MPEG Layer-3

Advances in Internet Music Distribution

for Bus. 656P - Patterns of Electronic Commerce

Goizueta Business School

November 5, 1998

 Advantages of MP3

A typical compact disc contains about 45 minutes of music, which requires about 480 megabytes of memory. Compact disc-quality music is played at a bit rate of approximately 1,400 Kbits/sec. Without compression technology, distribution of high-quality music at common modem speeds (28.8 or 56 Kbit/sec modems) has been impractical.

MPEG Layer-3 (commonly known as MP3) files use a 12 to 1 compression ratio to create near CD-quality music tracks that significantly reduce download times and storage requirements. The same 480 megabytes of music from a CD would be reduced to a 40 megabytes. A single high-quality audio track stored in standard wave file format might consume 50 megabytes of storage space, an equivalent MP3 file would occupy just fewer than 4.2 megabytes.

Compression technology also significantly reduces the cost of storing a CD on a hard drive. For example, a 4 Gigabyte hard drive, costing between $300 and $400 today, can store about 100 albums using MP3 technology. At this compression ratio, albums cost about $3.50 per album to store, compared to an uncompressed cost of about $42.00 per album. With MP3 technology, the storage cost of CD-quality music has finally undercut the cost of an actual CD, which is typically $15.

With recordable CDs selling for about $12 (and likely for less in the near future), the economics of self-manufactured CDs containing only the songs you want is becoming feasible.

 Use of MP3 Technology

Since its debut in early 1998, WinAmp has gone through eight revisions to include functionality includes the ability to play multiple Windows audio formats, create playlists and allow listeners to customize sound through a 10-band graphic equalizer. A growing slew of complementary programs have also sprung up to support WinAmp. Dozens of "skins," which change the look of WinAmp’s interface, are available on WinAmp’s home site. Others have programmed plugins designed to create bright visual displays that pulse to the music. Some of these are even equipped to make use of 3D accelerated video display cards.

Several other players have also entered the market with music-industry endorsed technologies which allow for carriage of medium to high quality music over the Internet but with cryptological protection measures designed to ensure payment for download.

 Limitations of MP3

 Digital music distribution in the past has been limited by two factors – technology and copyright barriers.

Even with the advancements of the compression algorithms used in the MP3 format, the most commonly used 28.8 or 56 Kb/sec modems are not capable of delivering real-time CD-quality music. However, ISDN, cable modems and the forthcoming ADSL technology - with speeds between 128 and 1,500 Kb/sec, - are capable of real-time, streaming delivery of high-quality music. As compression technologies allow for greater compression ratios and larger bandwidth transmission systems become more widely used, real-time transmission of music will likely become widely utilized.

Another limitation is the limited mobility of these file formats for most users. Clearly those who have a recordable CD-ROM drive can create portable copies. Diamond Multimedia's new Diamond Rio, a portable MP3 player capable of storing up to 60 minutes of music, also attempts to work around this restriction. But both are somewhat rare among music listeners.

A possible long-term solution to this barrier is the advent of a common media, a recordable disc that is used in PC, video, portable and other applications (e.g. Sony MiniDisc technology, had it been widely adopted, could have fulfilled this purpose).

 The Threat of Piracy

The music industry has been reluctant to use the Internet as a method of distribution because of the ease of copying and redistribution without authorization. MP3 technology, in this sense, is the music industry’s worst nightmare. The problem goes beyond avid music collectors searching the Internet for their favorite songs. Pirates in any part of the world can now access high-quality samples of most recording artists’ works for reproduction into illicit CDs for sale on the black market.

Though some are used for legal purposes, most MP3 files found on the Internet are bootlegs. Easily located "ripper" programs can pull songs off a CD converting it either directly into an MP3 or a wave file, which can then easily be converted into an MP3. A vast number of web sites have popped up in recent months purport to offer numerous popular MP3 files for download. Most of them are rife with broken links, where files have been removed at request of copyright holders.

The music industry has taken two early steps toward combating the threat of bootleg MP3s – legal action and encouraging development of competing (and less-threatening) high quality digital music formats.

 Future Commercial Development of Compressed Digital Music

It is clear the technological limitations that had thwarted Internet distribution of high-quality music are quickly falling. Copyright protections, in their current state, are unable to cope with the anarchic and decentralized nature of the Internet in protecting intellectual property rights.

What is the music industry to do? How can they commercialize the already-rampant distribution of MP3 files containing their copyrighted materials?

It has also been suggested that a "flexible licensing mechanism" be incorporated into the music that would allow for a set number of playbacks or a set amount of time for the songs to play. This could be accomplished by setting limits on the number of times or amount of time an encryption key could be used to decrypt the music. Sony is pursuing this a version of this path with its Sony Music Jukebox product, which allows a time-limited access to its music library. It remains to be seen, however, if consumers will be willing to pay for time-limited music when high-quality MP3 files are available free to those willing to look.

 References: 

 Lacy, Snyder, and Maher, "Music on the Internet and the Intellectual Property Protection Problem," AT&T Labs

Blaze, Feigenbaum, and Lacy, "Decentralized Trust Management," IEEE Conference on Security and Privacy, May 1996.