e.Digital Corporation (fka EDIG)

[Tinroad]

DataPlay gets in line to replace the CD
BY DAWN C. CHMIELEWSKI
Mercury News
http://www.siliconvalley.com/docs/news/ptech/datapl080901.htm

To hear some in the recording industry speak, the new music format from DataPlay will turn audio CDs into so many shiny drink coasters and flash memory cards into a digital flash in the pan.

DataPlay has developed an optical disc that's the size of a postage stamp -- but holds a stunning 500 megabytes of data, or about 11 hours worth of music in compressed format. And it's expected to cost $5 to $12 for blank media: a fraction of what consumers now pay for flash memory cards that hold a mere 60 minutes of music.

The first portable players, from Samsung, Toshiba and Sonicblue, maker of the Diamond Rio, should reach stores in time for the holidays. And three of the five major record labels -- Universal Music Group, BMG Entertainment and EMI Recorded Music -- plan to release recorded music on DataPlay discs.

``In the pantheon of technologies that have lined up to replace the CD, these guys are in the lead,'' said Talal Shamoon, executive vice president of InterTrust Technologies, a rights-management company in Santa Clara that supports the format. ``There's been a bevy of things, like MiniDisc, that have never quite stuck -- Here you've got the light fantastic. These things are going to kill. These things could be the next Walkman.''

Like Sony's gum-like Memory Stick, the DataPlay disc is a versatile repository of all things digital. It will support a mixture of content, whether it's music, digital photos, ebooks or Excel spread sheets, for that matter. And it will play in an array of compatible portable devices, from portable music players to digital cameras to handheld computers.

Unlike rival portable formats, such as flash memory cards, DataPlay's discs are cheap enough for record labels to press in massive quantities -- making it a fine medium for digital album releases. And there's space for additional content, like new music videos from, say, Blink 182, the tour calendar or exclusive interviews.

Labels can even include previous releases from the same group, which the consumer can sample and ``unlock'' through a quick online purchase. No need to return to Tower Records to buy an earlier album or wait for a lengthy download.

``Whenever an artist comes out with a hit, it sells back catalog,'' said DataPlay president Steve Volk. ``It's a huge source of revenue for record companies -- selling back catalog.''

DataPlay's compact size, its vast storage capacity and its novel ability to continue selling music to the fan, long after the initial purchase, has won the endorsement of record labels like Universal.

``This has the potential of being a major format,'' said Larry Kenswil, president of Universal Music Group's eLabs, the e-commerce division of Universal, which invested early in DataPlay.

DataPlay will be just one of an array of new portable players vying for consumers' time and money this fall.

Iomega will update its HipZip player with a new, 100-megabyte removable disc that's the size of a quarter -- and can hold up to two hours of MP3s. Sony's MiniDisc, which stumbled at its initial launch, will be reintroduced with removable discs that sell for $2 each and hold 80 minutes of music.

And that doesn't take into account new versions of popular MP3 players from Rio, Compaq and Nomad with use flash memory cards.

Whether DataPlay will achieve its lofty aspirations -- of replacing the compact disc -- seems a long shot. Right now, the portable digital audio market is tiny, with 1.4 million players shipped in 2001, according to research firm IDC. That number is expected to grow to 11 million by 2005. That's puny compared to the number of CD players in the home -- 700 million, not including the CD-ROM drives found in every PCs.

``CDs are still cheaper. And people still do burn CDs. You've seen those spindles at Fry's -- they're dirt cheap,'' said Bryan Ma, an analyst with IDC. ``DataPlay still isn't at the point where you can throw it away.''