Music Diary Flashback: In 2001 the Music Industry Thought They Could ‘Make MP3 Obsolete’

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Music Diary Flashback: In 2001 the Music Industry Thought They Could 'Make MP3 Obsolete'

Despite growing up in the era of the LP and 8-track tape, in many ways it is hard to remember a time since the dawn of the digital era before the MP3 was a legitimately purchasable format. Sure we all remember the Napster days with fairly rampant piracy made easier by the rise in broadband adoption, but there was a fixation on those downloading files illegally over the internet due to the newness and general fascination with all things ‘net’ related back then. It seemed that even then the RIAA was simply scapegoating piracy way out of proportion with what was actually going on.

One thing was clear – something needed to be done because a younger generation was growing up thinking that all music was and should be free regardless of the impact on the artists.

Of course, what happened was that MP3 stores started to pop up, though few were successful until late in 2001 Apple introduced the iTunes Music Store. The price of $0.99 per song, $9.99 per album was just right to provide a way for folks who simply wanted music on their MP3 player to get it there quickly and easily at a fair price without having to buy a full CD loaded with filler.

But the music industry didn’t just want to stop piracy, they wanted to protect album sales. So-called AOR (album-oriented rock) of the 70’s and 80’s had produced booming sales, and together with the move to CD resulting in a near death of the ‘single’ format (I remember seeing CD-singles for $3.99!), the industry had gotten used to everyone buying full CD’s … and they used that monopoly to keep increasing the prices!

A recent article uncovers a decade-old report on how the music industry was teaming up with Microsoft and other tech companies to try to ‘kill MP3’. Here are a few snippets:

MP3, a popular format for downloading music from the Web, is encountering competitive pressure as leading technology companies such as Microsoft Corp. work to subtly wean consumers away from the technology.

These companies, which have the music industry’s blessing, are encouraging those who download music to use new proprietary software formats that make the audio sound significantly better but also make it harder to share copyright-protected songs.

Interesting that it is called ‘competitive pressure’ in the lead, but as you read on you see that the ‘competition’ is based on proprietary formats and hobbling software capability.

Microsoft, for example, plans to severely limit the quality of music that can be recorded as an MP3 file using software built into the next version of its personal-computer operating system, Windows XP. But music recorded in the Redmond, Wash., software company’s own format, called Windows Media Audio, will sound clearer and require far less storage space on a computer.

Win-win for Microsoft – get to establish the audio format, kill competition, and have the recording industry by your side.

All the new music-software formats include technology known as digital-rights management, which can “lock” copyright-protected songs and make it harder for consumers to share that music illegally. As the largest recording labels begin selling music online, they generally have shunned MP3, which “has been commonly regarded as an unprotected format,” says Cary Sherman, senior vice president and general counsel of the Recording Industry Association of America.

“The industry doesn’t want [MP3] pushed, and Microsoft and RealNetworks don’t want it pushed. The consumer is going to eat what he’s given,” says David Farber, the former chief technologist at the Federal Communications Commission.

Of course the greatest quote is right there: “The consumer is going to eat what he’s given.” And the article goes even further:

“Certainly, when Microsoft decides to put something in their operating-system support, it becomes the standard,” says Mr. Farber, who testified for the government during the Microsoft antitrust trial. “The average consumer will use what comes on the disc when he buys the machine. They’re very effective in that way.”

Under Microsoft’s new restrictions — which prevent its built-in software from recording MP3 files at fidelity rates higher than 56 kilobits per second — MP3 music “sounds like somebody in a phone booth underwater,” says P.J. McNealy, an analyst who researches Internet audio issues for Gartner Inc. in Stamford, Conn. (Existing versions of Microsoft’s audio software don’t allow consumers to record music as MP3 files of any quality.)

And Microsoft – still the ‘Evil Empire’ in 2001 – was up to all-too-common tricks:

but early testers of beta versions of Windows XP already complain that the most popular MP3 recording applications — which compete with Microsoft’s format — don’t seem to function properly, apparently because of changes Microsoft made to how data are written on CD-ROMs under Windows XP.

