WMA hurts MP3 but streaming is key says analyst

Windows Media Audio secures a win over MP3, but AOL is tipped to hold the cards in the long term. Justin Pearse reports

The Windows Media Audio (WMA) format on Monday got a boost in its battle against MP3, with digital distribution company Dx3 selecting Microsoft's format for its music distribution network. However, neither format is long for this earth according to one analyst who believes the recent AOL Time Warner deal, coupled with the EMI tie-in, will kill off both.

The agreement, announced at this week's Midem music industry show in Cannes, means companies using Dx3's platform will have their audio or video content encoded into Windows Media. Dx3 is one of the first European companies to offer a complete end-to-end solution for the distribution of digital music. It is currently building an international distribution system through its partnership with US distribution company, amplified.com.

The company said it chose WMA over MP3, because of numerous reasons. "Its superior audio, quality, security and worldwide availability in 24 languages make WMA the best solution for our customers," stated Reza Kad, executive vice president of Dx3, in a press release.

Despite Microsoft's efforts however, at least one analyst believes the two front runners in online audio are missing the point and the future lies in streaming. The combined power of the forthcoming TimeWarner AOL company will set the scene for a new battle, with AOL holding all the strings. "With one in four records sold through the new company, whatever AOL does at this point is going to be the standard," predicts Martin Brass, director of new media at the Media Research Information Bureau.

With broadband connections on the horizon and the emphasis put on pumping streamed content into the home Brass reckons that formats offering high quality streaming media will be the long term victors. "This deal means that MP3 and WMA are dead. I believe that Real or QuickTime will be the winners. It took us around an hour to create 40 streaming audio files [using QuickTime and Real], with Windows Media it took a whole day."

David Phillips, former managing director of AOL UK and now CEO of online music store Crunch, is not convinced the future of digital music lies with a streaming format. Despite the arrival of broadband and wireless access devices, he says, "people will still want to physically own a piece of music," for which formats such as MP3 and WMA remain suitable.

Crunch "investigated all formats," according to Phillips and choose to use RealAudio for its streaming track previews.

AOL currently offers streaming audio in both Apple QuickTime and RealAudio formats.

Microsoft was unavailable for comment.

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