At all major industry events, there is buzz and then there is buzz.
At last week's Spring Internet World '99 in downtown L.A., online music fell solidly into the latter category.
Companies hoping to conquer the exploding field of digitally downloadable music were engaged in a game of aggressive one-upmanship.
With more than 40,000 attendees on hand, they clearly saw the sprawling trade show as an opportunity to pitch their competing products.
The opportunity was even better because the show took place in Los Angeles, which along with New York is the nation's music capital. Virtually all major record companies have operations in L.A., and together they employ thousands here.
Depending how the record labels position themselves to exploit the digital revolution, they stand to either greatly increase their $11 billion industry, and possibly their market share, or run the risk of ceding control to the Internet companies.
At last week's show, Seattle-based RealNetworks Inc. promoted two very different deals that company executives hope will give them an edge, regardless of how the market finally shakes out. Last week, the company announced a partnership with IBM to create a new universal standard for sending music over the Internet. They are pitching it as a piracy-proof and music-industry-friendly alternative to the popular MP3 format. IBM also announced a partnership with Sony to develop yet another anti-piracy standard.
Hedging its bet, RealNetworks also announced its intended $75 million acquisition of Xing Technology, a leading developer and provider of MP3 software.
Meanwhile, Redmond, Wash.-based Microsoft Corp. unveiled its Windows Media Technologies 4.0 software, another standard for delivering music via the Internet. Microsoft executives touted it as a faster and better-sounding alternative to MP3.
AT & T; Corp. and a2b music jointly released their new and improved music player software, also promising clearer sounds and faster downloads than previous technology.
Also at the show, San Jose-based Diamond Multimedia Systems Inc., creator of the handheld CD player-like device that records and plays MP3-format music, released its next-generation product.
With so many entrants throwing their hats into an increasingly crowded ring, a shakeout is inevitable. Not surprisingly, executives from each of the companies expressed confidence that their particular approach would conquer the market.
"We believe that (RealNetworks') ubiquity puts us in the center of things," said company spokesman Steve Haworth. "We're working with the record labels through our partnership with IBM, and we're working with the independent artists that have embraced MP3."
RealNetworks also has 58 million subscribers that use its radio-like audio streaming software and its television-like video streaming software. That built-in audience, combined with the fact that the record labels have granted support only to the IBM initiative, led some attendees to speculate that RealNetworks would come out on top regardless of which direction the industry develops.
Microsoft is another major contender because its music download software has the features that both the Internet and music industries want namely, piracy protection, CD-quality sound and fast download times. However, the company generated industry ill will even before its product was launched at an April 13 party at L.A.'s House of Blues.
Most tech companies in the digital music niche are awaiting a set of copyright-protection standards to be released before plowing ahead with new software and hardware products.
Those standards are being developed by the New York-based record industry trade group, the Recording Industry Association of America, which plans to announce the standards this summer. The consensus is that without support from the record labels, the gatekeepers to popular music, any technology would be dead in the water.
But Microsoft plowed ahead without waiting for the standards to be set. By doing so, the company clearly got off on the wrong foot with the music industry.
Microsoft executives waved off concern about the current lack of industry support for its product.
"As a company that makes its living off of intellectual property, we share the music industry's concern over anti-piracy issues, but we also know that the music industry doesn't move as fast as technology," said Gary Schare, lead product manager for Windows Media Technologies. "We're on the RIAA committee, and we don't know how long it is going to take for them to finish (the standards). We have the technology ready and we want to get it to the consumer as soon as possible. This is a competitive industry."
MP3.com, the San Diego-based company touted as the largest clearinghouse of MP3 files online, did not have a presence at last week's conference. Some analysts speculate that MP3 will soon suffer a timely demise as more-secure alternatives arrive on the scene. But the technology's enormous grass-roots support means that it likely is here to stay, at least for awhile.
"We expect that whatever standard finally wins out will be a type of MP3 with a security wrapper," said Lorraine Comstock, marketing director for Diamond Multimedia. "All the companies here today are vying with MP3 almost more than they are vying with each other. That's what started the boom, and it will take a huge amount of effort to persuade its loyal fans to change their habits."
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