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Trilogy Part 1 - 
Online distribution transforms an industry
DESIGN By Robert Frost I found a dimpled spider, fat and white, What had that flower to do with being white, |
KC: What does this mean for the labels, the artists and the consumers?
AR: The recording label industry executives are upset at how online piracy may be robbing them of profits. But more than that, the industry is upset that it didn't get first grab at online distribution of music.
With MP3, artists no longer need record labels. They record the material themselves, and upload a few demo songs to sites like MP3.com. That transforms consumers into talent agents -- they listen to as many bands as they like -- for free. When they find a band with exceptionally appealing demo songs, they buy the entire CD directly from the band (usually at much lower cost than from the record store).
The recording industry and the music stores are being cut out of the deal, and that's the big reason why the SDMI (Secure Digital Music Initiative) has been formed. While the group's meetings are all held under strict secrecy, there's talk of adding special coding to CDs and stamping them with a "date trigger." When that point is reached, the CD will no longer play on anything that isn't SDMI compliant. This could mean consumers will have to buy brand new CD players that adhere to the SDMI guidelines.
KC: So SDMI will affect consumer wallets. Will it affect MP3 technology?
AR: I don't think it will have much impact on the
technology. First, even if the industry does incorporate this "anti-piracy digital
watermark" on CDs next year, the entire bulk of recorded material released up to that
point could still be converted to MP3. Also, pirates are pirates. Computer hackers have
managed to break every encryption code ever designed. MP3 began life and earned its legs
from its piracy background; those same pirates will quickly find means to bypass any
protection schemes.
Also, MP3 gives people control over their music. A person's entire personal CD collection can be stored on the computer, song by song. A quick double-click and the song begins to play. Best yet, this technology is already free. Why would people switch to something that costs money, unless it offers them better advantages? That's why people switched to Digital Audio Tape from regular cassettes -- it offered better sound. People still recorded their music on tape, they just switched to get better sound. Can SDMI come up with a better sound? That's doubtful.
KC: As more and more new bands build up a fan base via the swiftness of the Internet (and without being under the thumb of a label), I imagine a lot of the "big name" artists might want to get out of their contracts, too, as the press coverage of the relationship between artists and labels usually centers around some type of legal squabble...
| A SEMI-REVOLUTION By Robert Frost I advocate a semi-revolution. |
AR: Yes, it certainly has the potential. Tom Petty released an MP3-version of his first single from his last CD (Echo) "before" the CD was released. He figured it would be a great promotion, and it was. The single took off on the charts. However, his record label was upset and made him pull the MP3 version from the Internet sites that offered it.
Recording labels tend to search for music that will sell -- not necessarily the best music. That's why much of the music released follows trends -- everybody sounds like Pearl Jam for awhile, then everybody sounds like Nirvana. With MP3 distribution, consumers have a much wider range of music to choose from. It's a win-win situation for consumers and musi cians. And since the recording industry is cut out of the deal, they're dead-set against it.
For more information:
*Andy Rathbone's book MP3 for
Dummies will be in bookstores and online at Amazon.com later this year. Meantime, he
can be reached at rathbone@q-a.com
*Links to other MP3- and SDMI-related websites can be found at www.designfax.net
*Send us your comments! Email
kchapple@designfax.net
MP3 Distribution:
A Financial Perspective
By Pimm Fox
In financial terms, MP3 is just the tip of the iceberg, and the traditional recording industry -- and particularly the middle-men like stores and distributors -- are all aboard the Titanic. Music sold via direct downloading from the Internet is paltry -- just $147 million in three years. Compare that to the sale of actual CDs online which will reach $2.6 billion in the same time. The recording business is a $39 billion a year money-making machine, and they aren't going to hand the keys of the kingdom over to the consumer without a fight. While MP3 is the first salvo in the war, the fact that the industry -- which still controls the artists and the music -- isn't pushing it will hamper Internet music downloads.
