As millions download music off the Net, privacy enforcement flounders

07/27/99

By Doug Bedell / The Dallas Morning News

Until April, the hottest search term on the Internet was "sex." The new undisputed king is "MP3," a digital technology feared by record companies and embraced by millions.

For about three years, computers users have been pulling down music - classical, foreign, new and old - in that MPeg-1, layer 3 format from a dizzying spectrum of Web sites, secret and public file servers, and unlicensed Web radio stations.

Thanks to word of mouth, recent court actions and a new array of players, MP3 singles and whole albums are being copied, or "ripped," from commercial compact discs faster than laws and record companies can respond.

"It's important to remember these are just music fans doing this," says Siddiq Bello, publisher of the online magazine MP3 Impact (mp3impact.com). "They're people who buy CDs. And in many cases, they're running servers at a cost to themselves to exchange music."

The International Federation of Phonographic Industries estimated this year that about 3 million tracks are being downloaded from the Internet every day, many of them without permission of established stars.

The Recording Industry Association of America, or RIAA, says that it lost as much as $10 billion through music piracy last year and that illegal Internet downloads of music are making a bad problem worse.

On the other hand, the exchanging of MP3 files on the Internet has provided a back door for artists who couldn't get a record company exec to return a phone call. Small, independent record labels have suddenly found the mass audience that eluded them in competition against the Big Five - Sony Music, Universal, EMI, BMG and Warner.

And a mini-industry has arisen as tech companies rush to produce MP3 players for the home, palm, PC, Mac and, now, automobile.

MP3 is a case of technology outpacing an industry's efforts to protect its product. With the exception of a few artists such as Public Enemy, Alanis Morissette, Beastie Boys and Frank Black, musicians and record labels haven't provided downloadable singles for consumption via the Internet. The technology is moving on, regardless.

"Very few people are in favor of MP3, per se," says MP3 researcher and consultant David Weekly (david.weekly.org). "They're in favor of a free, open format. And they're going to stick with MP3 until something better comes along."

The MP3 allure

As the recording industry grapples with policies and legalities, the public continues to endorse MP3 with mouse clicks. MP3 files played through a computer's speakers or headphones have captured the attention of many.

"It changed the way I looked at my computer," Mr. Weekly recalls. "I thought, 'Wow, I can play these files, they sound great and I can put them in any order.' ... It changed everything."

A song in an MP3 file is compressed to about 3 megabytes, one-sixteenth the size of the original CD track. That makes downloading singles onto a computer or other device fairly fast. With a good 56 kilobits-per-second modem, one tune may take 10 minutes or less to download. Although the music is physically changed, it retains a rich, full quality in MP3.

Technological advances and free programs for playing the files are behind much of the MP3 phenomenon. Software developers such as Nullsoft, maker of the immensely popular Winamp (www.winamp.com), distribute MP3 players at no charge that feature sophisticated mixing controls and lively, customizable electronic coverings, known as "skins," for those on-screen players.

Last week, the most popular downloads at Cnet's www.download.com were the new Macintosh MP3 players SoundJam MP and MacAMP.

Because downloading itself is not a crime, mega-search engines have cropped up to scan the Web by artist, track and album name. MP3 Fiend (www.mp3fiend.com) and Scour Net (www.scour.net), for example, provide software that helps locate all sorts of files, legal and illegal.

Other sites - among them MP3 Now (www.mp3now.com) and MP3.Com (www.mp3.com) - provide only authorized offerings from featured artists.

None of the Web search mechanisms can guarantee to return only sites that offer legal, downloadable tracks, however. Many have agreed to delist from their directories any site that violates copyright laws. They include the old-line search engine Lycos, which catalogs more than 500,000 files Netwide with its Fast MP3 Search service (mp3.lycos.com).

Still other MP3 sites have legitimized the format with innovative approaches.

MP3.Com, which raised at least $344 million in an initial public stock offering last week, allows artists to post their songs and sells digital automatic music, or DAM - custom CDs made up of tracks that the user selects. The site splits profits 50-50 with the artists.

MP3.Com also attempts to attract artist submissions by region, but selection is spotty at best. The heavy metal group Majik, for example, is the only Dallas band represented.

Another site, Emusic (www.emusic.com), sells music tracks for 99 cents apiece.

Underground movement

Mr. Weekly says that only about 5 percent of the Internet traffic in MP3s is run through public areas on the Net.

"People perceive it as being intrinsic to the Web," he says. "That's really not the case anymore."

For many reasons, MP3 has moved underground, where it continues to proliferate.

Copyright laws allow an owner of a CD to shift the format of its content. In other words, they are permitted to use free MP3 encoding software on their computers to convert albums and save them as digital files on their hard disks for private use.

To the music industry, though, the digital format remains an untamed beast.

"I can trade my CD or give it away," says MP3 Impact's Mr. Bello. "The problem is, in a digital world, it is highly doubtful that - when you gave an MP3 file to someone else - you also deleted your copy."

Cheap or free MP3 conversion software such as Xing Tech's AudioCatalyst (www.xingtech.com) and SoundJam MP for Macs (www. soundjam.com) have allowed users with little tech savvy to turn typical home computers into veritable conversion studios.

The Internet-proficient, many of them high school and college students using school equipment, have set up MP3 music exchange sites that hold massive quantities of copied collections.

