Playing a New Tune

All-digital music is bringing new convenience and fun, but record companies and other content owners may yet spoil the party.

By Aaron Pressman

Pop the new compact disc Celebrity by 'N Sync into an ordinary CD player and get ready to start jamming to the latest tunes from the top boy band. Put the same disc into a personal computer's CD drive, CD-compatible DVD player, or CD-burner unit, and the result may be quite different: total silence. That's because Zomba Records, the record label that publishes 'N Sync's disc, is using the release to test new techniques that prevent free trading of digital copies of songs on the Internet?and even stopping individuals from burning the CD. Sony Music is doing the same with its new Michael Jackson release, and other record labels are experimenting with ways to foil those who would copy music in any form. Such efforts could render some expensive audio equipment and DVD players useless, though record-label spokespeople generally disavow any intention to prevent copying for personal use.

Although the ongoing digital revolution in music offers the promise of greater flexibility and choice for listeners, the record labels are fomenting a counter-revolution to protect copyrighted material, even if that degrades music quality or inconveniences users. Some of these labels are also creating online music sites that offer titles for sale, though competitors warn that these sites may lock out other outlets, thereby monopolizing online music distribution. The complaints have already brought scrutiny from government antitrust regulators. The Justice Department is investigating and has issued subpoenas to participants in the labels' sites.

In 'N Sync's case, Zomba released three different versions of the CD. A general European release won't play on a computer at all. Lesser copy protection was included on releases for the United States and the United Kingdom. Only the European release had even a cursory warning label, noting that the disc could not be played on personal computers. Tests by AudioWeek magazine found that all three versions behaved unpredictably. The European disc played on a Macintosh, but not on Windows computers or on one brand of DVD player. The U.S. and U.K. discs played on computers, but not in some CD burners. That's an odd result since the music industry gets nothing from computer makers, but collects a royalty fee on every CD burner and every burner-compatible blank disc sold. Likewise, reports surfaced that the Michael Jackson CD from Sony suffered from degraded audio quality.

Some of the anticopying systems, such as Sunncomm's MediaCloq, prevent discs from being played at all on computer CD-ROMs and other nonstandard CD players. Other anticopying systems, like Macrovision's SafeAudio, automatically introduce errors and static when a consumer tries to make a digital copy of a track on a protected CD. Many record companies, including Zomba, won't reveal which anticopying system they plan to use, though many are experimenting with these systems. Universal Music, largest of the record labels, plans to include an anticopying system on every CD it sells by the middle of next year, but won't say which one. Needless to say, this effort risks consumer backlash, though at present, many consumers have no idea that labels are working to prevent copying.

Prospects for a solution that works for everyone are hindered by the significant difference in perspective between content owners and music users. For example, Larry Kenswil, president of Universal Music Group's new business development unit e-Labs, says, "Every single piece of evidence points to the current downward trend in the music market [as being related] to CD burning. We need to allow consumers to make the convenience copies they need, but to stop the mass production of discs."

At present, though, it's not clear how that will happen. Analysts are skeptical that the anticopying techniques will catch on or be of much use in stopping the MP3 trade, which often depends on CDs as the source for the music. "CDs are so widespread throughout the world that it would take five years before you even made a dent in the existing base of discs out there," says Mike Paxton, a media analyst with Cahners In-Stat Group.

Cutting the Web Connection

The driving force behind digital music, of course, was the widespread availability of free music online. Some 15 million people were downloading 70 million songs a month on Napster before the company lost its legal battle with the record labels earlier this year. Even if intellectual-property issues can be worked out, it could take years before commercial music sites on the Internet regain the ease of use and flexibility of Napster, analysts say.

The record labels' new services include MusicNet, backed by AOL Time Warner, BMG, and EMI; and PressPlay, backed by Sony Music and Vivendi Universal. They will offer tens of thousands of downloadable songs for a per-copy or monthly subscription fee. Consumers won't be able to do much with the songs except play them back on the PC where they were downloaded. The formats favored by the labels?Microsoft's Windows Media Format and RealNetwork's RealAudio?contain built-in restrictions that can block users from moving files onto portable MP3 players or burning them to CDs. And although MP3 files can be played on many types of digital-audio equipment, support for the other formats is fragmented. Consumers may have to install two or three different programs to listen to music on their computers, leading to incompatibilities and confusion. Some music formats will not play on certain portable players, even if the data can be transferred.

