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. Last Updated: 07/27/2016

Music Industry Seeks Defense Against Internet

For the music business, it was a harbinger. A Scottish rock band, the Jesus and Mary Chain, played during the summer's Intel New York Music Festival, and two hours later their live performance of "Virtually Unreal'' was on the Internet for the group's fans worldwide to download and listen to on their computers.

Commercially speaking, it was small potatoes: a technology demonstration by an alternative-rock band with a devoted following but not a mass public. Yet the uploading of "Virtually Unreal'' presaged a day when most recorded music will be available as digital information, distributed not on discs and tapes that have to be manufactured and shipped, but as data files that can be zapped instantly across the Internet.

The Jesus and Mary Chain gained valuable publicity from their World Wide Web demo. But just as significant, the band and its label, Sub Pop Records, received not a dime from the thousands of fans who grabbed the song off the Internet.

No wonder the recording industry is worried. It is easy to give music away on the Internet. In fact, thousands of songs now circulate freely in a technical format known as MP3, an easy way to swap recordings, authorized and unauthorized, as computer files online. The question now facing the music business is how to sell recordings as profitable pieces of data. The $12 billion-a-year recording industry is trying to catch up to the Internet era.

Just before Christmas, the major companies announced what they wanted under their trees for the 1999 holiday season: a uniform, industrywide standard for digital distribution of music. And now, a task force of recording companies, software programmers and consumer-electronics makers intends to begin work on music's version of the Star Wars missile defense program.

The project, named the Secure Digital Music Initiative, aims to make recordings available as pure digital information while letting only the copyright owners choose how it can be disseminated.

"All we're trying to create here is the structure by which the content would be labeled in a consistent fashion, to serve whatever business model emerges in the future,'' said Cary Sherman, a senior vice president and general counsel for the Recording Industry Association of America, which represents labels that account for 90 percent of the U.S. market.

European and Asian recording-industry trade groups support the initiative, along with hardware and software companies including Microsoft, IBM, and America Online. To avoid antitrust problems, any standards adopted would be voluntary.

Howard Singer, chief technical officer of A2B Music, an AT&T unit that produces digital-distribution software, acknowledges that the pressure is mounting. "Every day that ticks by, there's good news and there's bad news,'' he said. "The good news is that the potential client base for secure digital distribution is growing. The bad news is that they're also getting used to not paying.''

Despite the urgency, some participants predict that the process could drag on past next Christmas.

"These are all highly charged, very competitive companies,'' said Gerry Kearby, chief executive of Liquid Audio, which makes its own software for encoding and playing back music on the Internet and has already amassed a large catalog of digitally distributed music. "We won't be surprised if the process takes a little longer than announced.''

The labels, of course, are already using the Internet to sell conventional products - compact discs and cassettes - through online retailers like CD Now, N2K and

That business is expected to exceed $280 million this year, according to Jupiter Communications, a new-media research company. But the Secure Digital Music Initiative is planning for an era when many consumers will be buying music as downloaded files rather than prerecorded discs and tapes.

With a uniform standard embodied in computer codes that all the major recording companies would use, consumers could receive best-selling music directly through modems and play it back using one kind of software.

Once the labels agreed on a standard, a fan could jump to a top band's or a label's web site, bill the purchase through a credit card, and download a song or an album, saving it to the computer's hard drive, recording it onto a CD or transferring it to a memory chip in a portable player. (One such portable device is already on the market.)

In turn, the recording company would know where the music was sent, could specify whether or how often it could be copied, and could tabulate royalties and sales.

Until such a standard is developed, the labels that own the rights to recordings by everyone from Madonna to the bluesman Robert Johnson are unlikely to make their catalogs available for digital distribution. But while the major labels have hesitated, many of their holdings are already traveling the Internet as files compressed via MP3.

This software format - whose name is shortened from an engineering designation known as MPEG-1, Layer 3 - makes it practical to send full songs relatively quickly over the Internet.

Independent labels and individual musicians have made their music available in the MP3 format, but the major labels are alarmed by MP3 because the files can be copied without restriction, even sent as e-mail. The vast majority of MP3 songs circulate free of charge.