Throw away your Walkman, your Discman and your portable radio; heck, while you're at it, you might as well toss out your MiniDisc player and that new DVD. Music formats change faster than the speed of light these days, and the gadget you'll need in order to exploit the music technology of the hour is the Rio PMP300. This stylish little device from Diamond Multimedia, yours for a mere $200, will let you listen to 60 minutes of CD-quality music in the MP3 (or MPEG-1 Layer 3) audio format -- music you can download off the Web from a multitude of MP3 fan sites.
Unfortunately, the odds are good that some of that music you'll download will be illegal pirated copies of popular songs. Despite the presence of tens of thousands of legitimate songs on the Web, the best-known music is still pirated. And for this reason, the Recording Industry Association of America (RIAA), the powerful trade association of the music industry, would be happy if every single Rio were locked in a box and dumped at the bottom of the sea. As RIAA president Hilary Rosen put it at a recent press conference, "We sincerely doubt that there would be a market for the MP3 portable recording devices but for the thousands and thousands of illegal songs on the Internet."
The RIAA filed a lawsuit earlier this month, demanding an injunction that would prevent Diamond from distributing the Rio; Monday, the group lost the preliminary round in court. But that doesn't mean the battle is over. Mainstream online music distribution is getting closer every day, and the three primary music platforms -- MP3, the format of choice for Net-savvy music lovers, and the more RIAA-friendly a2b and Liquid Audio -- are lining up in hopes of becoming the new standard. The record labels that are members of the RIAA, on the other hand, produce 90 percent of all domestic music. With the power of this content in their hands -- and a passel of lawyers to boot -- the RIAA hopes to shape the direction of music technology. And it's not being subtle about it.
"MP3 is already a standard -- this is an interesting debate, though," explains Michael Robertson, the confident young president of MP3.com. "How much leverage do the major labels hold when it comes to the Net, and do they have enough leverage to force people to adopt Liquid Audio or a2b? I think not. If Microsoft couldn't do it, why could the record labels?"
MP3 is a freely available and open format, created by a coalition of international audio experts, with no embedded encryption or copyright protection. Any budding musicians can encode their own music into MP3 files and distribute them online or burn them to CD. Any music fan can also download "data-ripping" software, make copies of a favorite Aerosmith CD and upload it for the listening enjoyment of 60 million people on the Web.
Meanwhile, AT&T Labs has come up with a2b, a music format boasting better compression technology, encryption -- and a system called "Policy Maker," which allows artists to decide whether a song can be duplicated, how many times it can be played and whether it will expire after a certain amount of time. Liquid Audio includes comparable features, plus a watermarking system that reveals where and when a song was downloaded, and by whom. Both Liquid Audio and a2b offer their playback software for free, but to make music in either format you have to license the pricey encoding software.
Plainly, a2b and Liquid Audio are more appealing to piracy-conscious record labels than MP3 is in its current form.
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"Is the RIAA distinguishing amongst the formats out there? Yes, they are -- they're distinguishing among the ones that are satisfying to their organizations, and which have protection, and the ones who don't," says Howie Singer, vice president of technology for a2b. "They're not playing favorites between the ones that have protection. I don't even see them trying to stop anyone from using MP3 legitimately."
MP3 enthusiasts don't agree with that last statement. MP3 crusaders have been vocal about their belief that the RIAA is using bullying tactics to shut the format down. In their eyes, MP3 is good, and the RIAA is a big bad corporate group swooping in to turn off the fun. Sites like MP3.com, which brought in 2.6 million visitors in September, make no bones about their dislike of the RIAA. And some of the tech press has sided with them.
So Hilary Rosen, president of the RIAA, is understandably cautious about what she says to the press and picks her way through her words as if tiptoeing through a minefield. "If one person mischaracterizes our motives, the next thing you know, 10,000 people think the wrong thing," she explains measuredly. "It's simply not true that the major record companies are against MP3 as a format ... Our concern is when that format is used as a device for trading in unauthorized files."
Still, the RIAA's own actions have enraged the MP3 community. For the last two years, the RIAA has been working to shut down hundreds of illegal MP3 Web sites that offer pirated songs, sending legal threats and "informative" letters to pirate sites and university administrators; in some cases, they've even filed lawsuits against so-called music archives.
This, according to MP3 fans, isn't the problem: Although many of them believe that piracy is just a form of free promotion (i.e., fans will buy the album anyway), the format's proponents are aware that piracy is a no-no.
