Has anyone read this?
I apologize in advance if this has already been posted. However, I have read most of the messages on this board and have not seen the article. I hope this helps in furthering our understanding of what the future could hold. Good luck to everyone.
Friday April 30 6:00 PM ET
How digital music could change your life
By Matthew Broersma, ZDNet
What's the big deal about MP3?
The idea of scouring the Internet for tracks and then playing them on your computer might not seem
appealing, especially if, like most Americans, you're still connected via a 28.8 modem.
But the real potential, according to the proponents of digital music, is for consumers to create a convenient, portable music
library.
Instead of a mass of physical CDs, all of your music could exist as hundreds of music files, which could be arranged into
play-lists on your PC and synchronized with player devices, such as the Rio from Diamond Multimedia Systems Inc.
(Nasdaq:DIMD - news).
The same music could also be synchronized, for example, with a simple car PC and a computer at work, eliminating the need to
lug CDs around.
"The real value of MP3 is making music so much easier to use than it is today," said Gene Hoffman, President and Chief
Executive of GoodNoise Corp. (OTC BB:GDNO - news), which sells downloadable music. "Once you can take a piece of
music, and treat it like a file, that's revolutionary. Your music can always be there with you in a package that's easy to handle."
Raising the volume on MP3
Greater convenience and control is one reason behind the impressive growth of the MP3 format (the other is that MP3 is the
format of choice for Internet types looking to trade and distribute music.)
There are now an estimated 15 to 20 million MP3 software players in use. Diamond has already released its player device, and
others are on the way from Creative Labs Inc. and others; manufacturers of palmtop computers, such as Casio, are also
building stereo music players into their PCs.
Perhaps most impressively, "MP3" is now neck-in-neck with "sex" as one the most popular term on Internet search engines.
But given competition from other formats, and the fact that the major record labels won't allow their artists to release tracks in
MP3, can the format continue to grow and reach a mass audience?
Taking the MP3 out of digital music
Those in the industry point out that, indeed, MP3 could fall by the wayside -- but the digital distribution of music is likely to see
significant growth in the next few years.
For example, Rob Glaser, CEO of RealNetworks (Nasdaq:RNWK - news), recently purchased MP3 software developer
Xing Technology, and the new RealPlayer Jukebox product could boost MP3 to a more mainstream user base.
But Glaser is careful to note that Jukebox is format-neutral: it also plays RealNetworks' own RealMedia files, and can be
expanded to handle just about anything else.
The RealPlayer Jukebox is "a boost for MP3, but it's not exclusive to MP3," said analyst Mark Hardie with Forrester
Research. "It's more of a boost to the emergence of digital delivery products."
Regardless of the fate of MP3, Forrester predicts that the market for digital music delivery will reach $1 billion by 2003.
Even the chiefs of MP3.com and GoodNoise, two companies formed around the digital-music boom, say they are not betting
on MP3.
"We don't care about the format," said Michael Robertson, president of MP3.com, which acts as an Internet-based distributor
and record label. "We think it's important to have an open standard ... but we'll give customers what they want."
If MP3 were superseded by a more popular format, Robertson said his site will offer it; already, he pointed out, MP3.com
offers RealMedia versions of all of its songs.
Will the music industry succumb?
Hoffman's vision of a portable music collection wouldn't require major record labels to sell music directly in a downloadable
format; indeed, it wouldn't require the Internet at all.
But if enough people begin using PCs and computer peripherals to handle their music, the record companies might see the
market opportunity as too good to pass up. That's what could ultimately lead to the biggest growth in digital music sales.
"When the music industry realizes there are tens of millions of digital music players out there, they'll start to sell a product that's
compatible with those players," predicted Forrester's Hardie. "After a two-year period, we see the orientation of music
companies moving from CDs toward delivering products designed for digital distribution."
No crypto required
Hardie also notes that this sales scheme won't necessarily require the introduction of a new format with industrial-strength
copy-protection, which has been at the center of the digital-music debate so far.
After all, CDs -- the most prevalent type of digital music distribution around -- don't have any copy protection at all.
"It doesn't have to be something impregnable," he said. Music piracy "just has to be something the average consumer on a PC
experiences as something they can't do."
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