e.Digital Corporation (fka EDIG)

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Summary of MP3 Summit - Day 1
(Day 2 to be posted when available)

Ready to receive your music wherever you go?

The time isn't quite here yet, but it's getting closer every day.

That seemed to be an overriding message on Day 1 of the fourth annual MP3 Summit.

With the cost of wireless music delivery dropping, infrastructure expanding and the major players listening to the needs and wants of consumers, truly affordable music for all is not far off.

In fact, in his talk on "The Future of Wireless Entertainment," Webnoize analyst Ric Dube predicted 2006 to be the year when it all comes together. That's when the cost of delivering a 4MB file over a wireless network at speeds of 114kbps or greater should drop to about 27 cents, compared with today's $11.04.

Senior Analyst P.J. McNealy of research firm Gartner2 followed Dube by noting that consumer behavior doesn't change overnight. People have to be educated about the benefits of receiving their music via cell phone and other portable devices -- much as they had to transition from radio to TV to the Internet. But the fact that only about 2 percent of U.S. households have purchased music online is nothing to worry about, he said. It just shows there is plenty of time for manufacturers to learn about their needs, then give them an array of mobile choices.


Mobilizing According to Michael
In his keynote address, "Mobilizing Your Music," MP3.com CEO Michael Robertson focused on three main objectives: music, the industry and mobility. Noting the downward turn in mass communications, Robertson pointed out the increasing trend toward specialization and point-to-point service. "From instant messaging to Tivo," he said, "consumers want to have what they want, when they want it."

Robertson called for adding a new dimension to the music industry. With a marketing plan calling for quality, ease, cost, availability and convenience, Robertson encouraged his colleagues to "do more with music." His plan includes: matching the service to the environment, focusing on "what's in it for the consumer" and matching the service to the device. He was quick to point out that the use of the telephone as a music devise is still premature: "The future of wireless is not here yet."

Noting that music fans want a large amount of content, in one location and with easy accessibility, he demonstrated the benefits of MP3.com's new PluS service, including shorter sessions organizing music online, frequently refreshed content and easy purchasing music.

Moving on to another hot musical topic -- copyright law and the Internet -- was David G. Post, associate professor of law at Temple University. In his keynote titled "His Napster's Voice," post discussed the U.S. legal system's view of copyright law as "Instrumentalist." Creators are given incentive to create by ensuring profit via copyright. Post argued that the Internet, a realm that ensures no real copyright protection -- and which by the Instrumentalist view offers no incentive to create -- has influenced an "unprecedented outpouring of creative activity." Thus, the Internet has proved that there are other ways to stimulate creativity and that the legal system's view of copyrights does not carry over to the Internet.

Post also addressed "the Napster problem" and how he felt it could be solved. He argued that online "smuggling" of copyrighted material such as music could only be regulated when net citizens believed it in their own best interest to do so. One suggestion he offered was creating an arena of reciprocity, such as making Napster source code publicly available.

Susan Kevorkian, associate analyst for the Consumer Devices Group at IDC research, next amplified the earlier speakers' messages on wireless delivery. Her figures show that with an estimated 4.3 million compressed audio players in the market now growing into an estimated 17.9 million units in 2005, the audio player market shows much potential. But current constraints, such as the state of existing wireless networks and the lack of overwhelming support for wireless devices, must be overcome.


Manufacturers are Listening
The following panel, "Going Mobile," offered proof that the big guys are doing what it takes to assure we're all wirelessly connected in our wheels.

John Slosar, product development director of Visteon, said his firm is working now on the high-capacity car players scheduled to debut in the 2002 model year for major automakers such as Ford and GM. The key to assuring consumer acceptance is "pushbutton simplicity," meaning the products will be as easy to use and understand as a today's typical in-dash CD player/radio. Sensitive to issues such as driver safety, he envisions hands-free players that respond to the driver's voice commands for genre, artist and track.

A glimpse into Visteon's vision of the future: a red Mustang convertible outside the Summit auditorium, outfitted with the company's new MACH MP3 Jukebox. Powered by PhatNoise, the jukebox's heart is a removable 10GB storage cartridge that connects to your PC via USB docking station. The cartridge is then inserted in a trunk- or globe box-mounted interface and controlled via the of in-dash faceplate, which also contains an MP3/CD player and AM/FM stereo radio.

