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Posted at 3:01 p.m. PST Sunday, February 7, 1999
IBM to unveil digital music sales system
Financial Times
IBM, the world's largest computing company, and the ''big five'' music groups will unveil proposals Monday to launch the first fully fledged digital music distribution system -- code-named the ''Madison Project.''
Details of the Madison Project, which will enable consumers to buy albums and singles in the form of digital signals sent to their personal computers over the Internet, have been the subject of secret discussions between IBM and the music industry for more than a year.
The big five music companies -- Universal, Sony, Warner, EMI and Bertelsmann -- are anxious to diversify into the potentially lucrative digital music market at a time when Internet music piracy is escalating, but have been deterred from doing so by the dearth of technical and legal controls.
The results of the Madison Project experiment will also influence the development of the Secure Digital Music Initiative (SDMI), a program whereby the big five plan to set guidelines for digital distribution systems in conjunction with technology companies, including IBM, Microsoft and AT&T.
IBM has convinced the big five that its Madison Project technology, which has absorbed $20 million of development investment, will provide an efficient means of delivering music to consumers and will be secure enough to protect their copyrights from piracy. The five signed a confidential agreement in November to participate in a pilot program, and to contribute to the project's development costs.
IBM will disclose details of the pilot, scheduled to start in San Diego, Calif., in the next few months. It will include several hundred households, which can choose from roughly 200 albums on the Madison Project Internet site.
Each album will be sent digitally to its purchaser in three to six minutes, although IBM will also run a conventional mail-order service in case of error. The digital musical signals will be encrypted to prevent unauthorized copies being made.
The San Diego pilot is intended to test the efficacy and security of IBM's technology and to enable the big five to see how consumers react to digital distribution.
Downloading music digitally from the Internet is increasingly popular, particularly among teenagers, but is conducted mostly on an unauthorized basis using pirate Internet sites.
There is also a growing trend for consumers to buy conventional compact discs by mail order from online retailers.
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