What Digital Music Distribution is and Why it is Significant
What's at Stake?
Traditionally, music has been recorded to physical media, like CD or cassette now or like vinyl in the past, and distributed to music consumers through retail stores. "Digital music distribution" simply involves the transport of the product, recorded music, to the consumer via a non-physical, digital method
According to Mark Hardie, a senior analyst at Forrester Research, "consumers want a digital music format that allows a great deal more control of the content they choose…it is inevitable that we will have a music industry that distributes it products digitally.”
Music recording industry - annual worldwide revenues of $65 billion In 1998, nearly 20 million Americans visited music-related sites3 In 1999, Americans will spend $35 million on CDs; $1.6 billion by 2002 In 1999, piracy cost $10 billion in lost sales, according to the International Federation of the Phonographic Industry. The future of the industry Economic fortunes
Source RIAA 2000
Ten year record sales Source RIAA 2002
MP3 (MPEG Audio, Layer 3)
Fifteen years ago, in 1987, the Fraunhofer Institut Integrierte Schaltungen (Fraunhofer Institute for Integrated Circuits), a developer of microelectronics circuits and systems, began a project known as "EUREKA project EU147, Digital Audio Broadcasting". The institute worked in conjunction with Professor Dieter Seitzer of the University of Erlangen at Nuremberg to produce the powerful audio signal compression algorithm that would eventually become known as "MP3".
Without data reduction, digital audio signals typically consist of 16 bit samples recorded at a sampling rate more than twice the actual audio bandwidth (e.g. 44.1 kHz for Compact Disks). So you end up with more than 1.400 Megabit to represent just one second of stereo music in CD quality. By using MPEG audio coding, you may shrink down the original sound data from a CD by a factor of 12, without losing sound quality. Factors of 24 and even more still maintain a sound quality that is significantly better than what you get by just reducing the sampling rate and the resolution of your samples. Basically, this is realized by perceptual coding techniques addressing the perception of sound waves by the human ear.
A year later, in 1988, the Moving Pictures Experts Group (MPEG) was formed as a working g...
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...dicially established rule stipulates that the author of a piece of content relinquishes control over the use of the content once it is sold.
Price is another key win for the consumer. With most traditional record companies' cost structures changing, lower prices are sure to follow. Companies may worry that a customer's downloading an MP3 file might preclude the purchase of the song on CD. That theory doesn't seem to hold. According to Gerald de Melo, a consumer with a Web site dedicated to the legal issues surrounding the MP3 format, some people "use MP3s to 'try before you buy'. They wouldn't have considered buying certain CDs if it wasn't for MP3s." According to Michael Robertson, CEO of MP3.com, "we had a chance to meet with one of the larger retailers for [the Rio MP3 player], and we asked them, 'Hey, do you know what people are buying when they come into your store and they buy a Rio, what other things are in their shopping cart?' They did a report and what they found out was that the average person buying a Rio bought five CDs at the same time". That would not indicate that digital music distribution is driven wholly by the consumer preference for free content on the Web.