Best Of '99: Record Labels Plan Internet Delivery Test

In six-month trial, 1,000 people in San Diego will be able to download major-label albums and burn them onto their own CDs.

[Editor's note: Over the holiday season, SonicNet is looking back at 1999's top stories, chosen by our editors and writers. This story originally ran on Monday, Feb. 8.]

NEW YORK — A thousand Internet users in San Diego will get a glimpse this spring of what might be the future of the music industry.

The five major record companies announced Monday (Feb. 8) that they will join with computer-industry giant IBM in trying out a new way of delivering full-length CDs to consumers via the Net.

During the six-month trial, participants using high-speed cable modems will be able to pick from a selection of 2,000 albums and hundreds of singles through a prototype online music store.

Buyers will download music and album art to their computers at a speed of about three minutes per CD. Then they can burn the music onto a CD — using a burner provided by IBM and the record companies — and print out the art.

The project "is the logical next step in embracing the Internet," said Al Smith, a senior vice president of Sony Music, at a press conference at the Waldorf-Astoria hotel here. Smith said new technology developed by IBM — EMMS (Electronic Music Management System) — will allow "thousands of recordings to be easily accessed, closing the gap between artists and consumers."

EMMS allows record companies to limit the number of copies that can be made and to digitally watermark the file, according to Rick Selvage, a general manager at the computer company. The digital watermarks theoretically will enable companies to trace the source of unauthorized copies.

Still, the system won't be completely secure, argued Michael Robertson, president of the popular MP3.com website. He said consumers could convert music easily from their newly burned CDs into the MP3 format and distribute it freely, bypassing the system's copyright protection scheme.

"Any criticism that people have of music with no security applies" to EMMS, Robertson said.

The major record companies — BMG Entertainment, EMI Music, Sony Music, Warner Music Group and Universal Music Group — have been largely critical of the MP3 format, which allows the relatively quick transfer of near-CD-quality music files via the Internet. The labels have complained that the format allows for unauthorized duplication of copyrighted material.

In December, the major labels jointly announced the Secure Digital Music Initiative (SDMI), a collaborative effort to establish a standard for copyright protection for online music transmission. Paul Vidich, an executive vice president at Warner Bros., said the IBM project is "an example of how SDMI will work."

EMMS will work with a number of delivery formats, including Advanced Audio Coding, which uses less compression and therefore offers better sound quality than MP3, Ed Downs, an IBM employee who helped design the system, said.

It will be up to individual record companies to decide which format they use to deliver music, he said.

The record companies did not say which artists will have records available during the trial, slated to start sometime this spring. But to demonstrate the system for reporters Monday (Feb. 8), a copy of the Dave Matthews Band's 1996 album Crash was downloaded and burned onto a CD using EMMS.

The record companies handed out free CD copies of Crash and the Beastie Boys' Hello Nasty (1998) that they said were made the same way. The Beasties, avid proponents of MP3, have clashed with their label, Capitol, over MP3s they posted on their own website.

Larry Kenswil, executive vice president of Universal, said, "Our immediate impression is that artists are eager for this sort of thing."

IBM will recruit about 1,000 San Diego subscribers to Time Warner Cable's Roadrunner program, which provides high-speed Internet access through cable lines, to participate in the trial program. Initially, 1,000 albums and several hundred singles will be available for download; eventually, 2,000 albums will be available.

After the initial six-month trial, a "narrowband" trial will allow consumers to use standard telephone modems to download singles and possibly albums, according to Downs. IBM and the record companies have not decided whether that trial, most likely with another 1,000 participants, also will be limited to San Diego.

IBM's Selvage said EMMS will "rapidly create a new competitive channel for the sale of music."

Mike Farrace, vice president of worldwide marketing at Tower Records, said the retail chain is interested in the potential effect of the new delivery system. "Our attitude at Tower is, 'Bring it on, let's go,' " he said. "We've all been anticipating the impact of digital distribution on record retailing."

But Farrace said "there's not a big demand" from consumers for buying downloadable music.

"There's a big difference between getting something for free and paying for it," Farrace said. "If I had enough guys standing on street corners giving out free CDs, I could duplicate the MP3 phenomenon."