Of course, a decade of hindsight makes all of this stuff no more than a laughable curiosity. Speaking of which … check out this great ending:

Still, even MP3’s critics concede it might be here to stay. “It’s a little like the VHS tape,” says Steve Banfield, general manager at RealNetworks. “DVD is great, but VHS is ubiquitous and it isn’t going away anytime soon.”

Exactly! Wait … wha?

As for the image at the top, it is from an article that pulled it from the court case that recently took down LimeWire. The supposition that the RIAA makes is that the trend started in ~1981 – as measured in ‘albums sold per person’ would simply continue to have increased forever!

The fact that using continued monotonic growth as an assumption is flawed to begin with, and then taking a time period out of context and using just the time when the CD was emerging and forcing people to buy music as full albums makes things even worse. Not only that, but the overall trend ignores some important things I noted here about the historical transitions.

But worst of all is that it has long been established that due to the same economic forces that caused earlier downward trends, things were starting to decline in 1999 before Napster. Then as the economy recovered iTunes was already in place, and the transition to buying individual songs was already well established.

Comparing a song-based economy to an album-based economy is completely unrealistic and simply shifts blame. In 1999 we were paying an average of $15 per CD for the 3 songs we wanted – take for example a CD that got heavy play with my kids: Backstreet Boys ‘Millenium’ (hey, they were preschoolers and it was the #1 record of the year).

The Backstreet Boys ‘Millenium’ CD has 12 songs, but only about four are worth listening – Larger Than Life, I Want It That Way, Show Me the Meaning of Being Lonely and possibly Don’t Want You Back. We put it on recently when we came across it getting stuff ready for a charitable donation run, and the album is pretty lousy. The songs all sound the same, many sound extremely similar to ones by Britney Spears (whose ‘Baby One More Time’ was the same year). Not only that, you can hear extreme similarities to songs being churned out by Lady Gaga, Rihanna, and other mass-market product being pushed today.

So we have a transition to a single-based economy, the death of the A&R system being replaced by the ‘home run’ system that has seen fewer and fewer artists accounting for a greater percentage of album sales as I also noted here.

THOSE are huge in terms of the impact on the difference between the RIAA’s dream of more free money and the reality of actual life. Again, I am not disputing the impact of piracy – it is huge! BUT … I would argue that the music industries unwillingness to address their customers needs, and the push of more and more narrow sets of music harder and more monolithically has had at least as large an impact.

I know I went on a bit of a tangent … but it is actually related. In 2001 the music industry was trying to pair with a company who was in the midst of monopoly litigation and had a pretty solid track record of eliminating competition by making other software less compatible or mysteriously unstable through operating system upgrades.

The purpose was supposedly to divert users away from the MP3 format, but the tactics would have ended up killing loads of third party software and leaving Microsoft with a monopoly desktop audio format – and let’s not forget the awful early DRM systems including Sony’s infamous rootkit that were also being implemented. It is a hostile and draconian response that immediately treats everyone as a potential criminal – and tried to hobble your computer to force you to “eat what [you’re] given.”.

Now imagine if you bought a CD but wanted to put it on your Archos 6GB Jukebox (what I had before Apple launched the iPod) – the RIAA has stated in the past that they wanted to make you buy another copy, that they saw listening to a CD you bought in digital form on a MP3 player as the same as piracy.

How is it any different today? The industry still laments the loss of the album-only format, the ability to fully dictate buying habits, and would love to go back to a world before the internet and MP3 – as well as killing Pandora, Rdio and others – and get back into their cushy early 90’s mega-profit world.

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About the Author

Michael Anderson
I have loved technology for as long as I can remember - and have been a computer gamer since the PDP-10! Mobile Technology has played a major role in my life - I have used an electronic companion since the HP95LX more than 20 years ago, and have been a 'Laptop First' person since my Compaq LTE Lite 3/20 and Powerbook 170 back in 1991! As an avid gamer and gadget-junkie I was constantly asked for my opinions on new technology, which led to writing small blurbs ... and eventually becoming a reviewer many years ago. My family is my biggest priority in life, and they alternate between loving and tolerating my gaming and gadget hobbies ... but ultimately benefits from the addition of technology to our lives!