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November 30, 2000

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Asiaweek Time Asia Now Asiaweek technology

OCTOBER 1, 1999 VOL. 25 NO. 39

Face Off: Singing Out of Tune
The music industry meets the Internet, pitting record labels against fans, bands, and pirates. Its new weapon: SDMI

When the artist formerly known as Prince strode onstage at a 1996 awards ceremony with the word "slave" written across his face in protest at his recording contract, he defined the antagonistic relationship between musicians and their record labels. And left no doubt about who was the master.

Now the bootleg is on the other foot. The labels have held the whip hand by controlling the production of a CD from the recording session to the record shops. But a chance advance in technology threatens to shift the balance of power back to the fans and the bands - leaving the majors in fear of losing control of the $40 billion-a-year industry.

In 1987 while Prince was singing about a "Sign O' the Times," the times they were a changin'. German software engineers invented a compression format to squeeze huge digital music files down to a manageable size - without sacrificing sound quality.

With German precision, they named it Motion Picture Experts Group-1 Audio Layer 3 - probably never expecting its lack of catchiness would be an issue. Then came fast desktop PCs and the World Wide Web. By 1997, U.S. college students were using the technology to copy songs from their CD collections and swap them online. Suddenly MP3 (as it is thankfully now abbreviated) was the hottest acronym in town.

But here is another one that the record labels hope will replace it: SDMI, short for the Secure Digital Music Initiative. The problem with MP3 is piracy. Anybody with a computer can make perfect pirate copies of CDs and post them online for others to download. After months of pow-wows between music and computer industry bigwigs, SDMI announced plans for a piracy-proof way of delivering music online.

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The labels will add a digital "watermark" to future music releases that will allow the track to be copied only a limited number of times - stopping rampant piracy. Any playback or recording device that does not comply with the SDMI standard will be unable to play watermarked songs by big-name artists.

The still-sketchy outline of SDMI gives a knockout punch to MP3. Initially the recording industry tried to kill off MP3 by having the first players declared illegal. It lost in court and generated enough publicity in the process to cement MP3's place as the de facto standard - beating out formats such as Liquid Audio and a2b music, which already deployed encryption.

The SDMI framework is format-agnostic. It will work with MP3 or any other format, with the sole aim of making online music downloads secure and ensuring artists get paid. Today's 20-24-year-olds, the labels claim, are buying a third less music than ten years ago - and MP3 piracy is the cause. Rubbish, say critics, who charge that the piracy issue is a smokescreen being used by the labels to maintain their chokehold on the industry. Piracy, they claim, actually increases sales. The most pirated song on the Net at the moment is a track by The Offspring - whose CD has been one of the year's top sellers. When Amazon. com offers free MP3 downloads of a song, it sees sales of that artist's album rise.

What the labels are really worried about is not illegal copying but artist emancipation, say SDMI's opponents. At a recent digital music conference in Los Angeles, Eighties popster-turned-music technology pioneer Thomas Dolby foretold of a future where the talent would get an 80% cut of sales, instead of today's 15%. "I could see myself five years from now taking bids from a half-dozen recording companies [to] see what they could do for me," said Dolby.

The Net can free musicians from their shackles, a cheap, instant distribution system enabling performers to reach their fans without the need for a record label to manufacture and market CDs for them. SDMI is one way the majors are trying to stay in the game. Some labels are also demanding eternal ownership of their talents' Web addresses.

And Prince? He was last seen ranting about the dangers of using the Internet and threatening legal action against his own fan sites. There's no pleasing some people.

Where to get your fix of digital music

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