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12Jul2004 DJN-DJ THE SKEPTIC: Music Industry's Interoperability Headache

DJ THE SKEPTIC: Music Industry's Interoperability Headache
By Matthew Curtin
A DOW JONES NEWSWIRES COLUMN
PARIS (Dow Jones)--In its latest ads for its new DVD-based handycam, Sony is
quick to point out that one of the machine's advantages is that it records in a
format so that "you can share your films with everyone."
If only Sony took that approach to all its products.
A customer buying a Sony digital Walkman has no such luck, because it plays only
music digitized using the Japanese company's proprietary Atrac 3 technology.
So there's no point in buying a Walkman in the hope that it can play music
downloaded from Apple's iTunes musicstore, or the number of other online
retailers who use Microsoft's Windows Media Audio technology to digitize the
music they have for sale. But then Apple's iPod musicplayer can't player
WMA-encoded music bought from non-Apple stores either. And a musicplayer from
Philips or Creative won't play music encoded in the AAC format Apple uses.
The lack of interoperability of digital music standards mightn't be bad news
immediately for Apple or Sony, both of which have loyal consumer followings.
Sony is just trying to catch up with Apple, having belatedly realized music is a
great way to shift hardware, as the runaway success of the iPod has shown.
But for the music industry, it surely threatens to choke off what otherwise might
be a remarkable recovery in their fortunes that have been sapped so badly by
physical music piracy and the paranoia about peer-to-peer file-sharing.
Legal downloading of music is gathering a head of steam. Apple celebrated the
downloading of 100 million songs from iTunes at the weekend - admittedly helped
by special promotions - as it prepares to roll out its iPod mini internationally
in July. The launch was delayed because the company underestimated U.S. demand
for the machine.
The music companies themselves are getting to grips with their costs, which they
let get out of hand during the boom years of CD sales. EMI has arguably led the
way, but the decision by Universal Music to let the presidents of its DefJam and
Motown units go suggest the Vivendi subsidiary is also getting serious about its
cost base.
With the E.U. approving the merger of Sony Music and Bertelsmann AG's BMG unit
last month, the industry's rearguard action is starting to look more credible.
That said, the economics of digital downloading are such that it's only huge
volumes of online sales that are going to make a big difference to the music
companies fortunes, even as Apple and co. shift musicplayers.
It's here where the lack of interoperability is going limit digital downloading
to the enthusiasts, particularly when there such big holes in the music
catalogues offered online - compared with big music stores, specialist retailers,
or the peer-to-peer networks.
Music from The Beatles is notoriously absent from the official online retailers,
but so are several other big stars, particularly for customers outside the U.S.,
or fans of non-U.S. or U.K. artists. Independent labels are relatively poorly
represented, and there are slim pickings outside the pop-rock genre.
It may be time for the music industry to take the offensive by putting pressure
on hardware makers and software companies to agree common standards. That's no
doubt a tough idea for Apple to accept, as the uncontested leader in the sector
so far - though that's partly because it took the plunge by adapting its iTunes
software for PC use - but ultimately the only way the equipment makers and music
industry are going to both win out of digital downloading.
(Matthew Curtin has been a financial news reporter since 1990, and has reported
on international finance and business for Dow Jones Newswires - from South
Africa, Singapore and now Paris - since 1994. He can be reached at [phone]
or by e-mail: [e-mail])
(END) Dow Jones Newswires