Napster wannabes, like Morpheus from MusicCity, have emerged to meet the demand for free file trading. The new services don't keep a listing of all available songs on a central server the way Napster did, so they are better able to fend off lawsuits from the record industry. Still, the industry is trying to shut down these post-Napster sites. Many independent online services want to sell tunes that can be used on portable players or burned to a CD, but they can't offer much of anything without permission from the big five labels, which own the copyright to more than 80% of all songs. Unless antitrust regulators object, the labels may succeed in preventing consumers from getting many songs off their computers and onto CDs or portable players. MusicNet and PressPlay won't deliver an immediate answer to the millions of fans with portable players because the sites are too worried about piracy.

"There just is no standard, secure way to [make the music portable] yet," explains MusicNet strategic adviser Richard Wolpert. "To move off a secure platform to a nonsecure one defeats our entire security model. But we're already working on a way to do it. [Portability is] the biggest feature we don't have on day one." Nor did either service launch with a way for consumers to burn music to compact discs?the other popular way to get digital songs off a PC and into more traditional music-listening devices. As a result, the services may be unable to meet consumer demand stoked by the Napster phenomenon. "If you're keeping it tethered to the PC, you're not addressing portability?and that's what consumers want," says Jupiter analyst Mark Mooradian. "If that doesn't happen, the design of these services is effectively doomed to failure." Mooradian predicts consumers will be slow to sign up for the new services?letting free file trading continue to grow in popularity.

The pay services could also be hurt by competition between Microsoft and its competitors. Microsoft's Windows Media Player, including the latest version built into the Windows XP operating system, can handle some popular formats. But Media Player can't play music in RealNetwork's format, which is used for most live broadcasts on the Web. To make matters worse, MusicNet is starting off using the RealNetwork format; PressPlay relies on Microsoft's format. Other commercial sites use different formats, including Liquid Audio, an advanced audio-compression standard. At least Real Networks has licensed Microsoft's format, so consumers using the company's new RealOne player will be able to listen to songs recorded in Windows Media format.

But officials at some of the pay services complain that Windows XP discourages people from playing music in Real's player by making Microsoft's player the default. "What they're doing is trying to lock you into their company store," says Real Network's general manager of consumer products, Steve Banfield. "You can have any color you want, as long as it's black," he jokes, referring to the old Model T automobile that Henry Ford offered in a single color. Microsoft denies it is thwarting consumer choice. "You can choose the player; you can choose the default," says Michael Aldridge, product manager for Windows Digital Media division. "We ask you up front."

Music In Every Room

Digital music is most often created and downloaded on computers that reside in a study or home office, while the preferred way to listen to music is in the living room, kitchen, or bedroom. Portable MP3 players help to bridge this gap at least partway, so digital-music files can travel to the gym or on the subway. But within the home, many music fans are stuck hunched over their keyboards, listening to digital-audio tracks while sitting close to their PCs, in "the two-foot experience," according to John Spofford, vice president and general manager of HP personal storage solutions. Consumers would rather listen to music relaxing on a couch, across the room from their much more capable stereo system, he says.

"Both approaches are valid at different times of day, but we need to bring the music to the living room," Spofford says. Manufacturers like HP are trying to finally close the gap between PC audio and stereo systems with a new generation of products that are easier to use and compatible with a wide range of equipment. The offerings range from basic networking devices that keep files on a computer but allow playback on stereos, to more complex servers that connect directly to a stereo setup and store digital tracks on an internal hard drive.

HP's latest offering, the Digital Entertainment Center, includes a CD player that can also burn CDs and copy songs to the system's huge hard drive. The Digital Entertainment Center is designed to sit with other stereo equipment, not next to the PC. There's even an HP online service that offers music downloads.

SonicBlue, maker of the popular Rio line of portable digital players, will sell a similar device, but has other ideas about getting music off the PC and into the living room. The company's Rio Receiver connects to a stereo, then to a PC in another room using one of three simple networking techniques: The box can plug into phone lines, electric outlets, or wireless networks. The wireless links use the 802.11b standard, also known as WiFi.

