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December 17, 1998
Web posted at: 11:45 AM EST

by Bernhard Warner and Lessley Anderson

NEW YORK (IDG) -- In a first for the recording industry, executives from the world's top labels pledged at a press conference Tuesday to collaborate with technology companies to develop a standard for the secure distribution of digital music.

The announcement marked the first time the industry heavies – Sony, Warner Bros., Warner Music Group, EMI, BMG Entertainment and Universal Music Group – have collectively acknowledged the need to develop a framework for distributing copyrighted music across digital platforms such as the Internet, and, ultimately, collecting the proceeds. The task force is supported by America Online, AT&T, Lucent, Microsoft and RealNetworks, to name a few.

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"We need copyright protection but we must not stifle technology to get it," said Hillary Rosen, president and CEO of Recording Industry Association of America, a Washington-based trade association working on behalf of the labels.

Dubbed the "secure digital music initiative," or SDMI, the RIAA's announcement is being billed by music industry execs as a means of thwarting piracy and compensating recording artists for the distribution of their work. The RIAA in October lost an injunction against Diamond Multimedia to stop manufacturing its Rio portable player, used to download MP3 music files, which don't include copyright information.

But some in the tech music space are skeptical of SDMI, calling it a "vapor initiative."

"It's a great way for the RIAA to act like they're doing something progressive without really doing anything," said Gene Hoffman, CEO of digital recording label GoodNoise. "The recording industry wants to control all channels of distribution – that's the issue for them, and nothing's really changed."

Secure means of digital music distribution already exist – Liquid Audio as well as AT&T's a2b Music have been building their business on compression and encryption software the labels already use in limited capacity for special music promos. (Last summer, for instance, BMG e-mailed an attached a2b sound file of a Natalie Imbruglio single to a mailing list of potential customers.) According to the RIAA, the new standard for the industry, expected to be agreed upon by the end of 1999, will be a collaboration between these two competitors and other technology companies.

Though executives at both Liquid Audio and a2b were officially pleased about the initiative, a2b COO Larry Miller expressed some doubts. "I don't know if everyone in the world will be able to contribute something," he said, adding, "I think that's unlikely."

The question remains as to how the labels will approach the Net once they determine their preferred method of secure distribution. Universal Music Group exec Larry Kenswil evaded post-conference questions on the subject, saying that developing standards to protect copyrighted music must happen first, before labels and their individual artists can fully utilize the Web for distribution and marketing purposes.

"It's going to be up to each of the individual labels to determine this" once SDMI is finalized, said Kenswil, adding that it's unlikely the labels would share their plans publicly. "After all, we're all competing against one another."

One group left out of the equation thus far is the retailers. Cary H. Sherman, senior executive VP and general counsel for the RIAA, stated that "it's not clear retailers have any specific technological issue to bring to this forum." But, he added, the forum is open to anyone with a stake in the music destribution business.