But MP3 lovers do object to what they perceive as a stealth PR campaign against MP3. The RIAA last year launched a slick info-site called Soundbyting that, according to Rosen, is intended to scare college students away from MP3 piracy. The site's focus on "illegal MP3s" is so relentless, however, that visitors may come away with the sense that the entire format is illegal.
Then there's the letter-writing campaigns. The RIAA is asking well-known musicians, such as Sara McLachlan and Mick Jagger, to sign clunky statements of support, such as "I support the RIAA and its actions against Music Archive Sites on the Internet because copyright is my lifeline, without it recording artists would drown," or "Don't trash us by pirating sound recordings on the Net. Get real. Get legit." Rosen says this is a natural extension of the RIAA's fight against piracy; the MP3 community, in turn, sees it as a scare tactic pushing artists away from using MP3.
And regardless of Rosen's firm assertions that the RIAA hasn't wielded its power against MP3, the anecdotes from the MP3 camp suggest otherwise. "We had some music publishers, I can't say who, that were going to give us a sample of MP3 music to put on the Rio to sell with it. And after a call from the RIAA, they pulled it," says Ken Wirt, vice president of marketing at Diamond. "It would have been a coup for us and it's unfortunate that they got bullied ... I know there are members who don't agree with the RIAA, but they won't admit it. It doesn't look good to go against their own trade industry association."
Most tellingly, there's the lawsuit against the Rio. Portable MP3
players are critical to the format's success -- otherwise, listeners are
tied to their computers -- and the Rio will soon be joined on the market by
a similar product from Samsung. The RIAA's lawsuit against
Diamond Multimedia claimed that the portable player was a home audio
recording device and therefore was required to include a Serial Copyright
Management System (which prevents the device from making unauthorized
copies of protected songs), as well as to pay royalties. Diamond insisted
that the device was simply a legitimate playback device, like a Walkman,
and couldn't be used to transfer music to any other user. Apparently the
court agreed, calling the RIAA's demands an "exercise in futility."
Still, the RIAA says its actions are being misinterpreted -- that it is simply concerned about piracy, protecting the rights and creativity of musicians and ensuring that music technology is legitimate. In fact, says Rosen, the RIAA hopes to do more positive things in the future to help promote online music distribution -- including MP3.
"Clearly, the vulnerability of our core product, which is the CD, has required us to have some strategies that are more defensive than offensive," says Rosen. "But very soon people are going to see us unveil a much more proactive, pro-artist, pro-music-fan, pro-technology kind of site where we hope to provide a kind of forum for a lot of different formats, and companies interested in online delivery will have a showcase and a venue to communicate ... I hope that we will be more proactive in promoting all of the formats, whether it's MP3 or a2b or Liquid Audio -- all of them are going to have our endorsements if they engage in copyright protection and security."
Liquid Audio and a2b aren't necessarily openly applauding the RIAA's actions against MP3, but they certainly aren't unhappy about them. If the RIAA's actions stem the growth of MP3, then a2b and Liquid Audio won't have to worry about that competition for industry attention. Right now, they are losing market share to the rapidly growing -- and free -- MP3 beast.
Not surprisingly, they are throwing themselves at the feet of the music industry. Both companies are positioning themselves not as consumer-empowering platforms, but as "solutions" for the music industry; they wrap their rhetoric in promises of retail sales and copyright protection. Liquid Audio's Web site, for example, describes itself as "the first Internet company focusing exclusively on the needs of the music industry, providing labels and artists with software tools and technologies to enable the secure online preview and purchase of CD-quality music."
Says Singer of a2b, "We're putting the technology in service of the major record labels. We're trying to help them figure out how to use the new distribution channel to do the No. 1 job they have to do -- sell CDs and traditional physical goods."
For online distribution of CD-quality songs in any format to succeed,
the world needs better bandwidth (a 5.5-minute song in a2b format, for
example, would take 40 to 50 minutes to download over a 28.8
modem) and the development of portable devices that, like the Rio, enable you to listen to downloaded music away from the computer (a2b currently has a portable player in the works). But the biggest hurdle by far is content: If there's nothing to download, there will be no customers.
MP3 is leading the pack here: Robertson estimates that there are tens of thousands of legal MP3 songs, and countless more that are pirated. Liquid Audio will not put a number on how many tracks are available now, but it plans to have 100,000 by Christmas. a2b, on the other hand, boasts merely hundreds of songs.
