CD-ROMS: Bigger Than Music Videos?

Todd Rundgren has one. Ice-T wants one. Peter Gabriel is about to come out with one. David Bowie and Motley Crue have them in development. And record companies have started scouting around for technogeeks with rhythm who can produce them.

Interactive CD-ROMs are in, and the recording industry is rushing to experiment with a product that some executives believe will be bigger than the music video--and a lot more profitable.

CD-ROMs are like audio CDs, except they hold pictures and text as well as sound, and you need a CD-ROM drive and a personal computer to play one. But given the discs’ vast storage capacity and the power of desktop PCs these days, the music industry is drooling over the possibilities of a medium that combines music, video, graphics and text in practically as many permutations as there are fans.

A music CD-ROM, for instance, could let users assemble a kind of custom music video, read through a vast database of lyrics, remix audio tracks and, of course, play along.

Nor have music executives failed to note that the typical CD-ROM title sells for $50 but costs about as much to produce as a $15 audio CD.

“I am very optimistic that this is an area that is going to blossom,” says MCA Music Group Entertainment Chairman Al Teller, who has begun to set up an in-house interactive “Skunk Works” to produce musical CD-ROMs. “I just want us to be ready for it.”

There are a few obstacles. Hardly anyone knows what a CD-ROM is. And the music business hasn’t cultivated distribution relationships with retail outlets such as Egghead Software or the PC mail-order firms where CD-ROMs are sold.

So far, the best-selling CD-ROM titles have been video games and reference books. Compton’s crams its 27-volume encyclopedia on one 5-inch disc, for instance. But as all segments of the entertainment industry look for a way into the growing interactive market, the music business may have an advantage.

“They’re used to that shiny little disc,” says John Eric Greenberg of Ion, a Los Angeles-based multimedia developer working on Bowie’s interactive venture. “It’s not some weird thing from San Francisco.”

Music is intrinsically less linear than film or books, and music fans are conditioned by MTV to the plotless, quick-cutting style of a music CD-ROM. With some not-far-off advancements in compression technology, it should be possible to squeeze the entire contents of a regular audio compact disc onto a CD-ROM, so consumers may come to expect a visual and interactive element with their audio purchase.

Then there’s the fan factor. While video games rely on their ability to peddle blockbusters to 12-year-old boys, many recording artists have broader appeal to people who buy their CDs, watch their videos, read their fan magazines, attend their concerts and plaster blank surfaces with their images. CD-ROMs, the logic goes, offer all that and more.

On Peter Gabriel’s “Explora” CD-ROM due out this fall, for example, the British rocker leads you on an interactive tour of his recording studio in Wiltshire, England, where you can jam with the musicians, remix tracks from his latest album, “Us,” view clips of music videos and interviews or learn more about his work with activist groups such as Amnesty International.

“It’s all about experience,” says Steve Nelson, whose San Francisco-based software firm Brilliant Media is producing the title. “You’re not just pushing buttons on a computer screen, you’re an active part of something.”

The hope, of course, is that it also offers big profits. Until recently, the traditional music industry wasn’t much interested in CD-ROMs; the first generation of interactive music CDs has been driven almost entirely by computer jocks like Nelson, who approached Gabriel with a demo last year, and artists who have a personal interest in the technology.

Motley Crue’s Nikki Sixx and Tommy Lee were talked into a CD-ROM by Tim Byars, a computer nerd with an affinity for heavy metal. Todd Rundgren, whose interactive title “No World Order” will be available next month in CD-I format (Philips Electronics’ CD-I machine hooks up to the television rather than the computer), has set up his own interactive development firm. Ice-T wants to do an educational title for kids about how to get out of the ghetto.

If you ask rocker Michael Penn, who worries that the fledgling format may spawn an interactive equivalent of MTV’s “bimbettes in skimpy outfits,” it is best to leave traditional music executives out of it.

“Nobody really knows what this is going to be yet,” Penn says. “It could be more revolutionary than stereo. But I don’t really want it left to the guys in ties sitting in their corporate offices, because then I know it will be boring.”

Indeed, the first interactive projects most record executives are talking about are retrospectives of established artists with a large body of work: BMG will likely do Elvis Presley, Capitol Records may do Pink Floyd. Frank Sinatra is another likely candidate. Such “database” projects are seen as almost sure money-makers, but are looked down on by those who hope CD-ROM will be more than a new way of repackaging old material.

But there are other plans in the works. MCA’s Teller, for example, is recruiting students for his research, because he says they are the closest to the new technology and the new sorts of music that can be made with it. And other executives worry that if they don’t find an early foothold in interactive production, they may face unaccustomed competition.

“The artists of the future are going to have numerous other ways of exploiting their creative property than the traditional ‘make an album, put it out, go on the road,’ ” says Bruce Kirkland, senior vice president at Capitol Records. “If we don’t provide them with an outlet, they’ll go contract with someone who does--like Apple or IBM.”

Apple and IBM have both started multimedia publishing arms, in part to ensure that consumers will have software to play on their CD-ROM drives. But while the number of CD-ROM drives in American homes is expected to nearly double by the end of this year, a plethora of platforms prevents software developers from achieving economies of scale. Philips continues to market its CD-I player, and 3D0 Co. is expected to come out with its own interactive disc-playing machine this fall.

With only about a million computer-based CD-ROM drives in U.S. homes, the market is small and divided.

The bigger problem is that no one really knows if music fans will want to see and interact with their favorite tunes.

“You may not know the answers for another two or three years,” says Christian Jorg, head of BMG’s new technology division. “But if you wait two or three years, it will be too late to be a player in this business.”