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Industry: How can MP3s work for us? |
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Written by Troy Wolverton, MCT
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Friday, 12 January 2007 |
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For years, the recording industry has fought the popular MP3 music format.
Now some think the industry is ready to declare a truce.
Because consumers can potentially make unlimited copies of MP3 songs, the major record labels have seen the format as a threat to their business. But instead of continuing a battle that many think the industry is losing, some analysts think the labels are about to embrace the technology and figure out how to make money off of it.
“The record labels recognize that it’s tremendously important to protect content from unauthorized distribution,” said Eric Garland, chief executive officer of BigChampagne, a market research firm that focuses on digital media. “The one goal ... that trumps that is to sell the legitimate consumer popular music in the form he wants it.”
Some in the music industry have already embraced the popularity of MP3. eMusic, for instance, which focuses on the independent labels that typically handle less-popular artists and albums, offers some 1.5 million songs, all in MP3.
And there are indications that the Big Four record labels are starting to come around. This year, Yahoo’s music store ran four promotions offering MP3-encoded songs from major artists including Jessica Simpson and Norah Jones.
“We see the major labels dipping their toes in the water,” said Ian Rogers, director of product management at Yahoo! Music. “We think it’s going to be a really interesting year because the labels do want to go where the action is. Clearly a lot of the action is here (with MP3s).”
Two EMI artists were featured in Yahoo’s MP3 tests this year. EMI spokesman Adam Grossberg declined to say whether the company would test selling in the MP3 format in 2007. But he did say the company is looking at a number of different ways of delivering digital music.
Just to have the major labels thinking about experimenting with the MP3 format is a big change, argues the manager at one of the digital music distribution companies. Not long ago, MP3 was considered a profanity by many in the industry, he noted.
But now, distributing songs in MP3 is on the table, said Rogers.
“The companies are starting to say, ‘If that’s what the world is like, let’s acknowledge that and figure out how to live with it,’ ” he said.
Some think the industry is going to do more than just a few experiments. Garland, for instance, thinks some of the big labels will soon begin offering whole swathes of their catalogs and new releases in MP3 format, and eventually their entire catalogs.
“Not only will they sell all of their music in the MP3 format ultimately, but that is a relatively short path (to that day),” he said.
The MP3 format became popular in the late 1990s because it offered a way of compressing sound files so that they retained a large degree of their quality while making them much easier to store or transmit online. Instead of holding just 10 or 12 tracks, a CD could potentially store dozens of songs.
But that ease of use also made the format threatening to the music industry, which responded with a barrage of lawsuits to protect its interests.
It has also attempted to promote rival music formats that are wrapped in digital rights management, or DRM, software. Such software typically limits the number of copies consumers can make of the files and the number and types of machines they can play the files on.
Apple has had some success selling protected files through its iTunes music store for iPods. But other companies have struggled to convince customers to buy songs in formats that can’t be played on the iPod. Even among iPod users, the bulk of songs on their machines are in unprotected formats - typically MP3s that they’ve ripped from CDs.
Meanwhile, file trading still persists. Indeed, according to BigChampagne, downloads of illicit MP3s still make up the vast majority of online song downloads. And while sales through legitimate music sites are growing, they aren’t coming close to making up for the decline in sales of CDs.
To be sure, many doubt that the industry will do more than experiment with the MP3 any time soon. For one, despite the long popularity of MP3s, it’s unclear whether mainstream consumers are even aware of the limitations placed by DRM schemes, much less withholding purchases because of them.
Los Gatos, Calif., resident Erin Smith, 26, got an iPod nano two months ago. While most of the 700 songs she has stored on it are from CDs that she’s ripped, she’s already spent about $20 buying songs from iTunes.
Smith, a student at San Jose State University, said she would be interested in being able to buy songs in the MP3 format, rather than in Apple’s DRM-protected AAC format. But the lack of an MP3 option hasn’t stopped her purchases thus far.
“iTunes is just addicting,” she said.
Scotts Valley, Calif., resident Troy Kitch, 34, said he probably would buy more music online if it was available in the MP3 format. Like Smith, the bulk of the songs on his iPod nano come from CDs.
Still Kitch has bought about 15 albums from iTunes.
“It’s an impulse sort of thing,” said Kitch, a product manager at Verisign.
Meanwhile, many in the industry remain worried that selling MP3s will kill their business, whether selling CDs or digital downloads. And many remain resolute that any files they sell online have to have copy protection on them.
“We’ll continue to experiment and adapt to new models. However that doesn’t mean there’s going to be this wholesale ... adoption of open MP3s,” said one executive at a major label, who asked not to be named. “The most you’ll probably see are a handful of special (promotional) tracks.” | Only registered users can write comments.
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