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New high-quality MP3 format debuts
By John Borland CNET

The online world will get its first glimpse of the new MP3 format Thursday, with the first major update to a technology that has become synonymous with both digital music and online piracy.

Thomson Multimedia and the Fraunhofer Institute, the companies behind the MP3 digital music format, are releasing an upgraded version of their music format Thursday called MP3Pro. The companies hope to attract software and hardware developers to the new technology but are also providing a version for consumers to play with.

Although the release will be limited, it will include a new player and "ripper," or file creator, that will allow music lovers to create near-CD quality digital music files using only about half the disc space previously required for MP3s.

While MP3Pro files will work with software and devices based on the current MP3 format, they may sound worse on systems designed for standard MP3s because of differences in the way the sound is recorded. MP3Pro uses two separate streams of data to improve audio quality, only one of which can be detected by older players.

The release comes as the old MP3 format is under increasing pressure from companies such as Microsoft and RealNetworks, each of which have struck deals with record companies to use their technology in subscription or download services. But with the nearly universal use of MP3s online, Thomson and Fraunhofer hope to finally win their way into the record companies' graces.

"I expect that MP3 and MP3Pro will gain acceptance by the content owners," said Henri Linde, vice president of new business at Thomson. "If there are 12 million users of MP3 hardware devices, and if everyone has players for MP3s (on their computers), that's a fact that the industry cannot continue to ignore."

Others aren't nearly as confident about this strategy's success. Analysts note that even the new MP3Pro will lack any kind of built-in anti-piracy mechanism. This makes it a far less attractive choice than Windows Media from the record companies' perspective, they say.

"None of the Big Five (record labels) are going to distribute without security," said Gartner analyst P.J. McNealy. "Unless that's there, (MP3 proponents) are unlikely get any of the Big Five."

Listeners' choice
The MP3 backers do have one critical bit of history on their side. To this point, at least, it has been consumers, rather than record companies, who have driven the online music technology. The MP3 wave started as a grassroots phenomenon, as did later services using MP3 files such as Napsterand its rivals.

Other formats have moved ahead, however. Windows Media, for example, has offered much smaller files for equivalent audio quality for several years. An open-source, royalty-free project called Ogg Vorbis also is making substantial progress with its own high-quality format.

The technologists behind MP3 announced that they would release their own updated version of digital music's standby early this year.

The drive to push more data into smaller files has been critical as more people download music online over slow dial-up connections or load songs onto MP3 players with limited memory. Although PC hard drives are ballooning to the point where hundreds of albums could fit on a typical drive without filling it, the "flash memory" used in most portable players remains relatively expensive.

The MP3Pro format will be completely compatible with past MP3 files, so a new player will still be able to play songs encoded, or "ripped," with earlier technology, the companies say. But a new level of information has been added that substantially increases the audio quality for a given file size.

The companies haven't said who has agreed to use the technology, which will be about 50 percent more expensive to license than MP3. That means any company using Fraunhofer's encoder, whether in a hardware device or a software program, will have to pay about $7.50 per unit they distribute, Linde said. Companies developing their own software based on the technology would pay about half that much based on current published rates. Companies including MusicMatch have looked at early versions of the format, calling it "excellent," but have not announced plans to add it to their software. These companies' decisions to release products including MP3Pro will be the ones responsible for its move into the mainstream, if it moves that far.

A changing landscape
As MP3Pro reaches the market, the online music scene looks very different from just a year ago, with the major labels finally giving a good impression of being in the drivers' seat.

With the news of subscription services MusicNet and Pressplay, the big labels appear close to the point of releasing a large quantity of their music online in legal ways. Analysts say these choices, which will finally give consumers an industry-sanctioned place to go for music online, will help drive the technology decisions made by consumers. If these services widely support one format over another, that format is likely to become a standard for ordinary consumers, analysts say.

At this point, the technology decisions being made by the big subscription services are unclear. MusicNet will predominantly support RealNetworks technology, while the Pressplay venture backed by Sony Music and Vivendi Universal has yet to announce its format choices.

Microsoft has already struck unrelated deals with most of the big music labels, however.

"We will be deeply involved in many of these services," promised Dave Fester, general manager of Microsoft's Windows Digital Media division.

Analysts say consumers aren't likely to throw out the millions of songs they've collectively ripped and stored on their computers. But it may be harder to keep them using even a higher-quality MP3 if the official music world moves to a different standard.

"Just because you have a CD player doesn't mean you throw out all your cassette tapes," McNealy said. "It's going to be a slow transition."

The new high-quality MP3 player and encoder will be posted in several places Thursday, including the Web site.

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