and technology companies who are mapping a strategy for the industry's admission to the Digital Age.

The battleground is over what portable gadgets such as the Rio will play and how they'll play it.

Under the SDMI plan, portable digital players initially will be able to play both protected and unprotected music. But over the next 18 months, record labels will begin to embed digital "watermarks" into their music. The idea is that digital music players will distinguish between legitimate and bootleg music and reject pirated songs.

How this plan will affect consumers remains to be seen, and the industry coalition acknowledges that many details remain to be hammered out.

But one potential downside is that although consumers will be able to make a copy of a CD or song they've purchased, they won't be able to take a copy borrowed from a friend, or pass along one of the songs they've bought to a buddy.

So what should you expect in the coming months?

Initially, you'll see more Walkman-like digital music players. Diamond Multimedia, whose Rio sparked the revolution, will have a new player on the market this fall, the Rio 500. Creative Labs, Samsung, RCA and several other companies won't be far behind with their own players.

You may see more mainstream music in the coming months as labels slowly move their giant catalogs online. Over the past several months, Sony, BMG, EMI and others have struck deals with technology companies to digitize their catalogs and develop a secure way to pipe the music to consumers over the Internet.

It's unclear, however, what artists will be available online, whether labels will sell only albums or singles, or how much digital music will cost.

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