December 16, 1998 4:00 AM PST

Music initiative raises questions

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The powerful Recording Industry Association of America is making headlines with an announcement that seemed to indicate consensus between the major record labels and many digital technology firms on an initiative to protect music copyrights on the Internet.

To some of those familiar with the contentious issue, however, the campaign led by the Recording Industry Association of America (RIAA) raised more questions than it answered about its stated goal of forging an open standard for protection.

"The announcement was not at all about security or about piracy--it's about control," said Steve Grady, spokesman for online record company GoodNoise. "By implementing security, they maintain control."

Grady and others suggested that because of its widespread use, a de facto standard for music delivery already exists in the MP3 format (MPEG 1, Audio Layer 3), which the record labels and the RIAA have fought because it is often used for the distribution of unauthorized copies of their copyrighted material. GoodNoise is looking to bridge the gap between the widespread illegal uses of MP3 and its popularity by offering music for download via the MP3 format, but for a fee, part of which is paid to the copyright holders.

The RIAA says it is not looking to stamp out MP3 per se, but rather is using the Secure Digital Music Initiative to develop a specification that can be built into any online music delivery technology to protect copyrighted material.

But MP3, and the entire notion of delivering music on the Net, has been the source of intense debate between the copyright-conscious studios and cutting-edge technology companies, as well as the millions of fans who already have adopted MP3. In various forms, the issue of downloading, Webcasting, and other means of audio transmission has wended its way through the courts and led to major federal legislation in October.

The debate was sparked up yesterday when the RIAA assembled a group of luminaries from record labels and technology companies to announce the Secure Digital Music Initiative.

The goal is to create the new spec by fall of 1999. The RIAA said the initiative has been in the works for nearly a year.

The RIAA touted the new spec as a means for paving the way for interoperability, much the same way a user can purchase a CD from any record label and play it in a CD player manufactured by any company.

"We hope that a similar level of interoperability will be in place in online delivery," Larry Miller, chief operating officer of AT&T Labs' music delivery technology arm, a2b Music, said in an interview. a2b Music is one of the technology firms that offered its support for the RIAA plan.

CD model used as example
a2b Music already offers secure delivery technology, but Miller said the company doesn't mind putting aside its work to make way for an industry-wide standard, confident that his company will "still be able to distinguish itself" with features and quality. He too pointed to the CD precedent, saying that customers often will pay a premium for a given brand of player because it offers special features.

Despite assurances by the RIAA, it remains unclear how a single spec that pertains to copyright protection will ensure interoperability, given that the various technologies--including a2b's format, MP3, technology from Liquid Audio (which is also part of the initiative), and others--will still be in use.

Further, creating a spec that will work well in all the current delivery technologies could prove to be a daunting task.

"You can't add encryption to MP3 and still have MP3," GoodNoise's Grady said. He accused the RIAA and the mainstream music industry of using the project as a "stall tactic" to postpone having to offer a wide variety of music on the Net for download.

Fear of the "Big Five" labels
Furthermore, having the "Big Five" labels--BMG, EMI, Sony Music Entertainment, Universal Music Group, and Warner Bros. Music--at the helm of the initiative via the RIAA "stifles innovation and hurts consumers" by imposing the wants and needs of the larger labels on the industry as a whole, Grady said.

"This initiative is about the technology community developing an open security system that promotes compatible products in a competitive marketplace," Hilary Rosen, president and chief executive of the RIAA, said at the press conference announcing the initiative yesterday. "It's not about the recording industry imposing a standard on technology companies. We'll simply provide guidance on the needs of our industry and its customers."

However, technology companies will have to implement the spec to earn the RIAA's "compliant" seal. Moreover, companies that fail to do so could be deprived of content from the Big Five record labels represented by the trade association--in effect, allowing the industry to impose a standard on technology companies.

The all-powerful fans
The initiative calls for the spec to be introduced into any delivery technology, and the trade group said it welcomes any and all companies to be involved in the process. Key players such as IBM, Microsoft, Lucent Technologies, Matsushita, Toshiba, and RealNetworks have pronounced support for the SDMI.

MP3 so far has been the most widely accepted delivery technology among fans, but the hated and feared "stepchild" of technologies to the mainstream record industry because it is the favored format of music pirates. The question is whether it makes more sense for the RIAA initiative to put aside its feelings about MP3 and try to make it more secure--thereby taking the format's momentum and running with it--or whether the industry would be better off going forward with the SDMI, embracing other technologies and trying to get users to do the same with value adds and the like.

"The biggest challenge for digital distribution of music is consumer behavior," Mark Hardie, senior analyst at Forrester Research, wrote in a letter to Cary Sherman, senior executive vice president and general counsel of the RIAA, after being briefed on plans for the initiative.

What the industry needs is "an initiative among record companies designed to quickly settle on file formats for distribution," he wrote. "Given MP3's lead in this space at present, promotional tracks in this format would be well received by an estimated 5+ million consumers, versus the competing commercial offerings from Liquid Audio and a2b, where installed bases are minuscule."

"There already is a standard," GoodNoise's Grady seconded. "Where are the customers? They're already out there, and they're using MP3."

Loyalty up for grabs?
Still, a2b's Miller pointed out that most users of MP3 are more technology-savvy, and do not represent the mainstream audience found on huge Net services such as America Online. Those are the users that will adopt online music delivery going forward, he noted, and their loyalty is still up for grabs.

Another issue surrounding the initiative is basic logistics. On one hand, the time frame of one year is short, because bringing together all the players and coming up with a spec is a Herculean task to undertake in 12 months. On the other hand, a year is an eternity on the Internet, and technologies developed in the process could quickly become obsolete in that time.

"It's definitely ambitious," Steven Marks, vice president and deputy general counsel of the RIAA, said in an interview. "But we think everyone involved has an incentive to get the marketplace going."

Forrester's Hardie was less optimistic. "At a minimum, I expect the initiative would require 18 to 24 months to show any tangible results," he wrote in his letter.

"Moreover, all of the record companies are already involved in digital distribution and Internet antipiracy initiatives," Hardie wrote. "The SDMI will run parallel to some companies' initiatives and counter to others, creating counterproductive friction in the near term. I do not believe a completed specification will be forthcoming in one year."

 

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