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  •   .COM LIVE

    Hosted by Leslie Walker
    Washington Post Columnist
    Thursday, February 25, 1999
    Leslie Walker
    ".com" columnist Leslie Walker.

    Welcome to ".com Live." I'm your host Leslie Walker. Every other Thursday, I'm online from 1 to 2 p.m. Eastern to give you an opportunity to talk directly with entrepreneurs, visionaries and online business people on the way the Internet is changing the world of commerce.

    Read my last .com column on the file-compression standard MP3, and how this technology is revolutionizing accessibilty to popular music.
    Michael Robertson
    MP3.com CEO Michael Robertson.
    On Thursday, February 25, I hosted a live Q&A with Michael Robertson, CEO of San Diego-based MP3.com, a prime source for downloading digital music. According to Robertson, MP3.com receives an average of 200,000 visits a day from users looking to personalize their CDs with music ranging from classical to hip hop.

    Read the transcript.

    Leslie Walker: Hello everybody and welcome to Michael Robertson, who is the chief executive of MP3.com. Michael, why don't you start by telling us about the mission of your Web site?

    Michael Robertson: The mission is twofold.

    First is to empower artists. This means giving them better control over their future. This means giving artists exposure which they haven't been able to get before. This means selling CDs, building a fanbase. etc.

    Also, it's about consumer freedom. Giving people control over their music in ways they've never had before as well as exposure to music they've never had before.


    Leslie Walker: Can you explain the MP3 file format and tell people how it's used on the Internet?

    Michael Robertson: MP3 is an audio compression format used to squeeze normally really big audio files down to more reasonable sizes. But the files still retain much of their CD quality.

    This smaller size makes (high quality!) music transportable for the first time over the net opening the doors for commerce, promotion, and marketing of music on the net.


    Bethesda, MD: Why would anyone want to go to all the trouble of downloading a software program and then downloading big fat music files to play a song, when they can just pop the CD in a try and play it?

    Michael Robertson: This assumes you have the CD. What about the 90 percent of music which is not available on CD from your local store? And it's not played on the radio.


    Washington D.C.: Michael,
    Are you in town meeting with the folks at the RIAA? How would you describe your relationship with them? Why are they so against digital distribution?

    Michael Robertson: I'm dropping into the SDMI meeting in Los Angeles on Fri.

    Our relationship with the RIAA is cordial. We've met quite a few times. They've spoken at our conferences and we'll have them again this year.

    The majors are threatened by digital distribution because it effectively breaks their stranglehold on distribution.


    Washington D.C.: How do you see the advent of digital music delivery challenging the notion of an album? If the majority of MP3's today are collected by individuals as singles, what place does the album have in the future?

    Michael Robertson: Music seems to conform to technology. First there was the single, then it was convuluted by the album format with it's a and b side notion. Then the CD removed that a/b distinction. Will digital music get us back to a singles business? It may since artists are no longer required to create 8 songs before they can sell something.


    Cupertino CA: Will internet upstarts have the ability to compete with the major record labels?

    Michael Robertson: Sure. That's the beauty of the Net. Any company can compete on equal footing. They are not locked out of the system. Contrast that with the way things work now. If you were trying to start a record label, it would be nearly impossible to get your songs on the radio and to get an endcap in Tower Records.

    Of course on the net, you can make your own radio station or your own endcap! This is the benefit of the Net plus an open music standard like MP3. Anyone is free to compete.


    Leslie Walker: The Lycos search engine reports it has found more than half a million MP3 files on the Internet. How many are available on your Web site and how many are downloaded every day?

    Michael Robertson: We have about 30,000 available on our web site all of which you are sure to have access to because they come from our servers.

    Lycos search engine simply links to other people's servers which are usually very small or inaccessible.

    From our Web site, we download about 200,000 music files each day.


    Silver Spring, MD: Rio just hit the shelves, and it's still out of reach for most Americans due to it's expensive price tag and required need for some technical know-how. How soon would guess to say that this technology will filter out to become as easily accessible to Joe in his car as music CD's where delivered to the market back in what the early 80s?

