According to the $40 billion-a-year record industry, music piracy is a brushfire which must be contained. While the issue of piracy has entered the mainstream with flashy Newsweek cover stories and high-profile condemnations from bands like Metallica, the recording industry and its powerful lobbying arm, the Recording Industry Association of America (RIAA), are working behind the scenes to plan the future. The industry is teaming up with heavies in the digital music world, like Seattle companies RealNetworks and Microsoft, to lay the foundation for a new landscape--one that the record industry will define. The Napster brushfire is being smothered.
In order to understand the significance of the recording industry's efforts, a few terms and concepts must be explained. First you need a digital "player," which can be downloaded from the Internet. The player is software that translates a standard audio CD into a music file (like an MP3) that can be read by your computer. Next, after the music is digitized and housed on your computer, the player can read it. The player is like a VCR, and the MP3s are like videotapes. The music files can then be traded over the Internet through e-mail or networks like Napster. "I got about 1,000 songs right now," says Kevin.
Forester Research estimates that approximately 70 percent of homes will have high-speed Internet connections by the year 2004, making listening and trading digital music extremely easy. It's the potential widespread use that has music industry executives quaking in their boots.
"The Internet has a lot to offer, but we want to make sure we're not taken advantage of," says RIAA Communication Director Doug Curry. Realizing that the cat is out of the bag, the RIAA wants to ensure that in the future, digital music isn't so easy to exploit. The RIAA's strategy is being implemented in two ways: Control the digital players, and control the next generation of music files. Enter Microsoft and RealNetworks.
Phase 1: Control the players.
To listen to digital music, users need a player. Microsoft and RealNetworks are designing players with digital rights management technology (DRM). DRM prevents songs "that are not legitimate" from being played, says Secure Digital Music Initiative Executive Director Leonardo Chiariglione. The technology would create a situation similar to putting a copied tape in a VCR, only to have the VCR spit it back out. Currently, it's too early in the game for Microsoft and RealNetworks to exclude pirated music from their players, but they're laying the groundwork. Microsoft and RealNetworks are also teaming up with electronics companies like Philips to put DRM technology in portable commercial players. The record companies are investing cash in the players "to further solidify relationships and foster mutual marketing and promotion opportunities," says the RIAA website.
Phase 2: Control the music.
The RIAA is trying to do this in two ways. One is a technological quick fix to control the CDs themselves. The industry is pushing a technology called watermarking, which puts an encoded identifier in each song on a new or re-released CD, preventing it from being copied or traded.
The second and more profound way the RIAA wants to control music is to define and engineer the way future music commerce operates. Many of the major labels, like Sony and Universal, have begun to license their music inventories of new and old songs to Microsoft and RealNetworks, the big boys in the Internet world. (Microsoft 1999 revenues reached $19.7 billion, and RealNetworks reported $131.2 million.) In exchange for the label licensing agreement, Microsoft and RealNetworks are building online music catalogs, where users can buy and play songs with the recording industry's blessing. When the new Britney Spears record comes out, go to Microsoft.com. Want to hear that old Led Zeppelin album? Go to RealNetworks.com. The labels are offering their inventories so they can manage the way the songs are bought and sold.
So will the RIAA's strategy to contain the piracy brushfire work? By controlling the digital player and future music, the RIAA is betting that the sheer market dominance of their licensed music will in effect marginalize the competition. "We believe customers will prefer to do what's legal," says Microsoft project manager Geordie Wilson.
Kevin acknowledges that the Internet dominance of Microsoft and RealNetworks will have an effect on the mainstream computer user. "The more things are in front of your face, the harder it is to get to the good stuff," he says. And that's exactly what the RIAA's efforts are geared toward--the mainstream user. The music industry envisions a digital one-stop music world synonymous with Blockbuster video stores, where the bulk of the users shop pleasantly, totally unaware that they could download digital music for free. With the wide-reaching arms of Microsoft and RealNetworks, this constricted world is being built today.
