If the pundits are right and MP3 leads to a revolution in the music-recording industry, will the technology's real-time cousin spell curtains for RealNetworks and Microsoft?
At first blush it might seem that way, given the runaway success of Nullsoft's Shoutcast -- the high-quality streaming MP3 server that more or less allows anyone with a computer and a modem to launch his own digital radio station.
But Nullsoft co-founder Tom Pepper said his company isn't about to trouble the Seattle-area heavyweights anytime soon.
"We're taking more of a micro-casting approach," Pepper said. "Our server architecture is built to handle a distributed environment and is not really directed at people throwing out 5,000 streams.
"We don't have the business infrastructure to handle the demand on something like that. We're focusing on shaping what's happening on the smaller side."
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This boutique strategy has created a mighty ground swell of support for Pepper's small company, located in Sedona, Arizona. Nullsoft created Winamp, the de facto standard MP3 player. Though not quite a household word yet, MP3, or Motion Picture Experts Group, Audio Layer 3, is prized among audiophiles and pirates, who love the format's high sound quality and small download time.
Meanwhile, RealNetworks (RNWK) has invested years of development and millions of dollars on a streaming technology that performs in what senior vice president Phil Barrett called the "dirty environment that is the Internet."
But some say the same proprietary streaming technologies that are the foundation of the Microsoft NetShow and RealNetworks players may be their undoing.
Nullsoft's popularity can be attributed in part to MP3's near-CD quality sound, but also to the fact that the software is built atop an open, standardized compression technology.
After less than a year on the Net, more than 10 million consumers have downloaded the Winamp player, a number that increases by 120,000 each day. By comparison, after four years in the game, RealNetworks currently claims about 50 million registered RealPlayer users. Microsoft (MSFT) reported in October that music fans were downloading its Media Player at a clip of 70,000 copies per day.
The 270KB shareware Winamp program has spawned a community of digital audio engineers who, at the time of this writing, have created 98 plug-ins and 1,215 "skins," or custom interfaces, for their players.
And since the company released Shoutcast on 31 December, hundreds of MP3-streamed channels have sprouted on the Net. So have search tools such as MP3Spy to index and sort them.
With its staff still in the single digits, the company has cross-pollinated community-focused homepage shops such as GeoCities (GCTY), Tripod (LCOS), and theglobe.com (TGLO) with Linux, Mozilla, Apache, and other open-source projects.
Though piracy and MP3 are often mentioned in the same breath, independent bands wanting a cheap and easy way to promote their music may prove Shoutcast's best bets for distribution. RealNetworks has established a big business in that space, but the Shoutcast server is free for not-for-profit use, and commercial users pay only US$200 per machine.
The Shoutcast server could allow labels to host their own radio shows or promote new music �- even live shows �- in real-time, digital hi-fi.
Though a single Shoutcast computer can support only about 30 listeners, server chains can be built to support hundreds, even thousands more. But whether or not Shoutcast and streaming MP3 will be able to scale, or support, larger and larger audiences in the congested environment of the Internet remains to be seen.
"In the Internet space, it's not about the quality of the codec [coder-decoder], but the quality of the delivery system," said Barrett.
Longtime audiophile Tom Whore runs WSMF, a round-the-clock Shoutcast radio show, out of his home in Portland, Oregon. He broadcasts old-time radio shows, jazz, hip-hop, spoken word, and other tidbits over his high-capacity digital subscriber line. Whore supports nine simultaneous listeners at 24Kbps at 22kHz.
"I have eight inputs into it, and I talk, play music, mike in TV.... You can plug in a record player, tape deck, microphone, and eight-track mixer," Whore said. Since the audio is encoded in real time, he said he sometimes likes to creates collages of sound.
And how does Shoutcast compare to RealNetworks?
"Sonically, MP3 blows it away �- a 24Kbps MP3 stream beats out a 32Kbps RealAudio stream. And Shoutcast is free," he said.
Shoutcast users may one day be able to broadcast to a larger audience with an MP3-powered version of IP Multicast. A smart networking technology that now exists only in scattered corners of the Internet, IP Multicast relies on specialized routers to distribute and replicate data streams to their destinations with only one source stream.
IP Multicast supports the mass delivery of MP3 files, a videoconference, or a multimedia presentation as a single copy that travels alone over the network. Only a handful of Internet service providers presently subscribe to the MBone -- IP Multicast Backbone on the Internet -- that supports IP multicasting over the Net.
"It's only the ISPs with the biggest geeks," said Pepper.
The next version of Winamp, expected this week, will include some multicasting features, but Pepper said that the functionality will remain unused without multicast support in the routers.
In its current state, RealNetworks' Barrett said the Internet is simply not set up to deliver steady streams of high bit-rate audio, and that Nullsoft faces a big challenge in scaling up its system.
Further, since MP3 was never designed as a streaming technology, it is more challenging to transmit over the Internet without packet loss and the accompanying sound gaps and distortion.
"I know where these MP3 guys are coming from with multicasting," he said. "We thought that was the solution three years ago, but then went through the learning curve and came up with our solutions."
Another major roadblock to streaming MP3 music over the Net is the long-arm of the Recording Industry Association of America. The RIAA has pursued legal action against companies and individuals creating and working with MP3. Whore discovered this when he tried to set up a legitimate Net-based radio operation.
"For a small person doing this, it is nearly impossible [to get legal rights] since seven or eight different organizations want money," said Whore.
He said groups that represent music publishers, like the Harry Fox Agency, demand anywhere from US$100 to several thousand dollars per year to play their copyrighted songs over the radio.
"Basically, they said, if you're a small company, we'll see you in court."
The situation could change later this year when the US Department of Commerce establishes licensing rates for Net broadcasters under last year's Digital Millennium Copyright Act. By creating a licensing structure for Net-based broadcasts, the law is expected to separate major, commercial players from small-time operators.
"We are in active discussions with the RIAA and they have been very supportive of Shoutcast's ability," said Robert Lord, director of online strategies at Nullsoft. "They see this as a positive thing, and we intend to work with them to simplify the licensing process.... By us working with the RIAA we can help micro-webcasters flourish."
In the meantime, the number of MP3 users will continue to grow like weeds throughout the Net, playing whatever they want, whenever the moods strikes them.
"At this moment, I'm just hanging out there with the pirate flag on," said Whore.
