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Media

Music and More…

‘MP3’ is as scary a buzzword in the music business as “blank tape” was 20 years ago, meaning that while the big moneymakers are trying to figure out how to stuff the genie back in the bottle, there’s already a culture thriving on it.”

–The Village Voice

BACKGROUND

Since the introduction of the MP3-format the music industry is desperately searching for ways to secure market share in the future of the music business.

MP3 allows compressing music (with loss of data) in such a way that transferring high-quality music over the Internet doesn’t require high bandwidth connectivity anymore.

Thus the Music Industry fears that through a distribution channel like the Internet the need for buying CDs to listen to music will be obsolete and therefore destroying the lucrative multi-billion dollar market the music market currently is.

On the other hand the consumers are more and more unwilling to pay the high price for music the Music Industry is asking for, especially since some of the artists started producing their songs on the Internet, too and MP3-files are easily available for free download (s. http://www.scour.net/).

On the Internet, music is currently the hottest issue. When Diamond Multimedia Systems Inc. (Diamond) announced the availability of their Rio Player (http://www.rioport.com/) the Recording Industry Association of America (RIAA) sued Diamond claiming that Diamond’s Rio player violated a federal copyright infringement law, the Home Recording act. Diamond’s Rio player is a portable Walkman-like device for playing MP3 music files downloaded from the Internet or recorded on a user’s home PC (At the end the court decided in favor of Diamond and Diamond started shipping Rio). In the meantime a total of at least three companies are offering “MP3-Walkman” and it seems that MP3 is gaining more momentum in larger stereo systems (I don’t know right now how many companies are planning or developing HiFi-like MP3-Players, but there are sure signs that most of the HiFi-System Producers are at least thinking in that direction).

In response to the threat posed by the MP3-Format and the appropriate players the Secure Digital Music Initiative (SDMI) Consortium adopted a specification for portable devices for digital music on June 28, 1999 .

This specification allows for securing music downloaded over the Internet.

PROBLEM

When we analyze the situation it comes down to only two – obvious – problems, which have to be solved:

  1. The Music Industry (Labels, Artist, etc.) want and deserve to be compensated for their work
  2. The consumers don’t want to pay the high price to the “Big Five” for the music they listen to

It seems that this problem is not solvable, but when we have a closer look at the Media Industry as a whole we can pinpoint areas where the consumer is not paying for the product: Most of the print magazines, commercial TV, etc.

In these areas a third party is actually paying for the products the consumer consumes by inserting advertisement into the product itself.

Music is a product which most of us want to consume without being disturbed by intrusive advertisement. This means that we have to find a way for a third party to pay for the music without inserting an ad into it (especially because one would need to actually insert the ad into every piece of music the consumers get).

AMP3.com is trying to do exactly this: At the beginning of every MP3-file there is a 5-seconds advertisement which helps AMP3 pay the artist (the artists get 2 cents per download) .

SOMEONE ELSE PAYS THE BILL

The solution for the problems would be to let someone else take care of the bill. The Air Travel Industry has a product, which could be the inspiration for the solution: e.g. Lufthansa’s “Miles and More”. The idea behind the “Miles and More”-concept is to get customers to use the service more often and get gifts for it; it’s kind of a “Golden Handcuff”, one ties the customer to the own company, service and/or products by offering credits for other services and products.

In our global and vastly competitive economy more and more companies are facing tough competition and have to distinguish themselves as well as their products from the competitor. In some branches (e.g. Tobacco, Nutrition, Financial, etc. Industries) getting new and/or young customers to buy the products becomes mission critical, especially in branches where brands don’t exist as a reason to buy a specific product.

So, why not try to solve the above-mentioned two problems by helping other industries?

DESCRIPTION

The basic consideration to “Music&More” is to make music payable by distributing foreign/outside products. To manage this a system has to be introduced in which a third-supplier offers a voucher to a new client bundled to a sold product (tobacco, beverages) or service (account opening). The customer can then exchange the voucher at “Music&More.

