November 23, 1998 5:20 PM PST

Diamond faces the music

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After much controversy, Diamond Multimedia today began shipping its Rio PMP300 portable music player, just in time for the holiday shopping season.

Rio is one of the first portable MP3 players, a device that allows users to download compressed audio files via a computer. Although the format is not new, previously users could only listen to compressed songs on their computer.

"The encoding scheme is currently the most widely used format on the Internet for downloading and listening to music," said Elaine Comstock, director of marketing communications for Diamond. "It allows high compression levels, and doesn't take up a lot of hard disk space."

Diamond's Rio, which is about the size of a pager, stores the audio files on 32MB of flash memory, which can be expanded with 16MB add-on memory cards. Because there are no moving parts, the Rio never skips like portable CD or mini-disk players, Diamond says.

With the introduction of a portable device, PC users can now listen to downloaded music files anywhere, a development applauded by consumers and feared by the recording industry, which is worried about increased piracy via the Internet.

Rio's release was almost thwarted by the Recording Industry Association of America. The industry group attempted to delay the release of the Rio by filing for a temporary injunction. The motion was denied in early October.

Although the RIAA has decided to file an appeal, Comstock believes the battle has brought attention to the emerging technology which will result in increased sales.

"It's definitely boosted awareness of the product," she said, noting that the MP3 format is a popular choice among independent artists. "The thing that has hindered the growth of online music is the lack of portability."

The Rio PMP300 is available online and at major North American retailers for $199. Diamond is expected to launch an international rollout early next year.

Many analysts believe that the widespread popularity of Diamond's Rio and products like it is inevitable because of Rio's near CD quality sound, and because it is exceedingly simple to convert sound files to MP3.

"We're not talking about organized crime but a gazillion college students who are converting songs to MP3 and posting them on their home pages," said Kevin Hause, an analyst at International Data Corporation. "The cat is really out of the bag, and there's not much you can do about it at this point other than push an alternate standard."

Firms like Samsung and Saehan have marketed MP3 players in Korea, Hause said, and are watching carefully to see how Diamond's product is received in the U.S.

"It's going to be interesting to see what happens with Diamond," he said, calling the release of the Rio "precedent-setting."

 

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