Rocking the Net

Back in June 1994, Jim Griffin, then freshly hired as director of technology for Geffen Records, wanted to make an impression at his new company, something that would prove to people just how important computer technology was going to be to the music business.

So Griffin decided it would be a great idea to give away “Head First,” a brand-new single from the hit rock band Aerosmith. The song, worth millions of dollars on the market, would be free for the taking to anyone who wanted.

At the time, there were those who suggested maybe Griffin had perhaps missed the point of the record business: how the idea was to sell music, not give it away. Why, then, did the Aerosmith song release signal one of the most significant developments in the recording industry since the invention of stereo? And why does Griffin today look like something of a visionary?

The answers lie not in what they gave away, but how. The Aerosmith release was the first time an entire piece of commercial music was electronically distributed, conveyed to the public as computer data over telephone lines.

The computer and communications technologies that made Griffin’s gambit possible--and especially the burgeoning Internet computer network--are now precipitating the record industry’s biggest metamorphosis in decades. Music promotion, advertising, broadcasting and even artistic approaches are already being changed in fundamental ways, and the technological revolution will soon strike the bread-and-butter business of music distribution as well.

Nearly every major record company has been gearing up for the digital age by creating departments with names such as “new media” and “online services.” And a host of others, ranging from pop music stars of yore to creative college students with a dual interest in computers and music, are creating their own sites on the multimedia portion of the Internet known as the World Wide Web--and trying to figure out how they might make a business out of it.

There’s a certain amount of mystery about what all this will ultimately mean. “Whoever tells you they do know what is going to happen is lying,” says Todd Steinman, head of online and new media for Warner Bros. Records. There are more than a few dangers too: Many artists and music publishers are in a state of high anxiety about the ease with which recordings can be illegally copied and distributed electronically.

But it’s hard to overstate the potential impact of digital technology. Consider, for example, the route the Aerosmith single traveled in getting to its fans. It involved no CD factories, no delivery trucks, no record stores.

No record stores? The Big Six music companies--Warner Music Group, Sony Music, Thorn-EMI, PolyGram, Bertelsmann and MCA--dominate the worldwide record business primarily because of their ability to put a physical product--CDs, cassettes, whatever--on retail store shelves across the planet. In 1995, for example, the $12-billion music industry sold about 614 million full-length albums and 101 million singles; moving all that product takes massive organization of the type that’s very hard to build from scratch.

In a fully wired world, however, anyone with a music recording and access to the Internet could easily distribute his or her product. That could enable smaller independent labels or self-published musicians who otherwise couldn’t get their product to the public to flourish.

For the moment, would-be buyers of online music would have to record the songs onto a computer disk drive, a serious limitation. But soon, personal CD recorders--which now cost about $1,200, but are getting cheaper in a hurry--will enable consumers to make their own CDs by dialing into an online music source.

“If you are a company that’s distribution-leveraged, this could really affect you profoundly,” Griffin says.

Of course, the big record companies will retain some major advantages and conceivably even enhance their position if they play their cards right. Just as a brand name and marketing muscle may yet enable traditional print media companies to prosper in the electronic age, so might the publicity machinery of the record firms provide an enduring edge.

The Internet, Steinman says, is a double-edge sword. “Distribution might be easier, but marketing will be harder,” he says. “If the public is bombarded with tons of product, it might be nearly impossible for them to wade through it all.”

Equally unpredictable is the potential impact of online broadcasting, technically known as streaming audio and video, still in its infancy, but developing rapidly. Whereas getting music online today requires recipients to download the audio data to a computer, a process that can take many minutes for even a short clip, streaming audio offers instant sound at the touch of an on-screen button.

The potential in streaming audio, sometimes called Webcasting, has record industry visionaries wide-eyed with possibility. Music-on-demand subscription services are one model for the future.

“You could have access to the world’s biggest record collection for X dollars a month, whatever you want, whenever you want it,” says Jeff Gold, executive vice president and general manager for Warner Bros. Records. “That’s going to be hugely appealing.”

Streaming audio may also enable record companies to wrest a layer of control away from the traditional power centers of broadcasting--namely, FM radio stations and the MTV cable network. (Video can be sent over the Internet as well.)

“We count so much on radio and MTV to get exposure for our artists, but sometimes that door is closed,” says Howie Klein, president of Reprise Records. “The Internet is another way we can get our music out to the public and not be held hostage to what the current [radio and TV] format is.”

