That's a great article mark cox. It deserves to be printed on the thread since it mentions Lucent and EDIG several times.
Internet
Let the Music Play
Record companies and hardware makers are gearing up for a very digital holiday shopping season.
By Carol Levin
May 10, 1999 -- You don't have to be David Geffen to see that the delivery of music over the Web is a potential gold mine for music companies. The music business pulled in $12.8 billion in 1998, but only 1.5 percent of transactions were online. That number is expected to rise to 10 percent by 2003, according to market research firm Cyber Dialogue.
So far, though, few record companies have made even a penny, and they're just now recovering from the shock and confusion that hit when MP3, a file format developed by Fraunhofer Institute of Germany and France's Thomson Multimedia for delivering high-quality compressed audio, made its debut and started a digital stampede to upload, share, and download music (sometimes illegally) over the Web. Diamond Multimedia's portable MP3 player—the Diamond Rio—appeared shortly thereafter, enabling music fans to listen to the free downloaded tracks, independent of the PC.
Digital music distribution has just gotten another shot in the arm with the May 3 release of RealNetworks' RealJukebox, a free CD player and MP3 encoder that converts your CDs to digital files with almost no effort on your part. You can also use RealJukebox to organize your personal digital music library. With 60 million registered RealPlayer users out there already, RealNetworks has a huge installed base to leverage. Now there's been no going back. Will the Web's killer app kill the record industry?
"The idea that record companies are going away is absurd," says Brian Brinkerhoff, vice president of content acquisition at GoodNoise, an MP3 site. Although MP3 plays havoc with the traditional manufacturing and distribution roles of record companies, it doesn't touch the recording and promotion roles. The good news for the music industry is that these are still essential parts of the business. "The music industry shunned digital distribution, but the effect was to cut itself off from potential customers in the name of protecting intellectual property," says Scott Reents, analyst at CyberDialogue.
Bad Vibes
Simply put, artists and record companies don't get a cent from MP3 downloads of their copyrighted music. The Web is a music pirate's paradise, strewn with sites loaded with music available for downloading. Legal MP3 sites do exist, of course. For example, GoodNoise charges customers for music downloads and pays music publishers (the rights holders) 50 percent of every song sold online. Many music companies, meanwhile, pay publishers significantly less, says GoodNoise's Brinkerhoff.
But GoodNoise is the exception. "People who own this content have a very real reason to be afraid of how content is distributed now," says Rachel Walkden, director of audio at Lucent Technologies' New Ventures Group, which is developing a secure codec positioned to compete with MP3. To hammer out a resolution, the music and technology industries are cooperating on a method for delivering music that, rather than ripping off artists, will pay them royalties for every bit sold online.
Known as the Secure Digital Music Initiative or SDMI, the group includes the top five record companies—BMG Entertainment, EMI Recorded Music, Sony Music Entertainment, Universal Music Group, and Warner Music Group—which control 80 percent of the market—as well as 120 technology companies. SDMI's objective is to produce a digital rights management system to ensure that artists and record companies get royalties for online sales.
"Secure MP3 will be achieved this year," says David Watkins, president of the RioPort.com division of Diamond. "Without licensed content from artists, none of us have businesses," says Larry Miller, CEO of AT&T's a2b music. The objective is to have a standard for digital rights management in place this summer, with portable players and the music to play on them ready for the 1999 holiday shopping season. "The availability of millions and millions of recordings will turn this into a very robust distribution channel for the record industry," Miller says. Expect to see MP3 players from Creative Labs, eDigital, Empeg, RCA, Samsung, and Sony, many in time for the holiday shopping season.
Competing Codecs
Recognizing the reputation of MP3 with the music industry and potential problems with retrofitting MP3 with security features, several companies are developing MP3 alternatives that have security built in from the get-go. Secure MP3 is like "trying to put locks on a house that's already been burgled," says Rachel Walkden, director of audio at Lucent Technologies' New Ventures Group. Although some industry players say it's unlikely that another format will get traction as quickly as MP3 has, the jury is still out.
Lucent Technologies, which commercializes the goods of its research arm Bell Labs, is promoting a secure alternative to MP3 known as Enhanced Perceptual Audio Codec (EPAC). The sound quality of EPAC-compressed music so closely matches that produced by a CD that demonstrations of the technology have fooled even the biggest producers in the music business.
EPAC is designed to compress audio at 11:1, which means for every 11 bits thrown away, only one is kept. "That one bit is the DNA of the music," says Walkden. The codec strips out the frequencies that the human early doesn't hear and then sends only the model of the music, which is used to reconstruct the sound after it's downloaded. EPAC uses psychoacoustic modeling—a representation of how humans hear sound—to compress music in a way that's not noticeable to the ear. According to Walkden, EPAC is 30 to 50 percent faster than MP3 and takes up 30 to 50 percent less space.
Unlike MP3 players, which you need to download and install, an EPAC player can be delivered automatically when the you click on a song title. And unlike MP3 as it exists today, EPAC guarantees security for copyright holders, although artists can still choose to distribute music freely. "As a technology company, it's paramount that we meet the needs of the recording companies and artists," says Walkden. San Diego–based eDigital will be the first manufacturer to sell an EPAC portable player, which should be ready in time for the holiday shopping season.
Not to be left behind, Microsoft recently stepped into the market with its own codec, MS Audio 4.0, which the company claims downloads music in half the time and requires half the storage compared with music compressed with MP3. Thomson Multimedia is developing a portable player for MS Audio and MP3 files called Lyra, which will be sold under the RCA brand name.
Digital Rights Management
But the essence of the debate isn't about sound quality or compression efficiency, but digital rights management, a system for protecting and compensating copyright holders. "Copy management isn't a bad word," says Lucent's Walkden. Lucent is using watermarking and encryption technology from Cognicity. a2b music uses PolicyMaker, AT&T technology for license authoring that lets rights holders specify how consumers can use music. For instance, a copy can be made for personal use, but not for mass distribution.
Just last month, Microsoft announced a partnership with Reciprocal, a developer of digital rights management software. Tailored for the music industry, Recripocal's software will be incorporated into Microsoft's recently announced Windows Media Technologies 4.0 to enable the owners of copyrighted music to profit from digital downloads.
Meanwhile, music companies aren't waiting around for SDMI to hammer out a framework. Just this week music giant Universal Music Group partnered with InterTrust, a developer of digital rights management software, to expedite trials of online music distribution. Diamond also has a partnership with InterTrust to integrate InterTrust's security system into Rio portable MP3 players. And IBM is launching a pilot project to download music from the major record distributors to cable modem subscribers in San Diego.
Whether the winner is EPAC, MP3, MS Audio, or something else is almost a nonissue in the long run. "No one can tell you what technology will dominate a year from now," says Bob Ponce, president of consulting firm I-Contact and a Web music expert. Larry Miller, CEO of AT&T a2b music sums it up best: "Consumers don't care about technology," he says. "They care about music, and lots of it."
zdnet.com
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