Market-research analyst Jon Peddie predicts that eventually such new products will merge. Then everything from satellite television receivers to VCRs to DVD players will reside in what's almost an all-in-one player. "We're in a transitory environment," Peddie says. "Some of this is very technical, and some people will get stuck with boxes that don't do what they want after a year. One day, it will all evolve into two or three major devices." One might contain a hard drive for recording television shows, music, and Internet content, while another could control traditional stereo components. Either box might also provide controls for the TV and cable or satellite systems.

Incredible Disc Players

Despite the many forms of online music available, don't count out audio CDs just yet. Most of the new digital-music services promise only "near-CD-quality" sound. That's because the high rates of compression needed to make song files small enough to be downloaded and to fit on portable players causes some loss in fidelity. Makers of compact discs hope to keep their products popular by taking advantage of this limitation: They are moving in the opposite direction, producing new players that deliver even better sound than current models.

Since compact discs replaced vinyl albums in the 1980s, researchers have been hard at work improving the capabilities of the lasers used to lay down CD tracks and to play them back on a stereo. As a result, far more information can be squeezed onto new disc varieties?yet these are no larger than CDs holding at most 80 minutes of music. This will yield significant improvements in sound quality, though at the familiar price of competing, incompatible formats that could make some expensive gear obsolete.

DVD-audio and the Super Audio CD (SACD) will vie for space on the shelves of serious audiophiles this holiday season. Each format offers more room for digitally encoding music, giving the recordings a fuller dynamic range and a richer, fuller sound. Some say the new formats restore the warmth that was lost when analog vinyl records bit the dust. The extra capacity also lets recordings go beyond two stereo speakers, and take advantage of advanced home audio systems using five or more speakers. The new formats provide room for extra information, such as song titles or lyrics?which can be displayed by some stereo components and televisions.

DVD-audio, an extension of the technology used to create popular DVD videos, is being incorporated into DVD players and should soon be available in models costing only a few hundred dollars. With many people entering the market to buy their first DVD video player, analysts think this format could spread quickly. But only about 1,000 DVD-audio music titles will be available by the end of the year.

Super Audio capability is being incorporated only in new high-end CD players, so the potential audience may grow more slowly. Limited numbers of titles will be available in either format this year, says Jay Berpagnolli, manager of audio merchandise for electronics giant Circuit City. The discs cost up to twice as much as ordinary CDs and are usually kept in a separate section to avoid confusion. "These formats will be significant niche products for audiophiles who want the best sound possible," Berpagnolli says. Current players only read one format or the other, but eventually manufacturers will release players that can read both. This will let consumers avoid getting stuck with a useless box if one format triumphs, he says. Emerging compact-disc formats, online music services, and new portable players all point toward an exciting world of digital audio. But for now, consumers must shop carefully to find compatible products and avoid dead-end duds.

An Audio-Format Primer

Music on compact discs is already in digital form, but those high-fidelity sound files take up a lot of space. A variety of compressed digital formats attempt to offer the best sound quality in the smallest memory footprint. Here are the main contenders.

Format: MP3

Requirements: Requires 1MB per minute of music, 1/10 than that required by CDs.

What You Should Know: The most popular format for consumers. Wide variety of software and hardware products support playing MP3, paying royalties to Fraunhofer Institute in Germany.

Format: Windows Media

Requirements: Requires 1/20 the space CDs require.

What You Should Know: Microsoft is using its muscle to spread its format. Compatible with many hardware products. Anti-copying protection is built in but users can record some files without it.

Format: ogg vorbis

Requirements: About same file size as MP3.

What You Should Know: Still-in-the-works, royalty-free format being developed under an open-source model, like Linux. Anti-copying not included. Available for testing.

Format: AAC

Requirements:Better sound than MP3, with smaller file size.

What You Should Know: Advanced Audio Codec was developed by creators of MP3. It hasn't caught on. Modified version used by Liquid Audio for commercially encoded online music limits copying.

Format: Real Networks

Requirements: Better sound than MP3, with smaller file size.

What You Should Know: Widely used for streaming audio over the net; also used for downloaded files and recording CD music. Includes optional anti-copying.

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