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Digital firms playing a new tune in music sales

  • Story Highlights
  • Increasing digital sales not compensating for downturn in CD music sales
  • Analysts say music industry is willing to experiment with different formats
  • French start-up offers different formats for songs
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By Steve Mollman
For CNN
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(CNN) -- You might have 40,000 songs on your MP3 player, but in one sense they're all rather boring: They sound the same every time you play them.

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A French start-up claims it has a new format that allows for a song to be recorded and played back in different ways.

For all the changes in the music industry, today's artists usually enter a studio with a mind-set little changed from 50 years ago: They hope to produce a static song. A recording might end up in millions of MP3 players, but it always sounds the same.

Now a start-up in Paris called Musinaut claims to have a fresh way of doing things with a format called MXP4. The format allows for a song to be recorded and played back in many different ways, and for extras such as notes, videos and lyrics to be included in the file, as well. Think of it as MP3 on steroids.

With traditional approaches to selling music faltering -- and digital sales not filling in the gap -- record companies are open to new ideas such as Musinaut's.

According to the International Federation of the Phonographic Industry, digital sales last year increased 40 percent to $2.9 billion. But that's a mere 15 percent of the music market, and it doesn't make up for declining CD sales. Meanwhile, illegal downloads outnumber sold tracks by a 20-to-1 margin.

"The CD market is in crisis," says Claudio Checchia, an analyst with research firm IDC. "Now there's a lot of rethinking of the old business models. The record labels are actually much more willing now to explore different opportunities."

"People feel there's a sea change, that the industry is a lot more open than it has been previously," adds Musinaut CEO Patricia Thomson.

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Case in point: Universal Music signed a deal with Nokia whereby the label will get a cut of handset revenues in exchange for giving users of certain handsets free access to every song in its catalog (for 12 months only, but they can keep them). And labels are teaming up with popular music-oriented social networking sites such as LastFM and Imeem: For allowing access to their songs, the labels get a cut of the sites' advertising revenues.

Some record labels have also been talking to Musinaut, which was founded in June 2006. With the start-up's recording software, any work can become interactive and infused with new flavors or genres. Parameters such as "this beat always goes with this baseline" can be added, but an algorithm ensures the song plays out differently each time.

Such capabilities might appeal to a label that owns the rights a deceased artist's works, for instance. With MXP4, new variety could spice up well-worn tunes. Today's artists could add flavors to the master tracks, creating something that's partly a tribute album and partly a new creation with near-infinite variety.

Newer music, of course, can also be recorded in the format. The Paris-based act Dinner at the Thompson's (www.myspace.com/dinneratthet) remixed its recent track "Consciousness" into MXP4, adding afro-beat and electrofunk flavors to the original trip-hop soul composition.

"It changes how you compose," says member Sabrice Viel, who took a half day to learn the recording software and is enthusiastic about the possibilities.

Other DJs, producers and video game composers have also expressed excitement, says Musinaut's Thomson. For videogame composers, MXP4 addresses an old problem: When players get stuck in one section of the game, the same music often loops maddeningly until they move on. With MXP4, the music could be more varied, while still sticking to a general theme.

MXP4 also gives listeners more say. A downloadable MXP4 player will soon be offered on the Musinaut site (www.musinaut.com). A listener in a funky mood can select the afro-beat version of "Consciousness," for instance, instead of the original.

Such features would seem at home in a world where interactive entertainment is on the rise. "People have moved beyond simply being passive listeners of music, or passive watchers of television shows," says analyst Mike McGuire of research firm Gartner. Instead, he says, they want to interact with, comment on, tag, share, and manipulate their media.

So far relatively little MXP4 music is available. But the company has three studios around Paris where various artists like Dinner at the Thompson's are busy recording in the format. The company also operates a small label, Flying Truffles. (The label's site, www.flyingtruffles.com, will feature signed artists, and their MXP4 music, when it goes live.)

Musinaut hopes that once the player and more MXP4 music is available, the format will spread. It envisions mainstream MP3 devices, cell phones and software media players becoming MXP4 enhanced.

Of course, whether enough labels, artists and listeners adopt MXP4 -- and whether it works well -- remains to be seen. Musinaut is basically an experiment. But with the music industry unusually open to new ideas, the company's timing, at least, seems well played. E-mail to a friend E-mail to a friend

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