Microsoft inks music technology, distribution deals

At Webnoize 1999 today, the software giant announced significant deals with major record companies and device makers to securely deliver music for play via the Net, portable music players, and someday through car and home stereos.

To compete with streaming media leader RealNetworks and the rash of firms delivering independent music in the popular MP3 format, Microsoft is putting its stake on standards and partnerships that protect copyrighted music in the Digital Age.

Building on a partnership announced last week, Microsoft said Diamond Multimedia's third-generation Rio player, which is about the size and shape of a single cigar case, will support its Windows Media format for delivering audio and video. The device also is capable of supporting the Secure Digital Music Initiative (SDMI), a copyright-protection standard under development by the entrenched music labels.

"On the security side, we have broader industry support than anyone else," said Will Poole, Microsoft's general manager of streaming media. "By having the secure digital rights management solution in place on the PC and leading portals, we think we have the formula that the major labels have been looking for to open the floodgate and release singles for commerce in volume online."

Under the new Rio model, a consumer could download popular songs from a music company's Web site and store them in the Windows format on their PC or other devices. They would not be able to make pirated copies of the copyrighted music, Microsoft said, although they could transfer the music to other devices for their own use.

To further push the adoption of security standards for digital music, Microsoft also said it is supporting Sony's OpenMG copyright-protection technology in exchange for Sony's support of the Windows Media format on its upcoming portable device, the VAIO Music Clip.

RealNetworks CEO Rob Glaser said during his keynote speech today that his company also supports Sony's security standard. RealNetworks also supports SDMI compatibility through its deal with RCA's portable Lyra device.

In an attempt to gain ground over MP3 sites and RealNetworks, Microsoft has harnessed some major and independent record labels to support its format.

Now delivering media in the Windows Media format are EMI Group with 5,000 videos; Musicmaker.com with 10,000 songs; Entertainment Boulevard with 2,000 videos and 500 movie trailers; and independent label TVT Records with 100 full-length records and 1,200 singles. Tunes.com also will stream 50 live and on-demand concerts in Windows Media, and Virgin Megastores will preview music using the format.

"The PC will be the focal point for collecting and managing music and then moving it to multiple devices--but content is what is going to drive adoption in this area," Poole said.

How to protect music rights without hampering consumer access is the hot topic at Webnoize, where music and Net executives have convened to discuss issues facing the industry.

"We have a new generation of music listeners who don't care what (device) they are holding; they want access," Phillip Corwin, of the Federal Legislative Association, said during a panel on music rights this morning.

On all sides, companies want consumers to "do the right thing," meaning that they don't want them to download or distribute unauthorized copies of music.

But for the most part, the emerging companies here are not dealing with major labels, which have been leery of digital music cutting into profitable CD sales online and off.

EMusic.com, for one, sells online singles by independent record labels but doesn't erect security barriers for consumers.

"If it's not convenient, what is the point?" said Gene Hoffman, the company's president, who comes from the security software industry.

Convinced that consumers will pay for digital music without being policed, EMusic is forging deals to expand its business. Listen.com, a Net directory of legally posted digital music, will review many of EMusic's 150 independent labels, the companies said today. EMusic's Internet Underground Music Archive also will give artists 25 percent of the advertising revenue it earns from their Web sites.