Thursday May 27, 5:48 pm Eastern Time
Battle over Internet music formats takes shape
By Scott Hillis
LOS ANGELES, May 27 (Reuters) - Despite a sputtering effort to unify the development of technologies to deliver and play Internet music, the consumer electronics industry now seems to be headed for the same kind of bruising battle over formats that has plagued new-product launches in the past.
Hoping to avoid the kind of infighting that hampered the debuts of other products such as home video and the digital audio cassette, technology and record companies were supposed to be coordinating efforts to deliver pirate-proof music online.
Now, the industry seems to be playing the same old song as music labels scramble to partner with software makers, spawning a puzzling array of formats sure to befuddle all but the most technologically savvy.
The Internet music storm is swirling around the issue of how to ''compress'' digital music to enable fast delivery of CD-quality sound online. Microsoft Corp.(Nasdaq:MSFT - news), IBM(NYSE:IBM - news), AT&T(NYSE:T - news) and others have competing compression formats,
To avoid the problems caused by competing technologies, music and technology companies last year launched the Secure Digital Music Initiative -- SDMI for short. Its goal was to get companies to work together to hammer out standards for making secure online music a mass market reality.
But months of meetings and promises of reaching a standard by the holiday shopping season don't seem to be stopping companies from striking out on their own.
An alliance announced on Wednesday by AT&T Corp., Japanese electronics maker Matsushita Electric Industrial Co. and record companies BMG Entertainment and Universal Music cast further doubt that the joint initiative can move fast enough to keep consumers and businesses happy.
''We're not waiting. Since we're very active in SDMI we don't feel like we have to wait until the specs come out,'' said Kevin Compton, spokesman for AT&T Labs in Menlo Park near Silicon Valley.
The partnership will combine AT&T's experience with encoding digital music for delivery over networks with the consumer touch of Matsushita, better known through its Panasonic brand of electronics.
BMG and Universal, which hold about 40 percent of the album market in the United States, will provide content. AT&T, with its recent purchases of high-speed cable networks, is also expected to furnish the pipes that will pump music into homes.
Compton declined to reveal what sort of products the alliance was working on, but said they were looking hard at making a small portable device to store and play back songs.
''It's great that people can download music from the Internet to play it on their computers or whatever, but the music's got to be portable,'' Compton said.
The AT&T deal resembles an arrangement announced earlier this month by Microsoft and Sony Music Entertainment to use a digital format developed by the world's leading software company to sell popular songs over the Internet.
In addition, International Business Machines Corp. has teamed up with Universal Music, BMG and other major labels in a pilot program in San Diego to enable PC users to download music and record CDs at home.
''They are obviously taking the digital music opportunity very seriously and are not waiting for all the technological and engineering issues to be worked out,'' Geoffrey Sands, vice president of consultants Booz-Allen & Hamilton, said of the various partnerings.
''In the short term, it makes it a bit more confusing, and when you have platform uncertainty, that's not good for consumers,'' Sands said. ''Ultimately it will be a common platform, but that will take several years to work out.''
Compton stressed that AT&T was still working with SDMI, and acknowledged that there was a risk consumers could be caught in the format crossfire.
''At the end of the day it's not going to help customers if they have to chase after different platforms. It doesn't help business,'' Compton said.
As the technology battle rages, consumers are likely to continue to flock to MP3, an open format that has become the de facto standard for Internet music.
Already, tens of thousands of MP3 songs can be found online, and several portable players are on the market. But record labels have held back from releasing music from major artists in MP3 because there is no protection from piracy.
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