Future of digital music up for grabs

With a major investment by MTV Networks Online and a distribution deal inked with the Universal Music Group on Tuesday, digital music portal RioPort Inc. seems ready to fight for a prime position in the future of digital downloadable music.

The same cannot be said for the now-popular digital music file format, MP3, however.

Despite the fact that RioPort's music files are offered up today in MP3 format, David Watkins, president of RioPort, said the deal with Universal was possible because RioPort supports alternatives to MP3.

"Universal is less concerned with MP3 and more with higher quality (formats)," said the executive of the Diamond Multimedia Systems Inc. subsidiary. "We are independent of [format]."

On Tuesday, Universal announced it had signed a deal supporting the RioPort platform. The news came the same day that Viacom Inc.'s subsidiary MTV Networks Online invested in the online music portal. While financial details of the investment were not announced, Watkins referred to as a "significant, but not majority share."

The heavily-publicised security framework released by the Secure Digital Music Initiative is replacing MP3 as the yardstick by which digital recording formats are measured. MP3 will be just one of many file formats, said Joe Jennings, director of marketing for InterTrust Technologies Corp.. Each format will require a special hardware or software processor -- known as a codec -- to convert music into digitised ones and zeroes and to play the file back later.

Jennings joined other industry execs to hear pundits speak at the fourth annual Plug.In music forum in New York City this week. "The head of Audible said that he has been through three codecs since the company started," he said, referring to books-on-tape and conference proceedings merchant Audible Inc. "There will be a high-end codec market, there will be a mainstream, and many others in-between," said Jennings. Home theatre aficionados may want music files that play in 5.1 Dolby surround sound, requiring a Dolby codec, continued Jennings. Voice-only companies such as Audible would rather have highly compressed voice files than acoustically perfect ones. For each set of requirements, a different file format will be used, he explained.

Already, companies like Lucent Technologies Inc., Microsoft Corp., and Dolby Laboratories have put forward their own technologies to replace MP3. Such companies have time to make their mark on the emerging market for downloadable music. According to a recent study by multimedia market researcher Jupiter Communications Inc., online digital distribution of music will only reach $147m (£90m) -- or 5.7 percent of the $2.6bn in online music sales -- by 2003.