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Which Net music technology will win?

With an ever-increasing number of big players entering the race to have their music download technology become a standard, the question now is which format will triumph.

With an ever-increasing number of big players entering the race to have their music download technology become a standard, the question now is which format will win.

Many analysts agree that for the moment, MP3 has established itself as the de facto standard for downloading music, but the format is hated by many in the record industry because it allows for the easy distribution of illegal copies of copyright-protected music. Because of the industry's opposition to it, and because the technology itself is looked upon as somewhat outdated, some analysts and industry observers say MP3's heyday will be short-lived.

And even with a standard format, delivering music via personal computers has a number of hurdles still to be worked out, some analysts say. Although most agree that online delivery of music is both viable and inevitable, and record and technology firms are racing to get out in front on developing formats and business models, it involves a change in consumer behavior that extends far beyond the shift from vinyl to CDs, for example.

This week Seagrams' Universal Music Group became the latest player to enter the online music delivery format race, announcing a deal with InterTrust Technologies to offer a secure format. In addition, RealNetworks joined the music download fray this week, introducing a new digital music architecture and a new device for downloading music in MP3 (MPEG 1, Audio Layer 3) and other digital music formats.

Those two players join a host of other companies that are preparing to launch or are already offering music download products, such as Liquid Audio, AT&T Labs' a2b Music, Sony, Microsoft, and IBM, among others. Many also are part of the Secure Digital Music Initiative, the Recording Industry Association of America's project that seeks to create a specification for secure music downloads that ostensibly could be part of any format.

As is often the case with the Internet, the uncharted territory of Net music has created some strange bedfellows. On the technology and music front, competitors Sony and Warner Bros. already are linked by their co-ownership of Columbia House, which operates the TotalE e-commerce site. Universal and BMG earlier this month said they are getting together for an e-commerce site called GetMusic as well as an online network of genre-based music channels.

Delivery technologies are no exception to that trend. For example, AT&T is reportedly in talks with Universal and BMG for an alliance that would develop a system for online delivery of music to consumers. An a2b Music spokeswoman declined to comment on those talks but said, "We are talking to people all the time" about alliances in this space. And although Liquid Audio offers a client that was created to play music delivered via its own proprietary format, it also supports the popular MP3 format.

But when it comes to an actual standard, analysts and observers seem hard-pressed to choose one as a front-runner.

Testing the waters
Mark Hardie, a senior analyst with Forrester Research, places IBM and its record industry-backed Madison Project ahead in the standards race--but he warned that it hasn't won yet. The Madison Project involves consumer trials of IBM's Electronic Music Management System (EEMS) among subscribers to the Road Runner high-speed Net access service over cable in San Diego.

Of all the players in this space, "only IBM and Madison are doing what's necessary to achieve mass market penetration--they're testing to see what consumers want," Hardie said.

EEMS is comprised of "a content mastering system, tools for hosting music content and promotional materials, and tools for online music retailers supporting the sale of digital music to consumers," according to IBM.

Hardie said that to be a standard, music delivery technology has to be "nearly invisible," meaning it has to be as reliable and seamless as other music delivery mechanisms consumers are used to, such as CDs. Right now the technology "sure is visible," he added, noting that users generally have to visit a Web site and download software before they can go about downloading music.

Still, the a2b Music spokeswoman pointed out that although Net delivery of music is much more complicated than buying a physical CD and playing it on a CD player, often it is still easier than conducting other e-commerce transactions online.

The technology itself also is a factor, although analysts agree that all the players vying for position as a standard have the know-how to offer a solid product that is fast and easy to use.

Label backing is key
Moreover, "consumers don't care about technologies, they care about artists and the music they make," Jupiter Communications analyst Mark Mooradian wrote in an analyst brief last month. "Music widely available by major artists will absolutely help a technology attain standard status."

Complicating matters, however, is that labels themselves--or technology firms that also have labels, such as Sony--are heavily entrenched in this space. Sony is involved in the Madison Project, and the companies earlier this month said they would cooperate to make their respective technologies more compatible. For example, computers compliant with Sony's OpenMG download technology and devices compliant with its MagicGate technology will be able to play content bought and downloaded via IBM's EMMS, the firms said.

So with Universal and BMG banding together on one side and Sony partnering with IBM on another, the chances for one standard on which all the labels can agree seems slim--or at least far off.

"Sony has no impetus whatsoever to work with Universal in this capacity," Hardie said.

Creatures of habit
Another hurdle for online downloading of music is that it involves changing consumer behavior in a significant way. Although early adopters have embraced music downloading via MP3 and analysts are optimistic about the future of music downloading, most agree that widespread adoption will not happen overnight.

In addition, Hardie said converting the mass market to Net delivery of music will take place only after the labels are completely on board and are marketing their online offerings heavily. Plus, he reiterated that the technology has to be simple to use.

"A shift in consumer behavior would require consistency across all the major labels," he said.

Of all the players pushing to be the Net music delivery standard, "no one's even talking about the fact that what they're talking about is delivering music over a personal computer," which is not a familiar concept to the mass market, he said.

Whither MP3?
For the moment, analysts agree that consumers have chosen MP3 as a standard, but the technology lacks all the components necessary to give it staying power: true CD-quality sound, fast download speeds for all, and the hit content consumers want.

"At roughly 11:1, today's compression schemes have impressively delivered near-CD-quality sound. The problem is that even at the aforementioned ratio, onerous downloads are the reality for mainstream consumers accessing the Internet over dial-up connections," Mooradian wrote in his report. "For households with only one phone line, this is especially unrealistic.

"A new file format that doubles or triples the compression and subsequently cuts the download time while maintaining the sound fidelity may well obviate the demand for MP3 simply because it is far more practical," he added.

And according to the a2b Music spokeswoman, "It's nice that [music news, download, and community site] has 10,000 bands no one has heard of, but what matters is that music people want is available for download."

One possible solution could be an encrypted MP3 format such as those offered by Audio Explosion, MCY, or AudioSoft. Those companies have the advantage of offering both the familiar and popular MP3 format with built-in security.

But often the players support both encrypted and unencrypted files, so record labels refuse to offer their content to them. Many companies in the music download space say they are "format agnostic"--they offer music via MP3 now but will switch when consumers adopt another format.