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Last Updated: Sunday, 25 December 2005, 00:32 GMT
New tune for digital music in 2006
By Jane Wakefield
Technology reporter, BBC News website

File-sharing protesters
Those opposed to file-sharing have made their voice heard
Many people are likely to be unwrapping digital music players as they gather for the annual present-fest this Christmas.

While they will be delighted to get their hands on something that is rapidly becoming a must-have gadget, the device itself is only the start of the story.

A format war is looming and illegal downloads still outstripping legal ones by a ratio of three to one, despite a sustained legal onslaught by the music industry.

For the record label, the battle is to persuade people to pay for the music they put on their machines.

For consumers and critics of the way the music industry is handling the transition to digital music, the battle is to convince them to be a whole lot more radical.

Issue of control

Sony BMG's copyright protection system on CDs outraged users
It has been a mixed year for the music industry. On the one hand, there have been some notable victories over the trading of copyrighted songs via file-sharing networks.

But there was a huge debacle over the way one of the major record labels dealt with copyright infringement. This erupted after it was revealed that Sony BMG's XCP anti-piracy program on some CDs used virus-like techniques to hide itself on a PC.

Wayne Rosso, head of music service Mashboxx and former boss of file-sharing service Grokster, believes that the bad press that followed and the forced retraction of the technology from Sony BMG could signal the death-knell for DRM (Digital Rights Management).

DRM is defined as any mechanism used on a CD or in an audio file that controls the consumer's use of the media. It takes many forms and could limit the number of times the song can be added to a playlist, how many CDs it can be burned onto to and which digital player it can be played on.

Mr Rosso makes a bold claim that 2006 will be the year the record labels are persuaded to offer music in MP3 format.

"By the end of the year I will have got a major record company to experiment with selling MP3s," he told the BBC News website.

He sees himself as offering a bridge between legal download services and those of the file-sharing networks via his new company Mashboxx, a hybrid service which will offer both legal and free music to consumers.

MP3 has long been the bugbear of the record industry because it is free of copyright-protection, meaning it offers the labels no control over what consumers do with their digital music once they have downloaded it.

It is also the format favoured by file-sharing networks and one that digital music players, including the popular iPod, support.

Stealth networks

Mr Rosso, a well-known music industry maverick, is not the only one calling for a radical rethink.

Mark Mulligan, music analyst with research firm Jupiter, agrees that the industry needs to embrace the idea of free music if it has any hope of grabbing the next generation of music lovers before they turn to file-sharing.

Digital music is still the poor relation to digital music players. It is an added-extra, like having a walnut dashboard in a new care
Mark Mulligan, Jupiter Research
"Grokster may be on its last legs but there is still massive demand for file-sharing and it is not going to disappear overnight," he said.

Next year, according to Mr Mulligan, there will be a growth in so-called stealth networks which perform the same function as existing file-sharing networks, but without the same ability to be tracked down.

"On some of these it can't be traced even by the programmer so the music industry will have no chance," he said.

2005 saw several legal victories for the music industry over file-sharing networks. Most notable of these was the decision of a US Supreme Court that such services could be held liable for actions of their users under certain circumstances.

It led to Grokster's decision to shut up shop in its current form.

But the Supreme Court decision has not resolved the issue of illegal downloads.

Mr Mulligan says the music industry has to embrace file-sharing, building free services from the ground up. The catch would be offering files of reduced quality.

Poor relation

It is true that, despite the proliferation of players, digital music is still slow to take off.

According to a recent survey conducted on behalf of Napster, music lovers are struggling to fill their digital music players.

It found that most were only just over half filled, with the majority of music on the player (66%) being that which has been ripped from CDs.

"With retailers predicting a bumper year for sales of MP3 players, these statistics show that filling up and using an MP3 player is obviously not as quick and easy as people expect," said Leanne Sharman, general manager of Napster.

The problem is that ripping CDs is time consuming. Napster is keen to encourage people to use its subscription service, which allows for unlimited downloads for a set monthly fee.

The caveat is that cancelling the subscription means the user will no longer be able to access their digital music files.

Mr Mulligan predicts there will be a growth of subscription services during the coming year. But he believes MP3 players will be mainly used to manage existing music collections.

"Digital music is still the poor relation to digital music players. It is an added-extra, like having a walnut dashboard in a new car," he said.

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