IBM and Record Giants Test Online ‘Music Store’

IBM announced yesterday that a six-month experiment with five major record labels has successfully emulated a traditional music store online. According to the company, the store allows music to be downloaded, but prevents illegal copying.

The experiment, known as AlbumDirect, involved music giants BMG Entertainment, EMI Music, Sony Music Entertainment, Universal Music Group and Warner Music Group.

Exploding Digital Music Market

The record companies believe that this technology will be critical to their ability to cash in on the burgeoning online digital music market. A survey by London-based Market Tracking International Ltd. shows that music purchased via the Internet will account for an estimated 11 percent of global music sales by 2005, compared with less than 0.5 percent last year.

The report also forecasts that digital downloads will account for more than 12 percent of global online sales by 2005, and that the figure will soar to between 20 percent and 25 percent by 2010 as consumers become accustomed to the new format.

Because of its lead in Internet use, the report also projects that the U.S. will see the greatest percentage of digital downloads, accounting for nearly 16 percent of online music sales by 2005. Japan is slated for second place with just eight percent.

The Test

The IBM experiment was conducted using a digital music delivery system developed by the companies, which was piped via the Internet into 1,000 San Diego, California households. Participants in the test used the system to download single cuts, full CDs and liner notes plus art.

The system also utilized IBM’s technology for electronic music management, digital rights management and electronic media, which supposedly made unauthorized copying and use of music online impossible.

Company officials added that the AlbumDirect trial began in June 1999 and continued through December 1999, with follow-up research extended through mid-January.

Controversial Issue

The companies said that participants in the tests downloaded more than 50,000 digital musical tracks, and could ultimately choose from more than 1,000 different albums and 2,000 singles. The companies added that they “may choose to comment on their respective plans for digital distribution” in the near future.

Many industry analysts feel that this latest effort to develop a way to securely download digital music underscores the music industry’s growing concern that the wrong technology in the wrong hands could quickly undo its lucrative stream of royalties.

For example, in January, the Recording Industry Association of America (RIAA), sued digital music Web site MP3.com, Inc. on behalf of 10 major record labels. The RIAA claims that MP3 violates music copyrights by allowing consumers to store digital copies of their CDs on the site.

MP3.com vehemently denies the charges and said it intends to vigorously defend itself.