Here are some examples:

  1. At the opening of a new bank account at the Deutsche Bank every new client will receive a voucher for 500 minutes. On this voucher a unique serial number is printed. This serial number can be credited by the customer to his Music&More-account at the online-service of Music&More.
  2. Buying a Coca-Cola each client will receive automatically a voucher on 5 minutes music included in a serial number printed in cap/top. This means that the bottle has to be opened to get access to the number.
  3. Purchasing a pack of West every customer gets automatically 10 minutes in form of a serial number printed in the top of a cigarettes box.

Deutsche Bank, Coca-Cola and Westpark Tobacco buy the serial numbersfrom Music&More before they can be distributed with one of their products. It is not unthinkable that these companies only pay us for “minutes” that are actively up-loaded into accounts.

At the online-service of Music`n More the customer can exchange serial number and get it credited as minutes on “his” account. Then the client is able to pay for the music of his choice directly either on the Music’n More Website (maybe later at any other provider of music). The payment is deducted from his Music&More account by deducting the real duration of music.

It still needs to be clarified whether every minute has the same price. This can be done by an appropriate discounting structure.

At medium term each client having more than n minutes on his Music&More account will get a Music&More-credit card. With this credit card he will be able to purchase and pay music not only over the Internet but also at music loading stations (Sony intends to install such stations). On medium and long term this idea could be extended to films, too.

We also need to clarify whether Music&More offers each client the possibility to buy minutes directly at Music&More. The main focus at structuring the MnM’ product is to offer the client music at a lower price at MnM than he had to spend when buying it pre-packaged with money. It is also possible to think about offering products like a Music&More credit card where customer receive a minute for every $x charged.

BENEFITS / DRAWBACKS

A major part of the above mentioned issues can be easily solved. The advantages for the music industry are evident:

  1. the music is being paid
  2. the ways of distribution is shorter and more direct (web)
  3. professionally making illegal copies of music doesn’t pay off anymore
  4. artists without label will be enabled to afford the distribution of their music

Also the client has considerable advantage:

  1. he will not have to pay directly for the music
  2. cost of music actually bought by the customer himself is less than buying it pre-packaged
  3. the choice will increase as not only labels but also independent artists will offer more and more music

Advantages for the “Third-Party” are evident, too:

  1. to gain new clients – most of all target groups of younger persons
  2. an interesting non-monetary way to offer advantages after consumption.

In this way different revenue streams will be opened to Music&More

  1. sale of minutes to “Third Parties”
  2. sale of music and the profits margin between the cost of music and the price paid by third parties.
  3. Minutes sold but never exchanged: approximately 15-20% of all minutes ever sold.
  4. Float of minutes in accounts but not actively exchanged yet
  5. additional but different sources of revenue by licensing to the film industry

A disadvantage for Music&More could be seen in the immense investment needed to convince the music industry as well as “Third-Parties” of this concept. It may be necessary at the beginning to give a considerable quantities of minutes to Third Parties and to users as a gift.

Furthermore the music industry needs to be persuaded that this concept is one of the few concepts that will be able to limit illegal copies.

Music industry is heading without previous experience into a new area: IT. In this area each effort of protecting “Intellectual Property” by means of technology is being stopped by exactly the same means.

The 80ies industry of computer games is a symbol for this trend: each copy protection was cracked within only a few days after the release of the software. The standard suggested by the SDMI is a copy protection and has therefore to be made publicly available. So it can be expected that this standard will be cracked in a very short time, too. By the time this is being written, there is already software with which you can crack every digital music copy protection: Total Recorder. This software hooks itself up in between the music player and the sound card and records automatically every musical data sent to the sound card. As this software records the original data sent to the sound card, there is no loss of quality whatsoever.

The only reasonable alternative at the moment is the integrating of a watermark. Different groups and companies have developed relevant concepts.

