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Music, morality and Moore's Law

The debate over whether individuals have the right to copy digitally encoded music is perhaps one of today's most intriguing moral dilemmas.

The debate over whether individuals have the right to copy digitally encoded music is perhaps one of today's most intriguing moral dilemmas.

However, the morality issue may in fact be superseded by the technical limitations of a particular solution. Let's put aside the debate of whether the copying of digital music is illegal and instead focus on the technical feasibility of the copy protection of digital music.

Morality may not be the issue. The real issue may be that there is no technical way to stop the tidal wave that has already started.

Let us begin with a few numbers. There are about 200 million multimedia personal computers in the world, all capable of converting, or recording, a CD from physical form to a digital MP3 file. There are approximately 17 billion individual audio CDs in circulation, representing roughly 150,000 unique CDs titles. All 17 billion of these are capable of being easily recorded by the aforementioned 200 million PCs. Before the MP3 revolution, the average music owner owned 30 CDs, and the average music enthusiast about 200.

The year 2000 is unquestionably the breakout year for digital transfer of music. Certainly Napster is a big part of this, but it's not really the core driver. The technology behind Napster has been possible ever since the Internet became widespread. The real barrier to adoption before 2000 were the technical thresholds relative to storage capacity on PC hard drives and the transfer speed gated by the available bandwidth. With the average MP3 song about 4MB, storage and transfer were technically infeasible until recently.

The less obvious fact is the rate at which we approached these thresholds and, correspondingly, how quickly we will move past them. Until something is feasible, it is simply out of the question. However, Moore's Law is the driver of both issues in question: storage capacity and bandwidth. Therefore, while it may seem like it took forever to get to this point, the innovation from here will accelerate exponentially. The music industry should take heed of the following: "If you think it's bad now, you ain't seen nothing yet."

In last Sunday's New York Times, J&R Computer World advertised a 30.7GB hard drive for $150. This $150 drive is capable of holding 614 digitally encoded CDs in MP3 format. Recognize that this is already three times the storage needed by the average music enthusiast. Assuming storage continues to evolve according to Moore's Law (doubling every 18 months), consider the following: In five years, this same $150 hard drive will hold more than 6,000 CDs. In 11.9 years, this $150 hard drive will be able to hold 150,000 CDs, or as noted earlier, all of the recorded music currently in production. At the same time, the music collection of today's enthusiast will occupy a cool 0.13 percent of the average PC owner's hard drive. In other words, chicken feed.

If that's not enough, consider this: You can currently buy a 6GB handheld MP3 player called the personal jukebox for $750. In five years, this portable device will hold 1,200 CD equivalents. In 15.4 years--you guessed it--this device will hold all the music in the world. The same phenomenon is true for read/write optical discs. This fall, several vendors are expected to announce read/write drives at a 1.3GB capacity, which will hold the MP3 equivalent of 26 albums. In five years, these discs, which are the same physical size as a CD, will hold 262 albums. Assuming Moore's Law holds, in 18.7 years, you will be able to put all the music in the world on a single plastic disc.

The same trend is true for bandwidth. It currently takes about 10 minutes to download a song on a 56K line and just over a minute to download the same song on a typical high-speed connection (DSL or cable modem). Once again, looking forward and assuming Moore's Law holds, what you see today is just the beginning. In six years, the average high-speed home will be able to download a song in four seconds and an album in just under a minute. In 15 years, this home will transfer the equivalent of 200 audio CDs, the size of today's enthusiast library, in one second. In 8.5 years, an album attached to an email will seem like a PowerPoint file today. Interestingly, on a T3 line today, a complete audio CD can be transferred in nine seconds.

From a relative perspective, music will become increasingly small. Napster aside, it will be ridiculously easy to digitally record your favorite audio CD and email it to a friend. What's more, bootleg optical discs will hold more music of better quality. In less than a year, the entire works of the Beatles will fit on a single optical disc. Stopping the transfer of digital music will increasingly be like searching for a needle in a haystack; the only caveat is that the needle is shrinking and the haystack is growing.

Perhaps the biggest problem is that the technical infrastructure is already in place. Two hundred million multimedia PCs. Seventeen billion CDs. One billion audio CD players. The CD itself is the real enemy of the music industry, yet there is no way to put the genie back in the bottle. And even if you did find a way to encrypt future CDs, consider this irony: As long as you can hear music, you can easily and cheaply convert it back to digital form with inexpensive equipment. The cat is not just out of the bag, it is clear into the next county.

When everyone wakes up and realizes these facts, another dilemma will suddenly appear. The only way to truly prohibit the transfer of digitally encoded music is to "wiretap" everyone's personal email--an unquestionably unpopular concept among the digirati. With the massive digital infrastructure already in place, and based on what Moore's Law will deliver in the future, this is the only way to ensure that people don't transfer music from one machine to another.

So ask yourself the following question: What is more important--copyrights, or personal privacy rights? Tough question.

J. William Gurley 2000. All rights reserved. Above the Crowd is a monthly publication focusing on the evolution and economics of high-technology business and strategy. This column can also be found on CNET online and in Fortune magazine. The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete, and its accuracy cannot be guaranteed. Any opinions expressed herein are subject to change without notice. The author is a general partner of Benchmark Capital, a venture capital firm in Menlo Park, Calif. Benchmark Capital and its affiliated companies and/or individuals may, from time to time, have positions in the securities discussed herein. ABOVE THE CROWD is a service mark of J. William Gurley.

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