A Policy of Neutrality, for Now, In the Music Gadget Wars

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By Leslie Walker
Thursday, January 26, 2006

I have a bad case of mobile-media paralysis.

Overwhelmed by all the new options for taking songs and video on the go, I've decided to take a step back and let the digital media wars play out for a while before I make my next purchase. Clearly, my old MP3 player is ready for an upgrade -- and what I'd love to have is a new cell phone that will download the latest Usher tune as well as synchronize with the music collection on my home PC.

But I fear that I'll immediately regret any new purchase.

The problem is that there are already too many rival products on the market, including portable satellite radio receivers such as the one my brother got for Christmas and the Apple video iPod, which I coveted the minute I saw my niece unwrap a top-of-the-line model on her 17th birthday last month.

Digital music, already in chaos for several years, will change even more in 2006 thanks to the advent of a stunning variety of mobile devices and services. Even the companies that are releasing new products aren't making me feel much better -- after all, it seems like they're rolling the dice, hoping that the music format or product line they offer will be the one that consumers will fall in love with.

You could sense the fear and trembling around the latest news from the leading global music trade group, which announced Sunday that music sales dipped another 2 percent last year, despite the fact that mobile and Internet music sales tripled, to $1.1 billion, in 2005.

It's no secret that music sales have been under assault by free Internet-based file-sharing services. Recorded-music sales worldwide have plummeted by more than 15 percent since peaking at nearly $40 billion in 2000. Final figures for 2005 won't be released until March, but 2004 sales totaled $33.6 billion, according to the International Federation of the Phonographic Industry.

This year, the industry expects to halt the decline, partly as a result of recent wins in its protracted legal war on music piracy. At least that's what John Kennedy, the federation's chief executive, told music executives last weekend.

I say fat chance. While the record industry has scored significant legal victories against Kazaa and other song-swapping networks -- as well as consumers who use them -- new variations keep popping up, along with unanticipated threats.

For example, Kennedy's group said it is worried about an emerging technology called "digital stream ripping." Basically, it's software that scans digital radio broadcasts to identify specific songs and copy them for future replays. "In effect, a broadcast can be turned into a library of free downloads," said a report issued by the global trade group last week.

The report put an optimistic spin on digital commerce, noting that people are finally starting to pay for digital tunes -- some 420 million single-song tracks were legally downloaded last year, up more than twentyfold from two years earlier. It didn't mention how unhappy record labels are that most songs sold for a mere 99 cents apiece, thanks to the flat pricing plan pioneered by the Apple iTunes music service.

Until lately, most digital music purchases occurred on personal computers; even Apple's iPod requires a computer for downloads.


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