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DOWNLOAD; Can't stop the content: Music producers fight for their rights - or no party - Industry Trend or Event




If the proposed America Online/Time Warner merger has been crowned content king, then His Majesty just hired a heck of a royal band.

Warner Music's acquisition of EMI Group gives Time Warner a combined music catalog that contains one-third of all music recorded in the English-speaking world - and a strong incentive to keep those copyrighted tunes out of the hands of non-paying customers.

The stage is being set for a battle between those who hold the rights to content and those who want to spread that content via the Internet. The Recording Industry Association of America and several of the largest record labels are suing MP3.com on the grounds that its MyMP3 digital storage service violates their copyrights. Subscribers who buy one of 40,000 coded music titles online can have the music streamed to them by request from MP3.com. They also can add titles they own to their repertoire; a thin software client called Beam-It verifies ownership of the CD while it's in the computer drive.

Whatever the outcome, it's clear that getting big-name music onto the Web is going to be more complex than simply streaming the notes.

That means a new impetus for standards such as the interoperability efforts of the Secure Digital Music Initiative. "Standards will be key because they will determine how easily people can download and use music off the Web in a variety of places," said Ron Spellman, an analyst at Market Intelligence. "They will determine the form factors that will ultimately set the business models for making money from the service."

It also means a new flurry of licensing activity for products or services for secure music downloads. Last week, Lucent Technologies announced deals centered on its Enhanced Perceptual Audio Coder, an audio compression algorithm that provides high-quality audio at skinny bit rates as low as 128 kb/s.

One of those deals will put ePAC into Intel's Software Integrity System, which currently is built into popular audio players from Microsoft and Winamp.

"[The MP3 standard] has proved that the concept of downloadable music can work," said Joyce Eastman, Lucent's vice president for audio initiatives. "Now it's time for higher, more appropriate quality standards as the music moves off PC speakers and onto home entertainment centers. The AOL/Time Warner merger has created great interest in distribution of media of every type, and it's time to bring the quality up."

Lucent also has struck deals with others involved in digital music delivery, including secure delivery solution provider Preview Systems, music distribution dot-com company The Orchard, digital watermarking technology Blue Spike and Internet music developer VedaLabs. VedaLabs will build ePAC into its software player and into a new line of hand-held and home stereo hardware.

"We think it's a good idea to be included in as many digital distribution systems as possible," Eastman said. "It's not up to us as Lucent to tell the music business how to do their business. We want to be ubiquitous."

However, some analysts are not convinced that a record producer - even one with AOL/Time Warner's marketing savvy to tap into - can make pay-for-play digital music work over the Web.

"Clearly, these guys are going to be able to set standards in a way that secures their larger corporate interests," said Barry Parr, director of consumer e-commerce research with IDC. "But I don't think there's been a clear proof that record companies know how to distribute music digitally and make money at it."

IDC has predicted that some original CDs will become a hit this year via free distribution on MP3 - and that the successful model for a digital music business will come from some unforeseen start-up, not a behemoth such as AOL/Time Warner.

"We think that physical distribution will be enhanced by the free availability of music, and that's going to be a wake-up call for the entire industry," Parr said.

COPYRIGHT 2000 PRIMEDIA Business Magazines & Media Inc. All rights reserved.
COPYRIGHT 2003 Gale Group

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