    Thanks

    Michael Robertson: The Rio is great technology, but it's just version 1. It will take sometime to come down in price and be easier to use before the masses get on board.

    Having said that, the technology is quite compelling and we've met with several monster size consumer electronics companies that are dedicated to bringing these devices to market sooner rather than later.


    Reston VA: What do you think of the gigs of MP3's that are posted to Usenet every day. Is it your main competition?

    Michael Robertson: The problem with MP3s posted to usenet is that the artists didn't make that choice to have their music freely accessible. The artist should be making the decision.

    Another problem is that there is little ongoing benefit to the artist. You download a song called beachparty.mp3 and it doesn't have a convenient upsell for the artists. This is a problem with MP3 files in general.

    The artist should be able to turn every song into a shopping mall for themselves and MP3 doesn't offer that today. Hopefully some watermarking technologies will help here.


    Leslie Walker: Michael, you say your relationship with the Recording Industry Association of America is cordial, and I'm sure it is, but they are opposed to uncontrolled use of MP3 online and are working to come up with industry standards that will thwart piracy. Tell us your views on their initiatives.

    Michael Robertson: They are opposed to use of MP3 because it doesn't give them the control they feel they need. We disagree on the control (read: security) issue because we believe security hurts more than helps.

    If a consumer buys a song only to find out that they can only listen to it on one computer and can't make a CD of it to listen to in the car, that will surely turn them off. So we believe a system which focuses on making the music as useful as possible is the only way to go.

    As for SDMI, Madison Project, etc. the problem with these is that they focus almost entirely on keeping the "system" in place today working in the future. They do not focus on bringing the advantages of digital music to the consumer.

    We've written many pieces on these issues on our MP3.com web site in the news and Michael's Minute area. I encourage people that want to know more to visit the Web site.


    Cambridge, MA: You reported on MP3.com that Microsoft was given free admission to SDMI. Two weeks ago, Hilary Rosen specifically denied that in this forum. Do you stand by your report? Why is the RIAA denying this?

    Michael Robertson: We stand behind our report. The RIAA is in fact denying it because I think there's a certain level of embarassment associated with having to comp tech companies to get them to participate.


    Reston, VA: Can download MP3 files onto minidisc?

    Michael Robertson: No. Different format.


    Leesburg VA: What kind of music do you have online? Are they demo's or full tracks? Do you have popular artists?

    Michael Robertson: We have more than 40 genres from Alternative to World Music and everythning in between.

    Each artists is required to provide at least one full length promotional track for free download. What they offer beyond that is up to them.

    We have some popular artists and are getting more each day, but they are under enormous pressure not to work with MP3.com.


    Alexandria Virginia: It seems that MP3 would be perfect for Books-on-Tape.

    Do you know of any Books-on-tape producers who will use MP3?

    Leslie Walker: Michael, your Web site just starting distributing files (including New York Times news digests in MO3) from Audible Inc., the folks who distribute Internet sound versions of books on tape. Are the audible files copyright-protected, or free MP3s?

    Michael Robertson: Yes, we just started the NY Times in MP3 format. It's great example of how MP3 can be used with non-music files as well as music.

    Books on tapes are here. That's what Audible does, they're the online leader and they're moving towards MP3 as far as I understand.

    The Audible files on our site are copyrighted, but not secure. So users are not prohibited technically from using them how they wish.


    Washington DC: Mr. Robertson, it seems that the music industry is trying to say that MP3 de-values music by making it seem "free" and contributing to music piracy.

    Now, Doesn't normal broadcast radio make music seem free? After all, radio IS free.

    It also seems that the industry has done a good job of shutting down the illegal sites. So what is the problem?

    And if you use the logic of the music industry, since we have had VCRs for years, shouldn't Blockbuster be out of business with all the illegal video copies?

    Finally, how many normal people really go through the trouble to pirate music and video? Aren't people mostly honest and wouldn't get illegal copies when given a choice?

