Frankfurt (dpa) – Sabine Heinrich swears by her MP3 player. The 30-year-old
from Frankfurt, Germany, stopped buying CDs when she received the portable
MP3 player as a present.
The tiny, walkman-like device contains a chip that can store up to 150
digital-quality songs at a time. The songs can be erased and replace at
will.
To get the music for her player, Sabine downloads the music in the MP3 file
format from the Internet at no charge. Sabine’s MP3 collection includes the
latest bands and singles – and like thousands of others, she has learned
just where to look on the Internet to find massive amounts of freely traded,
commercial music.
It’s people like Sabine that strike fear into the hearts of recording
artists and record label executives alike, as they see the fruits of their
creative labour being shared illegally over the Internet by technology-savvy
music fans.
But now, after several years of trying to fight the delivery of music over
the Internet, some large record labels are setting up their own online music
distribution systems.
The reason is simple: music delivery over the Internet is clearly popular,
and if the music industry doesn’t make money this way, they’ll surely lose
it.
Reports from the Recording Industry Association of America (RIAA) suggest
that at least 5 billion dollars is lost each year due to commercial music
being copied and distributed illegally over the Internet.
But now some major record labels plan to fight back by offering music over
the Internet – albeit for a fee. BMG Entertainment, for instance, a branch
of the international Bertelsmann music group, announced its intention to
form an Internet company before the end of the year. The new online
distribution channel offers companies the chance to open up their archives
to the cyberspace public.
“Eighty per cent of our catalogue is no longer available,” says Bertelsmann
music manager Thomas Stein. The company hopes that putting music online will
provide an incentive for music lovers to turn directly to record labels for
music, as opposed to downloading illegally.
“The Internet will become the number one distribution channel for the entire
entertainment industry, especially for music,” Stein predicts.
Security issues were the main obstacle to record companies’ acceptance of
online distribution in the past. There was no security mechanism to prevent
music once downloaded to be passed on from one listener to another.
But according to Stein, the problem has now been solved. Music manufacturers
recently agreed on a unified security standard that is nearly ready for the
music market as a whole. BMG (www.bmg.com) plans to offer music downloads in
the next few months. To entice Web surfers, works by young artists will be
available free of charge.
BMG, although one of the biggest music manufacturers, is not the first
well-known name to move toward online music distribution. The EMI music
label (www.emigroup.com) has already used digital distribution for
music.
In 1997, the company created an online music store in collaboration with the
Germany-based telecommunication firm Deutsche Telekom. At its Audio on
Demand shop (www.audio-on-demand.de), approximately 200 CDs as well as
individual songs are available.
A complete CD downloaded over the Internet costs as much as it does in
retail stores. But according to Carl Mahlmann, business planner with EMI,
demand so far has not been large enough to warrant discounting.
Japanese electronics giant Sony (www.sonymusic.com) lags other big-name
music manufacturers in its online music-selling efforts. So far, the company
offers only sound bites from its home page. But that’s about to change.
“We expect the first commercial downloads to occur later this year,” says
Jochen Leuschner, CEO of Sony Music in Germany. Compared to traditional
retail distribution, Sony is jumping on the Internet music bandwagon because
it sees two key advantages to online sales.
“We can offer titles from our inventory that are no longer available on CD,”
says Leuschner. “And we can reach customers who haven’t been to a retail
music store in a long time.”
But while the number of online users keeps increasing, Leuschner believes
the traditional audio CD will still be the dominant medium for music five
years from now.
Universal Records is also preparing for digital music distribution. “At the
time, our revenues from digitally distributed music is zero,” Christopher
Gersten with Universal Records (www.umusic.com) reports. However, Gersten
believes that as soon as digital music is made available legally, demand
will explode.
Vice president of EMI, Jeremy Silver, is also counting on music lovers to be
honest. “We must provide a way for honest people to participate in the
digital revolution without having to become pirates,” Silver says.