Fellow panelist Paul Burlingame, senior product manager for Qualcomm's BREW (Binary Runtime Environment for Wireless) initiative, again stressed that giving consumers a product they can understand is paramount. And Bryan Biniak, COO of YourMobile.com, told an rather amazed audience that some 60,000 to 70,000 visitors a day download cell phone ring tones from the site -- some buying four or so at a time for up to $5 each. Because ring tones are an "established pattern," consumers understand and are willing to pay for them, the panelists concluded. In the near future, buying streamed and downloadable music wirelessly will become a similar pattern, they predicted.

Ware It's At with Wireless Products
The first in a series of "Ware It's At" demos, titled "No Wires Allowed," focused on technologies that facilitate the transfer and enjoyment of digital audio untethered by restrictive wires.

An affordable offering from Akoo drew the most enthusiasm from the auditorium crowd: a tiny $29 plug-in that enables portable devices to broadcast MP3s to an FM radio -- from clock radios to car stereos. Akoo representatives expect to license this technology to manufacturers to become an internal component in the next generation of MP3 devices.

*CD's George Searle presented his company's service of identifying any song played on the radio via *CD's fingerprinting technology. Sensate's cutting-edge wireless song-transferring application showed how promising future technologies like Bluetooth and 802.11 have been. And MP3.com's own Shawn Conahan demonstrated the integration of MP3.com applications like My.MP3 storage and Music Greetings into Qualcomm's BREW mobile phone technology.


Moving Beyond the PC
McNealy led the panel discussion "Beyond the PC," which focusing on the future of the PC and the emerging trend toward wireless devices. The panel of industry notables included Jean-Marc Matteini, GM of Philips Internet Audio Group; Dennis Tevlin, president and CEO of iObjects; Simon Hossell, CEO of Future Sound Technologies; and Todd Moore, director of product marketing at RioPort.

They discussed a number of reasons for the movement away from the PC: everything from the PC's susceptibility to hackers to the desire for new ways of enjoying music. While most agreed on the eventual move toward devices, Tevlin said the notion of moving beyond the PC is still very early in the adoption process. Noting the complication and expense factor associated with devices, he concluded that devices are best suited for extending the PC's functionality.

Also discussed were industry developments since last year's MP3 Summit. McNealy said the industry is a step closer tow working out agreements with the big five record labels in attaining access to their highly coveted content. While a year ago the big five avoided digital technology, all agreed that they now seem to be testing different business models. All were optimistic that the labels soon will provide the industry's missing link: music content.


Music Distribution's Future
In the next presentation, John DeRose, vice president of business development at MP3.com, compared and contrasting the current state of online and offline music distribution. He said recent technological developments are giving consumers what they want: ease of use. With consumers placing significance on availability, access and convenience, DeRose concluded that the next step is wireless content. He attributed this to the fact that a large number of Americans own cell phones, the data network is already in place and the largest wireless carriers are investing billions in improving their infrastructures.

Supporting DeRose's claim was Robert Tercek, president of the applications and services division of Packet Video. He backed up his belief that the future is in wireless with numerous quotes from industry notables. He described in detail the enormous momentum in the telecommunications industry. As such, he laying out his predictions for the future of wireless. He noted that with the wonders of wireless, "just about everything will eventually be connected to the net".

Also, he said, data devices will eventually outnumber PCs. Further, "With PC growth plateau-ing, mobile devices will be the next growth.


What Happened to the Revolution?


The day closed with some much-needed comic relief. A panel of quick-witted veterans from the dot-com frontlines of last year shared their war stories in a "pull no punches" discussion moderated by Robertson.

iCast, Napster, Scour and other dead-in-the-water music companies were represented, as well as a brave dramatic foil provided by Karen Allen from the RIAA, who took a lot of heat but noted during introductions that she was the only one on the panel without the word "formerly" after her name.

The panelists topped each other's accounts of bloated expenses, fatal decisions and lessons learned. Heads nodded in somber agreement as Scour's Travis Kalanick summed things up most incisively: "A lawsuit will squish you."

http://stations.mp3s.com/stations/204/summit_news.html