May 3, 1999
New System for PC Music
Stirs Recording Industry's Piracy Concerns
By JOHN MARKOFF
AN FRANCISCO -- In what may
be the most ambitious digital-age challenge yet to the nation's recording industry, Real Networks, a leading maker of
Internet audio software, plans to announce
on Monday a system designed to let consumers copy, store and play audio CD's on
personal computers. The system is also
designed to enable people to play music
transmitted via the Internet.
The software, Real Jukebox, will record
and play music in several technical formats including G2, a format developed by
Real Networks, and the increasingly popular MP3 standard that is widely used by
Internet music enthusiasts to swap music
files, often without regard for copyright.
The Real Networks announcement
comes as the music recording industry
tries to hammer out a digital music technology standard that would protect intellectual property on the Internet. Monday's
announcement seems certain to intensify
the debate over music piracy.
Real Jukebox is meant to conform to
copyright law by means of an electronic
"tether" that restricts digital copies of the
audio CD's to the hard drive of the user's
personal computer; that would supposedly
limit consumers to making but a single
copy of a music file for their personal use.
But the software will give users the option
of shutting off the tethering feature. That
would make it possible to attach a copy of a
CD track or an entire CD to an e-mail
message and send it to any number of
friends -- the kind of unfettered distribution that the recording industry opposes.
Company executives said Real Networks
was supporting a variety of copy protection
standards, but that it was also trying to
educate users about the balance between
personal use and intellectual property violations. "People can turn the tethering
feature off, but we remind them that they
can't legally take a file and mail it to 100
friends," said Rob Glaser, chairman and
chief executive of Real Networks.
A user who turns the tether feature off
will see an on-screen dialog box that explains the relevant issues of the Home
Audio Recording Act, a 1992 Federal law
enacted when digital audio tape, or DAT,
recorders were introduced to consumers.
That law allowed individuals to make a
single digital copy of a copyrighted recording for personal use, but barred further
copying and distribution of the recording to
others. In reality, though, adherence to the
law depends on the honor system.
Glaser drew an analogy between his
company's efforts and those of manufacturers who produce automobiles
that clearly have the ability to exceed speed limits.
"I admit that sometimes I go 57 or
59 or sometimes when I'm late for a
flight, I go 70 and then I feel a little
guilty," he said.
"So far on the digital
highway, the road hasn't had any
warning signs. This is the software
equivalent."
Real Networks already has standing in the digital music community
by dint of its Real Audio software,
the leading software used for so-called streaming audio -- the broadcast-like transmission over the Internet of radio programming and other
multimedia Web services. The company says that 60 million people are
registered users of Real Audio.
One significant feature of Real
Jukebox, which will be available in
free and commercial versions, is
that it will permit PC users to make
a copy of an audio CD in a fraction of
the time it takes to play it at normal
speed -- and to do so even while
listening to the CD on a personal
computer. A test version will be
available Monday for downloading
from the Real Networks site on the
World Wide Web, www.realnetworks.com.
Whether Real Networks' tethering
strategy will appease the recording
industry is yet to be determined. The
Recording Industry Association of
America, an industry group, went to
court last year to try to block distribution of the Rio, a portable player
made by Diamond Multimedia that
enables consumers to listen to MP3
computer files. Earlier this month, a
California appeals court heard the
industry association's appeal of a
judge's refusal to issue a preliminary injunction banning the Rio.
As part of the Real Networks announcement on Monday, the company plans to say that Thomson Consumer Electronics Inc., under its
RCA consumer brand, will produce a
portable Jukebox Networks player.
Glaser said on Friday that he
was in discussions with other consumer electronics companies that
planned to build playback devices,
which he said would reach the market later this year.
Meanwhile, the recording industry, which is at work on these various
issues under an effort called the Secure Digital Music Initiative, has a
stated goal of establishing a standard copyright-protecting format that
could be incorporated into portable
players that would reach stores by
next Christmas. In practical terms,
that would mean providing specifications to electronics manufacturers
by June 30.
But the group behind the digital
music initiative is deeply divided.
Among the most disputed of the unresolved issues is whether new devices should be able to play music
recorded not only with a new copyright-secure standard but also recordings made with the existing nonsecured MP3 format.
The Real Jukebox approach seems
to be an acknowledgment that the
pirate-friendly MP3 format has such
momentum that the record industry
will have difficulty extinguishing it.
"The honor system being offered
by Real Networks is the wild card,"
said Richard Doherty, president of
Envisioneering, a consumer electronics and computer industry consulting firm. "The Real Networks
system is one of the brands that
stands a chance of gaining wide
adoption, and this could raise the ire
of the music industry to a whole new
degree."
The Real Networks system also
comes during a period of intensive
innovation and competition between
different digital encoding and compression schemes. Within the last
month, both Apple Computer Inc.
and the Microsoft Corporation have
introduced their own software for
digital Internet music.
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Seeking a balance
between copyright
protections and
personal use.
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The various competitors are making a range of claims about audio
quality and compression efficiency.
Currently, MP3 files require about a
megabyte of storage for each minute
of audio playback, but a number of
the proprietary schemes do a much
better job with compression --
meaning that music can be stored in
less space on the user's hard disk.
But any compression system has
trouble competing with the sound
quality of a CD.
Whether the lower-quality audio of
Internet music will prove a market
factor is still to be determined.
"This is where religion comes in,"
said Steve Fields, a marketing executive at Pacific Microsonics, a Silicon Valley company that has developed a technology for improving the
audio quality of CD's. "In many
cases, some of these formats will
sound fine to the untrained ear. But,
emphatically, this is not CD-quality
audio."
That may not matter to the Internet audio market, according to
Doherty. "These are matters that
are highly subjective and age dependent," he said.
The strength of the Real Networks
software may ultimately be that it
will permit computer users to build
and exchange personal playlists of
songs. Personal computers, Glaser said, offer a level of control over
the sequence of musical selections
that is not possible with today's CD
players.
Real Jukebox will also be designed
to work with Internet music sites to
permit users to use music search
engines, download recordings and
purchase music over the Internet.
The company said Real Jukebox will
incorporate Internet music distribution standards now being developed
by both I.B.M. and AT&T.