    Michael Robertson: I agree with your radio is free analogy. Using something free as a loss leader is an age old sales tool.

    Also agree with Blockbuster analogy. Music industry could sell more music using the Net, not less.

    If legal digital music was more accessible and more affordable, the incentive to pirate would greatly diminish.


    Reston VA: Do you think that the Music industry will be forced to use the honor system (like shareware) to produce revenue from songs? Since they can't seem to stop MP3's what choices do they have?

    Michael Robertson: I don't know how successful the shareware model is. I think the real benefit to artists is to have an ongoing relationship with the consumer and giving away a free track is a great way to make this happen.


    Washington, DC: What do you see in the future for MP3 players?

    Michael Robertson: More capacity and cheaper! Watch for some killer devices in 99!


    Washingon DC: How do you pay the bands whose work is on your site? What are the financial arrangements behind your MP3.com Web site?

    Michael Robertson: We don't pay the bands directly for being on MP3.com. They agree to offer up one promotional song in return for massive exposure. We help them build their fan base, get exposure, and sell CDs.

    If they want to use us to manufacture and distribute CDs thru our DAM system, then we'll do that for no startup fee and give them 50 percent of each CD sold.

    And we never take ownership of their master recordings for eternity like a regular record label.


    ft. myer heights, va: I don't get it. The music business has always been hard on anything that might affect their intellectual property. Don't you figure they're going to spend millions to put you out of business?

    Michael Robertson: They may try, but the MP3 movement is bigger than Mp3.com. It's the users who are on our side. They can't put them out of business.


    Wheaton Maryland: The mp3 technology is incredible. Curious as to know if artists will start to include information about the genra/mood/style of music so that mp3 players can sort these pieces into playable lists like mood, etc.?

    Michael Robertson: Perhaps ID3v2 will make this an option, but it's been slow to catch on.


    Washington DC: Have any new bands with no recording contracts at all developed big followings on the WEb? If so, who? If not, do you envision this happening soon?

    Michael Robertson: We're still very young in this whole MP3 movement. It's a bit early to look for giant success stories, but they will come. We're signing up over 100 bands per day. The next Nirvana is likely on our site somewhere.


    Leslie Walker: Folks, we're about halfway through this dialogue. Keep those lively questions rolling in!


    Washington D.C.: Michael,
    I think what your are doing is terrific. Digital music rocks.
    Is MP3.com a record store or a music label? And if you are a label, are you competing in the industry you often criticize?

    Michael Robertson: When we're not a record label or music store in the traditional sense, but we surely emcompass some of their needs. We do give bands exposure, we do help them sell CDs, we do e-commerce for some.

    I think what MP3.com is doing is transforming what a music label is.


    Leslie Walker: What do you see as the biggest challenges facing MP3 and other open music standards on the Net? Is industry acceptance the main one?

    Michael Robertson: I don't think industry acceptance is the most important. Consumer acceptance is much more important. So consumers need to have the playback devices they want, be able to find and manage the music they are looking for.


    Arlington, VA: How do you feel about government regulation in the software industry?

    Can it effect you?

    Michael Robertson: The govt has stayed out of software industry which I think is a good thing. I hope they do the same with music.


    Reston VA: What specifically is the music industry doing to combat the MP3 piracy issue?

    Michael Robertson: I can't really speak for the industry, but I can tell you somethings they talk about.

    They've passed laws so that it is now a felony to share music. They've filed a few lawsuits.


    Fairfax, Va: Could MP3 help prevent musical artists from being sellouts?

    Michael Robertson: I'm not sure what a "sellout" means. If it means that artists will use their music to make money in other ways besides selling CDs, the Net actually may make more sellouts.


    Leslie Walker: There's a lot of talk today about how digital delivery of music will transform the industry. Tell us more about how you think Mp3 will transform record labels.

    Michael Robertson: It think smaller labels will be squeezed. Bigger labels will always have the dollars to offer artists massive promotion. What do smaller labels offer artists? Small amounts of exposure and access to distribution channels both of which they will eventually be able to get from the net.


