Pundits at summit ponder MP3's future

The community surrounding the MP3 audio compression format (MPEG 1, Audio Layer 3) and music downloads in general has evolved, and so have the comparisons between Net music's growing pains and those of other industries as new technologies were emerging.

The conference, being held at the University of California at San Diego, has ballooned from 200 attendees at the first summit last year to more than 1,000 this year, according to Michael Robertson, chief executive of conference host MP3.com.

In addition, the music download space has seen an influx of players, some of which were formed recently and others that have been involved in the online audio space all along--such as Microsoft and RealNetworks.

"Last year there were no booths, there was no competitive feeling," Bob Kohn, chairman of music download site EMusic.com, formerly GoodNoise, said in an interview. "Now it feels like the first formal Apple Computer meetings. We went from 1979 to 1983 in one year."

MP3 never rests
And movement in the online music space has not slowed during the conference. Diamond Multimedia, maker of the Rio portable player, yesterday won a key federal appeals court ruling that will allow it and other computer peripherals manufacturers to continue developing and selling MP3 portable players.

In addition, music hub and download site Tunes.com yesterday filed for an initial public offering.

Some conference attendees have observed that the theme of last year's conference was that MP3 as a format would turn the mainstream record industry on its head. This year, some say MP3 will be more of a catalyst, pushing the major record labels to take steps online.

Although there's no guarantee the format will survive, or that it will be the only format adopted by consumers, most seem to believe that for now, MP3 is safe.

"MP3 won't be the only game in town," Dennis Mudd, chief executive of digital audio software developer MusicMatch, told CNET News.com. "It's so powerful right now, but I don't think it will be the most powerful forever.

"But I don't believe MP3 is dead or dying," he added. "It will be the de facto standard for how free music is downloaded, especially for promotional tracks. That's the model that has the most momentum."

Some predicted a more dire future for MP3.

"MP3 will be replaced by a superior compression technique," EMusic's Kohn said during a speech, though he acknowledged its current momentum. "MP3 is the Windows of the download music space today--but that could change."

Issues and analogies
Of course, the range of issues that has arisen with the advent of music downloads by consumers has broadened since last year.

John Parres of talent agency Artist Management Group moderated a panel on the economics of artist management in the digital age, during which he said: "Last year, the question was, 'What is MP3? What's going on?' This year, the question is, 'How are artists going to get paid?'"

Similarities between the online music download community and other businesses have been drawn here as well. For example, there has been a general feeling against copyright protection and encryption.

During a keynote address today, computer scientist, musician, artist, and author Jaron Lanier noted that many industries before music have feared the onset and availability of information, but in the end it has always made people busier and created more commerce opportunities.

As many have in the past, he analogized the mainstream record industry's reaction to the MP3 movement to the movie industry's reaction to the VCR, which ended up adding additional revenue to the industry rather than killing it, as many had feared.

Lanier also compared the music business to the software industry in terms of copy protection.

He warned that adding copy protection "increases liability" for the music industry because it makes it more likely that the technology won't work.

"When you add copy protection to software your customer service calls triple because people can't get it to work," he said.

EMusic's Kohn echoed that sentiment, saying during a speech that "the computer industry is very aware of these problems--the music industry isn't. If your mom loses her key [to encrypted music files], she loses her entire music collection. I don't want to get that customer service call."

In an interview, Kohn added: "If history has taught us anything, it's that open always wins. An open compression technique will win--it has to be convenient for consumers to listen to their music."

The music industry speaks
Until today, there wasn't much being said from the mainstream record industry perspective. MP3.com's Robertson said many in the business were invited, including trade group the Recording Industry Association of America, but few attended.

Today, however, Larry Kenswil, president of global e-commerce and advanced technology for Universal Music Group, gave a speech that answered some of the issues raised by other speakers.

On the question of copy protection in music, Kenswil said that security is necessary to have a viable business.

"Sure it will be hacked, sure it will cost money. And sure it will be slightly less convenient for consumers," he told the packed auditorium. However, "I'll distribute my music in an insecure format the same day I take all the locks off my doors when I go on vacation and hang up a sign that says, 'Crashers welcome,'" he said.

Not surprisingly, he agreed with Kohn's assessment that the labels will not disappear, but rather will become more necessary as independent artists flood the Web.

He compared an artist with no label backing posting his or her music online with a man he saw pushing a cart in New York, out of which he was selling CDs. Kenswil said that although that man "gets 100 percent of his royalties," the exposure he gets walking the streets of Manhattan won't allow him to make significant money on his product. He said the same would be true for an artist that posts music online but has no marketing.