Streaming audio is possible largely because of the work of Seattle firm Progressive Networks, whose software, RealAudio, has become the de facto standard in Webcasting via standard modems. Currently, the sound quality offered by RealAudio is marginal for music, but it’s improving.

Still, plenty of obstacles to online music distribution remain. One big issue is piracy and copyright protection: The threat of unauthorized recording and distribution is nothing less than terrifying to the labels and many others in the music industry.

Just a few weeks ago, the Recording Industry Assn. of America, a record industry trade group, sent a cease-and-desist letter to a company on the Web that was making entire albums available in digital form for downloading.

“That was a clear violation of the law as I understand it and it really signals the potential for abuse,” says Chris Tobey, vice president of marketing and new technologies for Warner Music Group.

Protective solutions may involve computer encryption-and-key schemes that prevent unauthorized downloading of songs, or the creation of some kind of digital lock that limits how many copies of a piece of music can be made from one legally purchased original.

And electronic distribution prompts an even more basic question: Can music lovers abide a world without record stores? Not to worry, industry executives say.

“It would be a mistake to believe that we will wake up one morning to find that all the record stores have disappeared,” Tobey says. “Both the old and new forms of music retail will probably coexist well into the next century.”

For example, an online virtual music store could easily store a vast back catalog of music titles too obscure for record stores to stock but still desirable to some buyers.

Even if electronic distribution takes some time to develop, the Internet is already having an immense impact on the marketing and promotion sides of the music business. If music marketeers could invent the ideal tool for their job, it might indeed look a lot like the Internet. There’s almost no practical limit to the amount or type of information that can be made available online, nor is there an intervening editor or station manager to filter the information.

“The Web is really one of the first places that the artist can talk directly to the ultimate consumer instead of going through somebody else,” says Fred Erlich, senior vice president for new technologies at Sony Music Entertainment.

Music enthusiasts with Internet access have thousands of choices, ranging from big record company sites to online music magazines to unofficial home pages created by fans for specific bands.

Smaller labels are enthusiastic too. “We don’t have the advertising budgets to place big ads or visit all the big radio stations to get airplay. We just have the music,” says Ron Gumpertz, president of Heyday Records, an 8-year-old independent label based in San Francisco. “The Internet is a way for us to spread the word and create a buzz for our music.”

It’s not at all clear that the cyberspace promotions have boosted record sales, but recording executives say fans can’t get online enough. That interest has not been lost on musicians.

“For me, the most exciting aspect of all this is e-mail and newsgroups, because that’s where the communication happens,” says Steven Page, lead singer and songwriter for Barenaked Ladies, a Canadian band on the Reprise label.

“Our fan base in the U.S. is hungry for more information because we don’t get the exposure here that we get in Canada,” Page says. “The Internet is a really cheap and easy way to send material to fans.”

Some other new digital music technologies contribute in this way too. Enhanced CD, a generic name for compact discs playable in both audio CD players and computer CD-ROM drives, can augment music with computer graphics, photos, text and video. About 100 enhanced CDs have been released and many more are in the production pipeline, even though fan reaction has been tepid thus far.

Indeed, the real test for all the new digital music technologies may ultimately be not whether they can simply replace current media, but whether they can expand upon it in some way. “No new technology will succeed in music unless it enhances the emotional musical experience in ways that musicians and consumers want,” Warner’s Tobey says. “Exactly what that is, of course, remains to be seen.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hear This, Now

Music is not a natural on the Net. Conventional date transmission methods usually mean a long wait for a short music sample. (say 2 1/2 minutes of downloading for a 30-second sample).Progressive Networks’ RealAudio offers an alternative, real-time listening. Here’s how the RealAudio system works.

THE WEB SITE

A company buys software that encodes digitized audio signals and creates a “server” within its Web site. The server transmits data using UDP, or user datagram protocol, which offers speed but at the cost of losing some data. (A second protocol, TCP, of transmission control protocol, is reliable but too slow for RealAudio.

THE SURFER

To access RealAudio on a Web site, a Net surfer needs a RealAudio player software. It’s free and can be downloaded at: https://www.realaudio.co.

Then, when a RealAudio icon is selected at a Web site, the player communicates with the server and the sound begins. Data is invariably lost, but the player software con fill in some of the gaps.

THE QUALITY ISSUE

OK, so it makes a gramophone seem like high fidelity. RealAudio wasn’t really designed for music anyway. For voice only, it has a nostalgic quality, sort of like a recording of an old-time radio broadcast (think Hindenburg).

* Source: Progressive Networks

* Freelance writer Paul Karon can be reached at pkaron@netcom.com