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To: B. A. Marlow who wrote (7479)	4/18/1999 6:23:00 AM
From: flickerful	Read Replies (1) \| Respond to of 17679

Online Music's Bugaboo April 12, 1999 Robert Hertzberg The debate over Internet-delivered music will pick up again this week, when executives from Internet and music companies come together in Los Angeles. This time, though, the conversations are less likely to be about the threat being addressed by the music industry's Secure Digital Music Initiative (SDMI) and more about the opportunities inherent in digital music. Those opportunities are being pursued by many of the companies attending the Spring Internet World show, this publication's conference counterpart, taking place at the L.A. Convention Center. It's no secret that the music industry feels threatened by the Net, and in particular by MP3, a format that allows music listeners to download free (and often illegal) copies of songs. The extent of the threat was underlined last October when the Recording Industry Association of America sued Diamond Multimedia, the maker of the Rio, a handheld device that plays MP3 music files. Since then, from the music industry's perspective, things have only gotten hairier. Several other makers of consumer electronics gear have promised to introduce portable MP3 players, allowing millions of Net users, in the industry's worst fears, to walk around listening to music for which they haven't paid a cent. And this week Microsoft is expected to give the music industry something new to worry about when it puts forward a proprietary system of its own for secure delivery of music files over the Net. To be an executive at a music company today is like being a railroad executive at the dawn of aviation. There's a real risk of being rendered irrelevant. But there are opportunities, too, and those will be the focus this week. One clear opportunity is to reprice music in a way that expands the market. Without having to manufacture and distribute CDs, music labels could charge less, thereby increasing demand. In using the Net, the labels would also escape the economic constraints that limit the number of singles that can be released. That would allow more a la carte buying of individual tracks. Indeed, it is arguable that the Internet will change not just the distribution apparatus of music, but the way artists work. Will the practice of retreating to a studio for three months in order to put together a full-length CD seem quite so essential once the Internet is available as an immediate download mechanism? One of the music labels' big fears has been that artists will go directly to their audiences, thereby decimating the licensing fees that are the labels' main source of income. But such a change, already visible at sites like MP3.com and GoodNoise, with their profusion of independent artists tending to the avante garde, seems unlikely to occur with the most popular artists. For the foreseeable future, at least, such artists are going to want the marketing power the big labels bring. If the labels can take comfort in their enduring role as talent scouts, and in their proactive attempt to control the future through the SDMI initiative, it's harder to see a silver lining for distributors of CDs. And it's not just the brick-and-mortar stores such as Sam Goody that are at risk here; online CD sellers like Amazon.com and CDnow face risks, too. The plain fact is that digital music will eat into sales of CDs. The question is who's going to grab the opportunity at hand, which is to create stores with rich archives of downloadable music. Copyright 1999 Penton Media All Rights Reserved.

To: B. A. Marlow who wrote (7479)	4/18/1999 6:43:00 AM
From: flickerful	Read Replies (1) \| Respond to of 17679

<<Don't introduce another format and tell everybody the compression is better.>> for some, BAM, the song remains the same. however, this time...perhaps, the audience is[n't] listening. flick

To: B. A. Marlow who wrote (7479)	4/18/1999 7:02:00 AM
From: flickerful	Read Replies (1) \| Respond to of 17679

Sony To Launch Satellite Music Service By Rob Guth and Michael Drexler TOKYO The company that has built its fortunes on pioneering new ways to deliver music said Thursday it will start beaming songs via satellite to homes in Japan this May. Beginning May 20, Sony's new MusicLink service will let customers with a remote control and television select songs on-screen and then download them onto a set-top receiver. The customers can download song lists and short profiles of musicians, and can save music on Sony's MiniDisc recorders, officials said. The service will be run over SkyPerfecTV, an existing digital broadcasting business with investors including Sony and Australia's News Corp. SkyPerfecTV will dedicate one channel to the music service, officials said. Charges could range between 100 yen to 150 yen ($.85 to $1.28) per download, but the specific pricing has not been decided, according to Yoshiaki Nakanishi, a director at Digital Media Entertainment (DME), a joint venture set up to manage the service. MusicLink will offer music from independent artists, or musicians that are not backed by a record label, Nakanishi said. DME will pay artists a percentage of the proceeds but the amount "will depend on the individual artist," according to Aldo Liguori, a Sony spokesman. The service marks Sony's first commercial attempt to distribute music over a network. The growth of the Internet has spurred interest in online music among consumers, but has rankled leading record companies who fear the spread of pirated music online. "Sony likely wants to continue being an innovator," said Hitoshi Kuriyama, senior analyst at Merrill Lynch Japan, noting that MusicLink is the world's first satellite-based music download service. As a leading consumer-electronics company, Sony has a huge opportunity to create the building blocks for online music systems. Thursday, for instance, Sony announced a new MiniDisc recorder for MusicLink and a set-top box, called the PlusMedia Station, for accessing the service. The set-top box will sell for 62,000 yen. But Sony, parent of one of the world's largest record labels, must also contend with the copyright risk of shipping digital music over networks, in addition to the potential hit on its revenues from music CDs. The service will encrypt music tracks using a technology called Serial Copy Management System to foil would-be pirates. The system will use a Sony-developed compression technology called ATRAC (Adaptive Transform Acoustic Cording). Officials were careful to say that MusicLink will coexist with existing music-distribution methods such as CDs. The 12-person DME, which Sony affiliates quietly set up last year, will manage the service. Sony affiliates supplied 90 percent of the 480 million yen startup capital for DME, with Japanese advertising giant Dentsu kicking in the rest. At least one Sony competitor is planning direct-to-consumer satellite music service. Nippon Telegraph & Telephone and Victor Co. of Japan recently announced a project to use satellites to beam music to terminals in convenience stores, from which customers will be able to download tracks onto discs. And in the United States, IBM, supported by five leading record companies, will test a cable television-based system in San Diego, Calif., later this year. Rob Guth and Michael Drexler write for the IDG News Service.