The music industry on Tuesday mounted a charge against the popular MP3 audio format. The Recording Industry Association of America, or RIAA, asked big-name tech companies to create a new technology specification for selling music on the Internet.
As expected, the RIAA launched its Secure Digital Music Initiative, or SDMI, which calls on tech companies and the recording industry to develop an open specification for online distribution of music by the fall of 1999. The announcement came at a press conference in New York.
The RIAA gathered some major players in the industry to testify for an alternative to MP3. CEOs and presidents from BMG Entertainment, EMI Recorded Music, Sony Music, and Universal Music Group were in attendance. The RIAA even scored alternative rockers Better Than Ezra and record producer Babyface to testify for its cause, albeit in recordings.
"This initiative is about the technology community developing an open security system that promotes compatible products in a competitive marketplace," said Hilary Rosen, president and CEO of the RIAA. "It's not about the recording industry imposing a standard on technology companies."
SDMI poses a challenge to MP3, a prolific but controversial audio format that compresses music files at near-CD-quality sound for easy distribution over the Internet. Users love its convenience, but the RIAA says the technology allows for massive music piracy. The RIAA is calling for more security in the new format.
Heavy hitters AOL, AT&T, IBM, Lucent, Microsoft, Matsushita, RealNetworks, Sony, and Toshiba support the initiative, as do Liquid Audio and AT&T's a2b music, which already offer proprietary music platforms, the RIAA said.
"There's a misconception that the industry is against technology," said Nick DiGiacomo, vice president of electronic markets at Scient and a consultant to the RIAA for the initiative. "The industry has been afraid to license [music], because as soon as it gets out into the MP3 format and distributed, boom, it's gone. There's no way to get the royalties."
DiGiacomo said the SDMI will enable existing solutions like Liquid Audio, a2b, or even MP3 to work with each other. "MP3 is a great format."
But MP3 proponents said the RIAA is too late in the online music game, and that SDMI is vaporware, or rather, a "VaporSpec." "They don't have anything yet," said Michael Robertson, president of Z Company, which runs the MP3.com Web site devoted to MP3 files and news.
"They'll create the next Betamax no one will want," said Gene Hoffman, CEO of online record label GoodNoise, which sells songs for download in the MP3 format. "Between now and [next fall], MP3 will just get bigger."
"This isn't about piracy. It's about the RIAA not wanting to give up control over the distribution mechanism and infrastructure," Hoffman said.
DiGiacomo said the record companies are interested in being able to charge for music while allowing for a certain amount of copying or listening as well.
Rosen said the Fraunhofer Institute, a holder of MP3-related patents, has expressed interest in working on the initiative. "Our hope is that this initiative will develop ways that will allow artists ... to secure their music with MP3," Rosen said.
The RIAA "did this in the right way," said Mark Mooradian, analyst with Jupiter Communications. "If [SDMI] can get everybody on board, they will be able to secure music." He also said they probably won't wipe out MP3.
Another SDMI supporter -- Diamond Multimedia Systems -- is in the midst of a lawsuit with the RIAA over one of its handheld devices. Diamond's portable Rio player can download MP3 files from from a PC.
Rosen said there will be no impact on the court case. The RIAA sued Diamond to stop them from shipping the player last October, claiming the device could help to ruin the marketplace for digital music distribution. But the RIAA lost the case for an injunction last October, and the player shipped.
Earlier this month, Diamond countersued the RIAA for antitrust violations and unfair business practices.
A hearing, as yet unscheduled, will probably occur in the spring, with a trial to take place by fall, according to Ken Wirt, vice president of corporate marketing for Diamond. But Diamond supports SDMI because the company wants its player to be compatible with any future specification that is developed.
"The important point is not to prejudge the solution," Rosen said. "We are not interested in locking up music forever. We are interested in providing access" to consumers.