But those songs, with the exception of the pirated MP3 songs, are predominantly from little-known independent artists. Certainly that's a fantastic opportunity for the new musicians who couldn't break through the mainstream retail outlets and labels. Unfortunately, it is the top-shelf artists -- the Madonnas, the Spice Girls, the Michael Jacksons -- who will make or break online music distribution. Only a small percentage of music consumers will actually download music by bands they've never heard of; as Singer puts it, "the band is the brand."
"Content is king, and for the consumer, it will be the top-shelf artists being available in any given format [that will make them use that format]. We're working closely with the major record labels as part of our strategy to do that," says Scott Burnett, vice president of marketing at Liquid Audio. "There are some jewels in the indie labels, but I have to hunt and peck for them."
Each of these formats needs big names to garner big audiences. So far, though, the music industry's participation has been sparing at best: Both a2b and Liquid Audio have had to be satisfied with a thin trickle of songs, one at a time -- and of those, most were merely marketing promotions that were tied in to in-store CD sales and that expired when the promotion was over. Neither platform can boast more than 30 tracks from mainstream artists.
The RIAA is aware that it's hard for it to condemn MP3 piracy if it's not offering content to another, "legitimate" platform. "There's no question that the most powerful incentive for consumers not to solicit illegal files is to have a lot of choices for legal files," says Rosen. "I understand that, and I think the record companies understand that, and that's the hope, that it will happen soon. But these are complicated issues -- economically and sound-quality-wise and creatively. There is a real concern from the major artists who have the most to lose -- not just the most to gain -- that they make sure that what they do is the right thing."
The main complaint of the online music industry is, simply, that the recording industry isn't doing, it's preventing -- that while the RIAA battles for copyright protection and license fees and an end to piracy, the record labels are simply sitting tight and not bothering to help grow the industry by making their catalogs available. One argument is that the music industry is afraid of online music distribution because it might reduce retail profits. Others, like Singer, insist that the existence of MP3 piracy is what's scaring the record industry away from doing anything substantial to distribute their music online. Why bother selling the new Aerosmith single in a secure format like a2b, if a consumer can just go over to an MP3 site and get a pirate version for free?
But can piracy truly be eliminated? Despite the best attempts of a2b and Liquid Audio, even those formats aren't pirate-proof: A program called a2b2Wav is already circulating the Web that will turn any a2b or Liquid Audio track into a .Wav file -- which, of course, then can be turned into an MP3 file (albeit with some sound quality loss). And, ironically, the most easily pirated format of them all is your everyday audio CD, which has no copyright management whatsoever.
"The issue of piracy and copying, that's just a factor of doing business in the digital age. If you do business in this age, you've got to factor into the equation that there's going to be a certain amount of piracy or copying," says Robertson. "The challenge is how to shape that desire of people into something positive."
The RIAA, with its litany of legal actions, may be able to shut off Web sites, demand fees and embrace the technology it supports. But can it hamper the growth of MP3 as a format? Perhaps. If all of the major record labels suddenly decide tomorrow that they are going to use Liquid Audio or a2b, and make significant portions of their catalogues available for sale online, maybe consumers would flock to the new formats and forsake MP3. But the odds of that happening are slim.
And while the music industry hems and haws about which format it wants to use, and just how it could make a profit hawking music on the Internet, MP3 is slowly but surely spreading its influence over the music industry online. It is without a doubt the format of choice for what Rosen calls "wonderful adventurous creative new baby bands" -- since it is the only CD-quality format that is free for anyone to use. But it is also being used more often by well-known artists such as the Beastie Boys. MP3 record labels like Goodnoise are getting recognizable artists like Frank Black to sign on. The Rio has had fantastic presale orders -- and lots of press attention, thanks to the lawsuit.
But most important, MP3 is growing in popularity with users. Already over 10 million copies of MP3 playback software have been downloaded, and an MP3 player is included in Windows 98.
"They're all fine formats, but ultimately the marketplace will decide. The issue really is in the hands of consumers, rather than record companies," says Jim Griffin, president of digital music consulting firm One House and a former Geffen executive who fought MP3 piracy. "If I'm a record company, the main thing I'm interested in is a lot of ears -- if people don't hear it, what is the odds I'm going to like it?"