Downloadable free mp3 music

The Internet is rewriting the rules of the record biz, a fact that some of L.A.'s big labels have been slow to grasp. CouLd it be their swan song?

THE FAST-PACED WORLD of the Internet is colliding head-on with the slow-moving world of the record business, and the result could radically change the way music is packaged, sold and played. Thanks to a popular; easy-to-master digital-audio technology known as MP3 (short for MPEG 1 Layer 3), the Web is suddenly teeming with sites offering songs and even entire albums of compact disc-quality digital files that can be quickly downloaded to just about any PC hard drive, often for free.

Predictably, the recording industry's Big Five--Universal Music Group, BMG Entertainment, Sony Music Entertainment, Warner Music Group and EMI Recorded Music--united through the trade group the' Recording Industry Association of America (RIAA), are fighting MP3 sites that don't prevent the illegal duplication of downloaded music. The assumption is that unfettered duplication endangers artist copyrights and dilutes the labels' revenues. The RIAA has sued a number of sites as well as Diamond Multimedia Systems, maker of a portable MP3 player called the Rio. The RIAA, Big Five and several technology companies have also formed a venture called the Secure Digital Music Initiative (SDMI), whose mission is to establish a standard for downloading music that will still allow consumers to receive digitized music over the Internet, but ensure it can't be copied by bootleggers.

The industry has more at stake in cracking down on digital downloading than it did in its battles against home-taping in the '80s and used-CD sales earlier this decade. Those dustups were about protecting profits; this is about affirming sovereignty in the midst of a paradigm shift, as the cultural and marketplace forces of the Internet hasten a change in the music-business model from the marketing of physical products to the selling of intellectual property. In this new environment, the record companies are, for the first time in decades, being forced to reconsider their entire business model.

In mid-March, representatives from both the music and technology spheres convened in an auditorium during the annual South by Southwest music-industry conference in Austin, Texas, to speculate about the future in the discussion "Downloading on the Upswing: Trouble for the Music Business?" Meanwhile, just down the hall among the hundreds of booths in the conference's trade show, a new Web-based record label called Atomic Pop was aggressively promoting its vision of the future.

Launched by music-industry veteran Al Teller in mid-February, Atomic Pop is essentially the Internet version of an independent label and has as its best-known act the veteran rap group Public Enemy. But symbolically the Santa Monica-based company stands as David to the Big Five's Goliath. It has thrown down a gauntlet by simply recognizing that digital music delivery means labels will eventually have a lot less control over the essential elements of their trade.

"The only permanent aspects about the music business are artists who make music and consumers who consume it--everything else is in the middle," says the 54-year-old Teller. Sitting back in his chair in the glass-walled conference room at Atomic Pop's headquarters, the Harvard MBA smiles and adds, "And no one gets a permanent pass to be in the middle."

During his 30-year career, Teller has been chairman and CEO of the MCA Music Entertainment Group and president of CBS Records. For the better part of this decade, he has been urging his colleagues to accept the changes the Internet is bringing rather than try to prevent them from happening. In a 1993 interview, while chairman of MCA, he said, "We are at the start of a radically different way of life when it comes to the concept of home entertainment," and further noted that record companies would have to "continue to prove our place in the world."

Today, he says that, sooner than anyone thinks, "there will be a generation of consumers who will find going on-line to download an album no more unusual than making a telephone call. On-line, an artist can reach out to a fan and say, `Here I am. This is what I sound like, this is what I look like. Check me out, and if you like what you hear, keep coming back for more. And if you like it that much, buy something.'"

Recording artists could benefit from having this direct line to the audience not only because of the potential for instant feedback, but because such transactions naturally eliminate many costly steps in the record-making process--maybe even the process itself. The major labels have a financial stake in nearly every aspect of that process, from owning the master recordings used to mass-produce albums to controlling the distribution houses that ship CDs from manufacturing plants to retail stores. If it comes to pass that most people merely download their music, along with high-quality artwork, lyrics and liner notes, nothing would need to be shipped anywhere. And if the artists themselves could upload their digital music files directly onto the Web and disseminate them to the world electronically--which they can now--why would they need to give up the rights to their master recordings? These are the sort of questions that have made the Big Five's reaction to the Net, Teller notes, "very defensive."

As 38-year-old Public Enemy leader Chuck D puts it, "The majors have to figure out how they fit in, because this is a technology they can't pimp." That is, unlike with CDs, consumers got to digital downloading before the labels forced it on them. Instead of controlling the emergence of digital downloading, says the rapper, the big record companies must build a structure around it. "But they'll have to move the accountants and the lawyers out of the way," he says. "The fact that the accountants and lawyers run the music industry kind of makes you go hmmm."

Creating the industry's own digital-downloading structure--and controlling it--is clearly the goal of such experiments as this spring's Madison Project, a joint venture of the Big Five and IBM that developed a secure in-home digital-delivery system for testing in San Diego. But as the major labels engage in territorial activity to "try to circle the wagons, so to speak, they'll find that the Indians aren't going to be interested in attacking the wagons," Teller says. "They're just going to go right past the wagons." That's because although the major-label system is profitable for superstar artists like Celine Dion and Madonna, hundreds of acts might do substantially better for themselves by turning to an Internet-based company such as Atomic Pop.

While the Web allows more artists to share their music with the world, however, that "doesn't guarantee that people will spend the time [browsing] through the millions of music websites that are up today to seek out unfamiliar music," points out Fred Ehrlich, senior vice president in charge of Sony Music Entertainment's new technology development. Ehrlich considers the Internet "a great tool to market and promote both new and established artists," but says it's "unlikely that digital distribution will become the only distribution system available. Traditional distribution will always be needed as well."

Nevertheless, in mid-May Sony announced an agreement with Microsoft to sell the label's commercially available singles on the Web via the software giant's own secure digital-downloading technology. Sony was the second of the Big Five to engage in a venture outside the united front of the SDMI, following by only one week Universal's similar agreement with Intertrust Technologies.

THE BIG FIVE HAVE some compelling reasons to embrace digital downloading. The industry logged record-setting growth and profits throughout the '80s and early '90s when baby boomers replaced their cassettes and vinyl records with CDs. Something like that could happen with downloadable music. Reprise Records president Howie Klein offers an example. "We take a tremendous amount of [recordings] out of the catalog after a while," Klein says, because it would be impossible to stock, store or profitably sell CDs of every artist that recorded for the label. But once digital delivery becomes commonplace, he says, "it will be very profitable" to sell so-called deep catalog over the Internet. Consumers might discover something they really like, and labels could make money from music that previously wasn't worth keeping around.