The Battle For MP3

If you’re involved in music, or any technology that must be streamed, the present battle over the MP3 format deserves a close look.

MP3 is the compression algorithm under which most of the Web’s music is compressed. Since it doesn’t carry copy protection, the music industry wants it replaced with work IBM is doing under the name of the Secure Digital Music Initiative.

Broadcast.Com president Mark Cuban has the best seat for the fight. The headline at his Multimedia.Com conference keynote address in San Jose was his prediction MP3 will fall.

But buried within the story is a fascinating business model for Internet music. Cuban predicted artists will sell subscriptions to their work on Web sites, which is the business model used at Disney’s ESPN site. Offer some content free, sell all the goods you can, but offer the true fan a “subscription” package that includes more “inside” stuff.

If Cuban is correct, there’s a huge opportunity here for artists and their managers. Certainly major labels will try to add provisions to future recording contracts that tie up artists’ Web efforts, and for some groups that may prove irresistible. But the music industry changes very quickly, and if a Web entrepreneur can “break” an artist, it could become difficult for the record companies to take them away.

Web entrepreneurs know many things record companies don’t, about how publicity is done in the new medium, and if someone finds a way to put more of that money into artists’ pockets than the record companies can they could do very well indeed.

There is a tradition of musicians becoming powers in this business. Herb Alpert and Chet Atkins made most of their money as producers. The Web already has such a musician, and he’s already an entrepreneur pushing the kind of advanced Web music player Cuban thinks will make MP3 a memory. Could the 21st Century’s music industry be blindsided by “science!”? Stay tuned.

What do you think? Let’s talk about it.

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