The recording industry estimates that it lost $10 billion in sales to traditionally pirated forms, like compact disc and cassette copies -- and that doesn't even begin to count the 500,000 MP3 files that are sloshing around the Internet. Talk about disarray. Just last year the industry launched something called the Secure Digital Music Initiative which is supposed to be developing a framework for digital music distribution. Good luck. It is sort of like trying to stop the sun from rising. With the recent public offering of MP3.com shares -- and other competing formats from Liquid Audio (which has a deal with Amazon.com) -- Internet listeners are going to be treated to a variety of alternative methods of getting their noise -- and not paying for it. The big music moguls -- Universal, Time Warner, Sony, Bertelsmann and EMI -- have been trying to form alliances to create new secure Internet formats.
AT&T connected with Universal and BMG to make A2B encryption, while Sony is developing an alternative to MP3 called MagicGate. Even Microsoft wants in on this act which in April launched MS Audio -- another MP3 alternative.
All these competing formats and alliances obscure one main point -- the death of the distributors and slow wheeze of the retail stores. Unless the distributor or retailer is adding value to the product, they are going to get cut from the scene. And each Rio player -- the Diamond Multimedia product that plays MP3 format music -- that gets sold is another nail in the coffin. More than a million of them are expected to be sold this year alone. Try getting out of that box.
* Pimm Fox provides strategic and marketing services for technology start-up companies. He also is the former business editor of The San Francisco Chronicle and has worked for The Wall Street Journal, Newsweek Magazine and The New York Times. His work has appeared in Institutional Investor, Financial World, and CEO Magazine. Pimm can be reached at pimmfox@ibm.net
Part 1 Conclusion: The 3 R's.
Reluctance, Revelation, Response
RESPONSE
Why Trilogy, you may be asking? Well, it's because the editors of Designfax care. We care about you. We care about technology. We care about the future. And so do the many people --visionaries, thinkers, OEM representatives, inventors, authors, scientists, Wall Street analysts, engineers, and other readers -- who came forward to share their insights once we began asking questions.
It's their perspectives we provide you today. And it's not simply because we care. It's also because we recognize that YOU -- our design engineering readers -- have a big job ahead of you. You and YOUR DESIGNS will carry us into the next millennium. The world is truly in your hands (and we bet 99% of the world isn't even aware of it).
Taking a breath and really peering into the future can be a pretty intensive endeavor. It's as heavy or deep a subject as each individual cares to acknowledge or admit. Upon the recommendation of one reader, we at Designfax made the choice to "keep light, shine bright" while deciphering and then presenting the multi-leveled, far-reaching perspectives contained in this article.
Reach Kimberly, Richard, Frances, Gerald or Kirby via email (editors@designfax.net) or phone (440-248-1125) or mail (Adams Business Media, 6001 Cochran Road, 3rd Floor, Cleveland, Ohio 44139)
RELUCTANCE
by Robert Frost
Ah, when to the heart of man
Was it ever less than a treason
To go with the drift of things,
To yield with a grace to reason,
And bow and accept the end
Of a love or a season?
REVELATION
By Robert Frost
We make ourselves a place apart
Behind light words that tease and flout,
But oh, the agitated heart
Till someone really find us out.
Tis pity if the case require
(Or so we say) that in the end
We speak the literal to inspire
The understanding of a friend.
But so with all, from babes that play
At hide-and-seek to God afar,
So all who hide too well away
Must speak and tell us where they are.
"Kurt Vonnegut used to say to his class at Iowa, 'You've got to be a good date for the reader.'"
-- John Casey
Well, readers, were we? Our next "Trilogy dates" will occur in October (Part 2 -- Future of the Marketplace) and December (Part 3 -- Future of the World). Send us your insights. We'll spread the word. And until then, why don't you curl up on the couch, pop Kurt & Courtney into the VCR, and tell us whoreallydunnit...yes, just one more "based on fact" M Files to keep this world a lively, entertaining place. *
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