Music industry points the way for mainstream digital audio
(IDG) -- The war over online music has become the stuff of electronic-commerce legend. As music fans have raced to the Internet to download their favorite songs, musicians have started bucking their labels with digital releases, and record labels have begun scrambling to accommodate digital distribution without sacrificing copyright control.
A spate of new technologies, standards, and business models -- not to mention the Internet as a distribution medium -- is revolutionizing the way people obtain and use digital media.
But one industry's revolution is another's evolution. Media streaming and playback technologies, spurred by Web-based outlets, have forced the major labels to embrace the digital medium rather than fight it. However, the resulting standards and business practices will be more than just interesting fodder for industry watchers and the Matt Drudge gossip set. They will also provide a valuable precedent for other industries and, eventually, mainstream corporate applications of audio and video.
The catalyst for all this upheaval has been Moving Picture Expert Group 1 (MPEG-1) Layer 3, or MP3, the much-hyped audio compression format. During the last year or so, MP3 has become the format of choice for the digital music files that now commonly circulate the Internet. That in turn has spawned a growing industry of Web merchants and playback devices catering to the format.
Much to the chagrin of the major record labels, MP3 files can be freely copied and distributed, with little copyright protection or direct financial gain. The issue is one that record labels are only now coming to terms with.
"The music industry hasn't coped well with [MP3] in the past," said Lucas Graves, an analyst at Jupiter Communications, in New York. "Now they're shifting from fear and denial to adaptability. They're starting to work with technology rather than reject it."
The work in question is the Secure Digital Music Initiative, or SDMI, the industry's attempt to standardize rights management and licensing for digital content. The Recording Industry Association of America, started work on SDMI earlier this year and hopes to have an architecture for secure downloads finished by June and in use by year's end.
Same old standards song
In the meantime, a number of proprietary technologies have been vying to replace MP3.
Despite the continuing work on the unfinished SDMI, two of the proprietary mechanisms have already gotten a major boost. Earlier in May, Universal Music Group and Sony tapped InterTrust Technologies' Commerce 1.2 and Microsoft's Windows Media 4.0, respectively, for securing and managing digital music that the labels plan to sell by Christmas.
Also in May, Tower Records and several smaller labels backed yet another mechanism, Liquid Audio's Liquid Distribution, for their Web distribution efforts.
A handful of other copyright protection schemes have also gained varying degrees of attention, including AT&T's a2b music and IBM's Electronic Music Management System. The latter will soon be used in market trials by the major labels and will eventually be integrated into playback technology from RealNetworks.
As the various companies jockey for position and continue to forge alliances with industry players and each other, all of their products and services may continue to be relevant even after a standard emerges.
"SDMI was never intended to anoint one technology," Graves said. "It's just a set of requirements and structural recommendations for protecting copyrights and working with hardware and software. Any technology that conforms to it will meet with approval."
In the area of video, digital distribution is still nascent but gaining steam. Progress was evident at the Internet World trade show last April, where Microsoft released a new version of its Media Player with rights management capabilities; RealNetworks and IBM said they would team up on a future project; and Apple released an upgraded version of its QuickTime software. Recently, Web site Sightsound.com released its first video-streaming rental movie for $3 per view.
With digital copies of entire movies available elsewhere on the Internet -- most notably "Titanic" -- and broadband services soon to speed access to video content, the film industry may not be far behind in starting its own version of SDMI.
Back in today's world, IT departments may not care much about how the record industry handles a burgeoning culture of song pirating off the Internet, except to notice which end-users downloaded the latest Tom Petty single.
Yet the impact could be far more profound, according to industry experts. The music industry may have been the first to grapple with these issues, but it may not be long before all kinds of proprietary, corporate information is beamed across the Internet in digital audio and video formats.
Other entertainment and media businesses are also grappling with how to protect intellectual property in cyberspace and will certainly take note of the unfolding events in the music industry.
But even beyond that, copyright protection and rights management could quickly become familiar concepts in corporate IT settings. Among the next industries to feel the impact of this trend will be those providing professional services, according to Michael Putnam, an analyst at Forrester Research, in Cambridge, Mass.
"Those companies will face the same issues that the music industry faces today: How do you protect content from being copied and distributed over the Internet?" said Putnam.
A recent Forrester study projected that the market for business services will jump from $22 billion in 1999 to $220 billion in 2003. Most of that new revenue is attributed to services that will be delivered through the Internet rather than by people.
For example, financial companies may want to provide video feeds or files of analyst reports. Rights management will be essential to maintaining control over that content, according to Putnam.
Rights management and licensing techniques could also lead to new uses of audio and video technologies, according to one provider of digital-content services.
"I could imagine a scenario where someone would be able to download an archived Webcast and replay it later on some sort of portable device," said Tom Scott, vice president of engineering at EDnet, in San Francisco. In addition to Webcasting services, the company provides wide-area connectivity for entertainment production houses.
"The way people obtain and use digital content could really change," Scott said.
And as that content spreads to machines that companies do not own or run, the way IT managers view security will probably change too. Tracking many of those security issues, which are being tested in the first phases of digital audio distribution, make the recording industry's trailblazing more than just an interesting sideshow.
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