The record industry has reacted strongly on several fronts. Over the past year, label representatives have threatened systems administrators wherever they found unauthorized MP3 file trading in large volume.

The Recording Industry Association of America, armed with a new federal law, has had three full-time staffers sniffing out pirates and large-scale MP3 sites that have File Transfer Protocol, or FTP, servers. More than 250 sites were shut down as of April.

Will Komassa, a University of Wisconsin student forced to close his free FTP site, told the online service Wired News that the action by his university's network administrator was "akin to bitching at every eighth-grader who taped MMMBop off the radio."

Hillary Rosen, RIAA president and CEO, doesn't share such opinions.

"It is simply not fair to take someone else's music and put it online for free distribution," she says. "No one wants their property taken from them and distributed without their permission.

"Why should artists be treated any differently?"

Enforcement attempts have done little to stop MP3, however. Mr. Weekly, whose own music exchange site was forcibly shut down two years ago, says most of the traffic has gone underground.

Many traders of MP3 files have moved to the old Internet Relay Chat service, a technological hangover from the days when the Internet was text-based, to set up and administer chat rooms where file exchanges are arranged. Some IRC servers even allow bots, small programs that scan, copy and automatically trade files around the clock.

Usenet groups are also being used to make contacts, and an application called NewsRover has been developed to collect MP3 files and download them overnight.

Another suite of programs, Hotline, allows individual computers to be easily set up as servers away from the public portion of the Internet. Mr. Bello's MP3 Impact e-zine reports that more than 400 sites equipped with Hotline currently distribute MP3 files. More than half of them boast high-speed Internet connections that support lightning-quick downloads of massive amounts of MP3 data.

"MP3 doesn't have to hurt the industry. But it's a new way of doing things, and it's going to fundamentally change the way the Big Five record companies operate, whether they like it or not," Mr. Bello says.

Worried industry

Computers have been the main source for downloading and playing the music files, but a host of new MP3 devices and mechanisms are adding to the record industry's Internet music headache.

Diamond Multimedia has sold more than 200,000 of its Walkman-like Rio MP3 players in the last year and is being joined by competitors after a recent legal victory over the RIAA.

A federal appeals court ruled that Diamond was within its rights to develop and sell portable MP3 players. The court's action spurred the production of newer, larger-capacity units. Creative Labs entered the market last week with Nomad, which is an FM radio and MP3 player.

"With the legal path cleared, portable players could quickly become an even more persistent playback thorn than PCs," says a recent report by market researchers at ZDNet's InfoBeads.

Manufacturers, as cataloged at www.mp3.com/hardware/car/listcar. htm, are taking orders and starting to ship car audio players. AudioRequest (www.audiorequest.com) and several other companies have now developed home stereo components that store and play more than 2,000 songs made with MP3 and other digital compression formats.

Radio MP3

And some obscure, music-based Internet radio stations have begun using MP3 files streamed live to anyone who can find their Internet addresses.

The industry is attempting to assess fees on those stations, although this breed of Internet broadcaster often receives no advertising revenue and is frequently limited to a couple dozen listeners at a time.

SHOUTcast (www.shoutcast.com) and Live365 (www.live365.com) are offering menus of these new MP3-based stations. Hundreds are available daily. Like regular radio, they run the gamut from punk to Puccini.

The streaming technique allows Internet listeners to hear music as it is pushed out of the site, eliminating the wait while files download. Radiomoi (www.radiomoi.com) just this year became the first site licensed to play MP3 music under the recently passed Digital Millennium Copyright Act.

Under the provision, the nascent Net radio stations must pay a statutory license fee to the record companies, something not required of traditional broadcast radio stations. Previously, Webcasters were also exempt because they basically served as free promoters of the record industry's products.

Beyond that, the music industry is trying develop its own standards for distributing digital music while protecting copyrights.

The Secure Digital Music Initiative, or SDMI, was formed last year by 150 recording industry and technology companies to develop an architecture and specification for rights management and licensing of digital music.

But since its inception, splinter groups have formed, impatient that the process was taking too long.

The SDMI drew strong reactions last week when it revealed that those specifications will limit how many times devices such as the Rio can record a track.

In a single downloading session, a consumer would be restricted to four digital copies of a single track off a CD. If a person needs to copy the MP3 file again, it must be recopied from the original CD.

SDMI's goal is to reduce piracy by requiring that portable digital stereo systems include mechanisms to limit rampant conversion of CD music to MP3 and other digital forms.

That puts the organization potentially at odds with intellectual property laws establishing that content creators give up control over that content's use at the point of sale.

Fight them or join them

But experts predict that the free MP3 model of music distribution will become even more attractive as Internet connections become faster.

According to InfoBeads' Technology User Profile, more than 121 million PCs had been installed in the United States by January. About 66 percent of those computers used a CD-ROM or DVD-ROM drive, and 56 percent of those 121 million PCs had Internet access.

In theory, the InfoBeads report concludes, more than 67 million PCs are ready and waiting to download music - legally or illegally - from the Internet.

"So here's the question for music executives: Would they rather have 90 percent of a $1 billion market or 10 percent of a $40 billion market? It's not a silly question," the InfoBeads report states.

"Piracy - or at least some piracy - may be the price the music industry has to pay for growing their business in a more open future," the report says.

Send e-mail to Doug Bedell at dougb@metronet.com.