    Leslie Walker: David Bowie has an ISP business. Todd Rundgren sells music subscriptions online. It seems more and more artists are going directly to their fans online. How do you see the relationships between fans and artists changing on the Web?

    Michael Robertson: This is what it's all about. The value to the artist is not in the one time sales of a song for $1 or even the one time sale of a CD, but an ongoing relationship for concert tickets, subscription services, merchandise, limited availability products, etc.


    Alexandria VA: I enjoy MP3, I just bought a Rio Player I don't illegally copy or distribute intellectual property, I am an honest person. And finally, I make over $100K a year. How can I tell the recording industry to wake up and get with the program?

    Michael Robertson: Not sure you can. It may be that the music industry will have to lose some money or marketshare before they will change it sure seems that way.

    The reality is they're making a tidy sum in profit today so they have little reason to change.


    Rockville, MD: What is the most fun part about your job? Also, what's been the biggest surprise to you about how music is developing online?

    Michael Robertson: Most fun is getting messages from artists who thank me profusely for reigniting their dead music interest/career. That's incredibly rewarding.

    Biggest surprise is probably how powerful the music industry is and how they're impeding our business. Because of direct pressure from the establishment, artists won't work with us, advertisers have pulled their ads, magazines won't take our ads, etc.


    Vienna, VA: What will happen to your site when MP3 is the past and it's MP7 or LiquidAudio that's the music format of the Web? What I mean is, why did you name your Web business after a compression format?

    Michael Robertson: Good question:

    I refer you to an article we wrote on this topic at:

    http://bboard.mp3.com/mp3/ubb/Forum8/HTML/000027.html

    In summary, it isn't about the format. Nobody cares about the format. It's about the revolution in digital music. The revolution needs a name. MP3 is as good as any.


    Leslie Walker: You wrote last week that you had paid to run an ad in Grammy magazine (run by the National Academy of Recording Arts and Sciences, only to have the ad yanked. Did anyone tell you it was because of the MP3 controversy?

    Michael Robertson: Yes, this is the case. There's an article on our web site about it. They sent us a letter saying we were "too controversial". Kind of ironic given that Grammy organization is supposed to represent artists and we have over 6000 artists we represent.


    Silver Spring MD: Any word on if Sony or Panasonic are planning to develop a portable MP3 player?

    Michael Robertson: I know both are investigting it seriously. Sony is unlikely to be an early mover because they have their own mini-disc format.


    Washington DC: Many sites that offer online music do it in the Real Player format. What is the incentive for them to change their format to .mp3?

    Michael Robertson: Real is great for lower bandwidth lower quality options. If you want CD like quality, then MP3 is the way to go. Different technologies for different applications.


    Rockville, MD: In what ways does MP3 technology pose dangers to the recorded music industry?

    Michael Robertson: It allows anyone in the world to distribute and sell music to a worldwide audience. This threatens their oligopoly.


    Reston VA: In the brave new world of music that you and your web site is promoting, how are the artists supposed to get paid? Every CD they publish (if popular) will get ripped and posted days or hours after release. They won't make music if they can't make a profit, right?

    Michael Robertson: There are laws against doing what you propose. Let me turn the question around a bit. How do software companies get paid? Any of their software programs can be copied and posted to the net and they won't make a profit right?

    The answer is yes, there are people that will steal - that has always been the case. But everyone doesn't steal. In fact, if you made music accessible and affordable, few would steal it. For the same reason drug dealers don't sell aspirin.

    As for profit motive, there will ALWAYS be people making music.


    cambridge, ma: The RIAA has successfully exerted influence over the legislative process (for example, getting the AHRA passed) because they are a well-funded and well-organized group. Is there a plan for a lobbying group to represent the new world of digital music to Congress and policy-makers?

    Michael Robertson: There is one organization named DIMA, but many think they haven't done a great job of representing net interests. The reality is that Real Networks interest are diferrent then Broadcast.com, than MP3.com, etc. Since many companies are just now building their business models, some aren't sure WHERE their interest lies.