In the case of Music&More this means that the client’s Music&More number will be insert in the music as a watermark, in order to make it possible – if needed – to trace the original buyer of the music. As a result the buyer of music is not allowed to resell the music. Today everybody can resell any of his CDs, records and audiocassettes, if he adds to the sale all of his copies produced for his private use. There is still no answer to the question how to deal with digital music bearing a watermark.

Another goal of Music&More should be to convince the music industry that copy protection will not be necessary and that music, which is not copy protected is not automatically inviting to piracy in vast amount.

As soon as a concept like Music&More has made its way, reselling copied music will no longer be profitable for professional pirates. On the other hand the damage caused by private persons (piracy amongst friends) will not be more significant than with the traditional distribution system.

WATERMARKING

Named after the process for authenticating the paper used on $100 bills, watermark software embeds imperceptible messages – such as the name of the artist and recording date – into music. The messages stick whether a song is stamped on a CD or zipped over the Internet. Computer programs can read the marks and find Web sites that download the songs. The marks won’t determine whether the use is legal – but tracking down the sites to check for abuses will get much faster.

Every piece of music sold online can contain information specific to the sale, including the name of the purchaser. This concept is similar to the registration identification mark in software, and it serves two purposes: it deters unlawful distribution and it incriminates those who engage in this practice.

At least eight companies in the U.S. and Japan are developing watermarks. And they’re ready to roll – as soon as the record industry agrees on a standard. The International Federation of the Phonographic Industry (IFPI) in Zurich hopes to do so by yearend.

The watermark fix isn’t perfect. Hackers will work relentlessly to strip out the telltale marks. And the world is already awash in unmarked digital music. Also, privacy advocates are worried because watermark trackers can identify who’s listening to what, and somebody may misuse the information.

Aris Technologies, Inc. – MusiCode

ARIS Technologies, being one of the two music watermarking technology vendors chosen by 4C Entity, LLC, provides MusiCode, a technology to insert watermarks into digital music without distorting the music itself. In fact, David Moulton, producer of the recording engineer training series, ‘Golden Ears’, says “After extensive tests, we were unable to detect any coloration or artifacts in the encoded music.” With MusiCode any information can be embedded within music such as the name of the song, artist, album, record company, ISRC, batch, master, etc. without degrading sound quality.MusiCode was chosen by encoding.com and musicmaker.com to offer secured music. Especially musicmaker.com created a format called “Secure MP3”, which is regular MP3 with watermarks inserted by using MusiCode.

4C Entity (a cooperation of IBM, Intel, Matsushita Electric and Toshiba) chose ARIS’s and it’s still-competitor Solana Technology, Inc’s watermarking technology as the standard for DVD-Audio. This standard will also be agreed-upon by the Big Five, according to news from 4C in March.

On June 16th, ARIS and Solana announced their intent to merge both companies. At the same time the 4C Entity announced at the SDMI meeting that after extensive testing and evaluation of several watermarking systems, that both ARIS’s and Solana’s systems were the two systems that best met their requirements.

Solana Technology Development Corporation – Electronic DNA

Solana Technology Development Corp. (STD) is a developer of systems for audio, video, and wireless communications markets. Among STD’s current initiatives is Electronic DNA® (E-DNA®), a suite of technologies for applying imperceptible digital information to audio or video content. STD’s Electronic DNA is an entire system for applying digital data streams, called information strands, to audio program material (or the audio stream of a video program).

This wideband technology makes use of digital signal processing techniques to exploit the psycho-acoustic limits of human auditory perception in order to apply inaudible information strands to the audio path. Like genetic DNA, the E-DNA information strands cannot be altered, require special equipment to detect and decipher, and by virtue of the fact that different E-DNA strands can overlay each other, can help trace the genealogy of the material.

In plain English: STD’s E-DNA is technology to insert non-removable watermarks (they claim) into electronic streams like audio and video 😉

Summary

Watermarking technologies are available on the market and should be considered in discussions with the Big Five to introduce the MnM-Idea.The problem of reselling the music has to be solved, but in any case there are already technologies accepted by the 4C Entity and the SDMI consortium.