Why MP3 matters
by Glyn Moody
Thursday 2 August 2001
An apparently peripheral music technology is central to the future of the Internet
Last week's feature described the latest developments in the online music scene. But one major player barely mentioned was Microsoft. Following a by now familiar pattern, the company woke up to the potential of digital music formats late, and by the time that it launched its Windows Media Audio (WMA), MP3 had already become the de facto standard.
However, just as with Web browsers, the existence of a market leader did not daunt Microsoft, which has plugged away at its own standard, using its financial might and desktop dominance to forge a credible online music strategy.
This has succeeded to the point where the market is at a very interesting juncture, with WMA now the only serious rival to MP3. Although the recording industry pledged to come up with its own alternative as part of the Secure Digital Music Initiative (SDMI), this has proved an embarrassing disaster.
The extent of the music industry's disarray was demonstrated by the fiasco of the HackSDMI challenge. After the SDMI watermarking technologies were defeated, the record companies panicked and attempted to censor all discussion of how they were broken That a supposedly secure format could be cracked was probably unavoidable, but the crass handling of the affair was not.
With the SDMI no longer a credible option, WMA's chances look even brighter. Significantly, Microsoft's stance towards the MP3 format is shifting. At first it seemed that Windows XP would not offer the ability to rip (convert) audio CDs to MP3 format, only to WMA. MP3 ripping will now be available, though only as paid-for third-party add-ins.
Microsoft may be making minor concessions here in part because of the recent antitrust appeal judgement. But it seems more likely that Microsoft is more relaxed about MP3 because WMA is beginning to catch on. Another factor is Microsoft's recent agreement with Pressplay.
Pressplay is yet another attempt by music giants, in this case Sony and Universal, to come up with an online music service. Part of the deal is that the WMA format will be supported. It seems that an insistence on WMA was the rock on which crucial negotiations between Microsoft and AOL foundered.
According to what is claimed to be an e-mail from within AOL management, an agreement for AOL's client software to be bundled with Windows XP was close. This would have been an extension of the previous deal between the two companies, signed in 1996, that bundled AOL's software with Windows 95 in return for AOL backing Internet Explorer over Netscape Navigator.
It was this agreement that effectively sealed the fate of Netscape. But this time AOL did not want to acquiesce so readily. Perhaps it recognised that at stake was the next key area earmarked for Microsoft's conquest: online music. Thanks to AOL's acquisition of Time-Warner, this is of keen interest to the company, and not something to be handed to Microsoft lightly. AOL has already made its first moves in this sector with Musicnet working with Microsoft's streaming rival RealNetworks.
It is also worth noting that some time ago AOL bought Nullsoft, the company that produces the hugely popular MP3 player Winamp (though this also supports WMA). In short, online music is likely to be the market where Microsoft and AOL clash most directly and violently. This is why an apparently peripheral technology like MP3 is in fact central to the future of the Internet.