    Washington, DC: What protections are there re: forged, unauthorized, or bootleg MP3s proliferating online? Conversely, are there ways to release MP3s under the GPL or similar liscences, and to have that information travel with the MP3?

    Michael Robertson: As for protections, they have full force of the law. It's now a felony to pirate music.

    Good point about licenses travelling with songs. That doesn't happen yet.


    Reston VA: Mr Robertson, while I agree that most search engine MP3 links are dead or point to porn sites, I'm looking right now at the newsgroup "alt.binaries.sounds.mp3.1990s", there are over 265 songs posted here just in the last three days. Full albums from popular artists like "IceHouse" and "Alice in Chains", the music industry can't shut down Usenet like it does a web site. Is there anything the music industry can really do to protect their copyrighted materials?

    Leslie Walker: This is an important question. Creators of copyrighted works need protections in the long run, and today's digital technologies are evolving too fast for protection schemes to keep up. A reader this AM said she had posted a software program called NewsBin on UseNet that allows even non-geeks to post hundreds of MP3 files at a pop. Michael, surely you are not opposed to any controls at all? Can the honor system really work in an industry so valuable?

    Michael Robertson: What controls are their for software? None. Yet Microsoft posts record profits every quarter. Virtually every software company in the world used to use copy protection. Now virtually none do. You have to ask yourself why.

    It is because it hurts more than helps.

    The amount of piracy is really a reflection of the demand. There is _huge_ demand, yet the major labels offer no way to acquire music in a digital format. So just as with drugs, people will find a way.

    So the music industry can spend billions to fight piracy or figure out a way to create a system where they benefit.

    Some might point to the broadcast model. What if I taped an episode of ER and emailed it to you Leslie. Does the network which produces it want to throw me in jail? Of course not, they would actually like that since it increases the reach.


    Hyattsville, MD: How come this is going to be so big, when i can't even use the net to help straighten out some of those lyrics in my head? Do you think someday MP3 files will be searchable for words/phrases?

    Michael Robertson: Absolutely. Unfortunately a lyrics database in switzerland was shutdown recently. It could have been a great resource. It may open up as an ad driven vehicle.


    Leslie Walker: Michael, one final question. I'd like you to peer deeper into your crystal ball and tell us more about how you see the brave new world of music evolving. It's clearly a wild ride, but what's going to be different about how I go to concerts and buy and listen to music a year or two from now?

    Michael Robertson: The selection will be incredible. The economics will change that smaller bands can still make a living, not just the platinum sellers.

    You'll have an audio listening device with you where ever you are: in the car, in the house, or on your bike. You'll be able to listen to your own library or a "station" custom tailored for you. When you hear a song you like, you'll mark it so you can easily replay it in the future.

    Exciting stuff!!


    Leslie Walker: Michael, you're right that Microsoft makes big fat profits, but the software industry has long considered piracy one of its biggest competitors. And ironically, digital distribution of commercial software on a big scale – in businesses and government – may HELP the software industry get a better grip on piracy!


    Sterling, VA: For those concerned about digital (music, software, etc.) piracy, please comment on how watermarking technologies can combat this. It is my understanding digital files can be tagged with an un-alterable signature saying who is liscenced to own the thing.

    Leslie Walker: Companies like ARIS Technologies offer watermarking already used by musicmaker.com and an upcoming MP3 store from MCY.com. There's also Diversinet Corp, which offers a public key infrastructure technology of some kind. Michael, how many competing formats are there? Hundreds?

    Michael Robertson: There is no watermarking standard yet unfortunately. The real benefits of watermarks is the positive aspects, not the darkside applications. It's not about protecting the music, it's about adding value to the music to the consumer and more connections directly to the artist.

    Leslie Walker: That is all we have time for today, folks. A special thanks to our guest Michael Robertson, also to the folks at washingtonpost.com and all of you who sent in your great questions. Hope to see you again in two weeks!


    © Copyright 1999 The Washington Post Company

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