Portable players such as Diamond Multimedia's Rio and Creative Labs' soon-to-be-released Nomad record and play back music stored in the MP3 format. These players have been at the center of an industrywide controversy because of the ease with which MP3 files can be reproduced and distributed without any degradation in sound quality.
Net users have enjoyed access to a huge amount of free music, and the recording industry has protested the unrestricted access to pirated music and has pressured makers of MP3 players to adhere to standards designed to foil illegal reproduction. Established makers like Diamond have agreed to implement the standards. Small manufacturers looking for market share, however, have little incentive to do so.
The popularity of downloadable music has put pressure on record labels.
"The record industry has to change," said Rich Templeton, executive vice president of Texas Instruments, which makes the Digital Signal Processors, or DSPs, that power many MP3 devices. "They have to get music distributed the way the youth of America wants to get it."
Recently the recording industry has acknowledged the Net as a viable medium for marketing and selling music. Earlier this month, music industry attendees at Jupiter Communications' Plug.In conference said the industry needs to work with the high-tech industry to tap a potentially huge market for distributing music online.
In addition, major labels including Sony Music and Universal, as well as cable channel MTV, have struck deals with Net companies to promote downloading music over the Internet.
In accepting a standard for digital players, manufacturers are trading some of their popularity among fans of pirated music in return for grudging support from the recording industry. As previously reported, the voluntary standard was developed by the Secure Digital Music Initiative (SMDI), an industry group made up of record labels, portable digital music player manufacturers, and software developers.
The SDMI specification essentially blocks portable MP3 players from accepting music files created illegally. Those who agree to the standard will implement it in two phases--the first arriving with portable players hitting the stores for this year's holiday season.
Established companies such as Diamond Multimedia and Creative Labs have already announced their support for the SDMI standard.
"Nobody's out there trying to facilitate or endorse illegal piracy at all," said Kevin Hause, an analyst at IDC, referring to manufacturers as well as digital music developers and artists. "To kick-start this, we need the labels behind it."
However, not everyone is solidly behind SDMI. Samsung appears to be hedging its bets, joining SDMI as a member while also integrating its own proprietary encryption system in its YeppYP-E32 player. The Yepp device comes with a standard 32MB of memory, upgradeable to 64MB.
And there are other companies reserving judgment about the new antipiracy measures.
Like Diamond, Eiger Labs offers 32MB and 64MB portable MP3 players, known as the F-10 and F-20, respectively. But unlike the Rio manufacturer, the company is not completely sold on the viability of the standard.
"SDMI is kind of new for us," said Eiger sales representative Tai Hwang. "We will definitely support the SDMI standard if that's what the trend is leaning toward," he said, noting that the company could easily implement the standard if it so chooses. "Our R&D in Korea works on all the latest standards related to cable, hardware, and software."
Jack Lacey, chairman of the SDMI portable-device working group, said last month: "There are going to be devices that are and are not SDMI-compliant. We can't say much about non-SDMI compliant devices. It's up to the manufacturers."
Smaller manufacturers emboldened by Diamond's success may be hard pressed to implement a standard that effectively blocks a significant portion of content created for MP3 players.
"I think it's going to be very difficult for the small guys to participate," said Tim Bajarin, of Creative Strategies. "It makes it harder for the small guys to respond."
Bajarin called the new standard "a step in the right direction" for the security and privacy risks that have made the recording industry leery of digital music. "They're petrified, but this is moving so fast they have to deal with it whether they like it or not," he said.