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Revolutionaries press the mute button

Smaller crowds and diminished enthusiasm at the MP3.com Summit highlight how the online music world has moved away from utopian visions of the original wave of music companies.

SAN DIEGO--On a sunny university plaza here, a band played punk rock songs for a dwindling lunchtime crowd of businesspeople, code writers and copyright lawyers.

The music fit the event, the fourth--and probably last--annual MP3.com Summit, or what used to be one of the chief gatherings of online music's revolutionaries. Entrepreneurs and engineers once spun visions here of overturning the behemoths of the traditional music business with new online music services, new formats and new ways of distribution.

It is a more practical, a more subdued and certainly a far smaller bunch this year. Like punks continuing to rail against an indifferent music world, a few revolutionaries remain. But the smaller crowds and the diminished enthusiasm at the event highlight just how much the online music world has moved away from the utopian visions of the original wave of music companies.

"There's no room for small companies to do big things anymore," said Michael Robertson, MP3.com's 34-year-old CEO, whose company was recently bought by media giant Vivendi Universal. The need for massive amounts of money and, most critically, relationships with the big record companies have all but shut out start-ups from the chance of making a significant dent in online music, he said. "Small companies can still do small things."

The week has been full of signs of the media giants' ascendance, looming over the MP3.com conference as a reminder of the market's evolution.

Even as employees and journalists were gathering at the MP3.com headquarters Wednesday evening for a conference pre-party, a federal judge in San Francisco was issuing orders that Napster should keep its free music-trading service shut down, perhaps for good.

Just a few hours later, Microsoft signaled that it would jump more heavily into the music distribution wars as a partner of Vivendi Universal and Sony Music and their Pressplay venture, highlighting the feud between the Redmond, Wash., company and technology rival RealNetworks in the music market.

To be sure, consumers are already going to new companies and free sites that have taken on some of the rebellious sheen of the old MP3.com and Napster. Hundreds of thousands of people have flocked to services such as Audiogalaxy, Music City and Gnutella looking for free music. But most of the companies involved are keeping lower profiles, without the manifestoes of revolution that marked the last generation of services, and which punctuated previous MP3.com summits.

Robertson himself retained his trademark optimism during the course of his own speeches. But in private conversations, a sense of wistfulness about the events of the last year, and the upcoming assimilation of his own company, was close to the surface.

Getting gadgets in tune
The theme of the conference this year was "mobility," and the idea of bringing online music to cars, ordinary stereos, and even wireless phones was played out in panel after panel. But even here, the tone of lessons-learned practicality replaced previous years' optimism, as entrepreneurs conceded that wireless networks were not yet ready for most music services and would not be for several years.

Perhaps the most striking element of the theme was how completely it contrasted with the visions of the main music-subscription services, MusicNet and Pressplay, now being touted by the major record labels.

Neither Pressplay nor MusicNet has launched yet, and the vision for each could change as they draw close to their late summer openings. But executives from both have reiterated that the music in each--at least in the early stages--would be "tethered" to personal computers, in large part to prevent unauthorized copying and transfers of music.

And both have said that they would later provide some rudimentary ability to transfer music to portable devices, but have indicated that substantial restrictions would remain on copying and burning music to CDs.

In his keynote speech Thursday, Robertson outlined his own vision of successful subscription services based on MP3.com's technology, in what appeared as a not-so-subtle warning to his new partners at Vivendi Universal.

"You have to be sensitive to what people are doing with their music," Robertson said, discussing the future of subscription services. "If the only thing they can do is listen to it on a PC they're not going to buy it."

MP3.com's technology itself will underlie much of Pressplay's service, but it's not yet clear how much of this vision of bringing music anywhere will be retained.

Where do we fit?
Underlying most of the panels, and running though recollections of previous years, was a consistent question: Where can small companies fit in a market increasingly dominated by the music and technology giants?

With Yahoo, America Online and Microsoft stepping into the distribution business, the middleman roles apparently filled by Pressplay and MusicNet, and the labels still unwilling to broadly license their content, it's a question that has yet to be answered.

"There's plenty of room for a number of companies to provide channels, or infrastructure, for the distribution of the labels' music," said Dave Ulmer, former CEO of Earjam.com and now an independent consultant. "There's a whole new machine being built now, and no one company is going to build it by itself."

Others were more pessimistic in their assessment.

"As long as you're not trying to deliver music to consumers, you should be fine," said Joe Fleischer, former CEO of iCast, a defunct online radio station.