Notes From The Underground

Brandweek, Sept 6, 1999 by Kipp Cheng

Online music, no longer the domain of upstarts, gets some respect.

Onstage before a capacity crowd at New York's once notorious Studio 54 this past July, director Spike Lee helped coax on the music industry's revolution. Standing at the podium at the second annual Yahoo! Internet Life online music awards, all Lee needed to do was announce that the song, "The War," by the Artist Formerly Known as Prince, had been named Best Internet-Only Single.

The award--for a 26-minute song unsuitable for radio airplay--brought to vivid, offline life a reality that has spooked traditional record labels since last year's emergence of the MP3 music compression format: artists, both known and unknown, are now visibly and credibly releasing their music over the Internet without the marketing muscle--and interference--of old media recording companies, radio or heavy rotation on MTV The roar of applause from the audience of 1,000-plus digerati as the Artist accepted his prize signaled the definitive arrival of the wired new music elite.

The enthusiasm of that audience may be easy to understand. But, the casual observer would be surprised to learn that the traditional recording companies are now also attempting to harness the power of the Web, understanding that the delicate embrace is imperative if they want their companies to keep from becoming casualties in the online revolution. A more cynical take on the medium they so recently shunned is that new, Web-savvy music companies have already embraced the change, and that traditional record labels must enter the fray or lose out big time.

Joanne Marino, CEO and co-founder of Stoneham, Mass.-based Web consulting firm Digital Music Network (DMN), says it's about time. "Traditional music entities need to understand that they will need to learn how to use this medium to benefit themselves," she says. "Now, all of the sudden, all of these outside industries are looking in and saying, 'You need us, we can enable technology for you.'

"There are a lot of different revenue models out there and there are a lot of different ways that people can work together," Marino adds. "The relationship between labels and tech companies doesn't have to be an antagonistic one."

Indeed, in the past several months, most of the major record labels, including BMG, Sony, and Universal have announced initiatives to address the issue of selling music online. They've been spurred on by the industry's evolving attitude toward the once-dreaded MP3 file format--which, despite its lurid bad-ass rap, is simply a technology that compresses and decompresses music files. Equally influential in their changing attitudes is the fact that consumers view the Internet as a viable distribution mechanism, one fervently accepted by both famous and up-and-coming musicians.

In fact, an ever-growing number of established recording artists--including YIL awards show headliners The Artist, Public Enemy's Chuck D, and even rock legend David Bowie have taken control of their careers by selling or giving away their music on the Web. Bowie, who also has his own ISP, just announced that his latest album on EMI would be available for download in its entirety--and before its dirt-world release--through the label's site this month.

These music industry vets join the new generation of Net-savvy musicians who have eschewed the traditional recording contract route to fame and fortune, capitalizing instead on the democratized playing field of the Web.

"I'll be a force to be reckoned with," said Chuck D during his performance at the YIL awards, "because of technology."

MP3: MYTH & MADNESS

The continuing innovations in technology have allowed online music to travel light years away from the days when unwieldy and poor quality MIDI and WAV sound file formats dominated music Web sites. Today, high compression standards have resulted in impressive, if not yet stellar, sound quality, and, as the distribution pipeline ekes toward a broader-band future, the impact of the Internet will grow to meet or surpass that of its older media kin.

Of course, much of the public and media attention in the past 12 months has focused on MP3, illustrated by the fact that "MP3" has now surpassed "sex" as the most frequently requested term on Internet search engines. In a survey conducted by DMN for its music industry consulting group Webnoize Insider, nearly 60 percent of respondents in April 1999 claimed awareness of the term MP3, compared to less than 8 percent in December 1998. Meanwhile, public awareness on the availability of downloadable music in general was at 36 percent in April 1999, tripling from a 12 percent awareness rate in December 1998.

So the technology that many record label executives had treated like a four-letter word in the past has penetrated the population at large, requiring labels to deal with MP3 whether they want to or not. Thanks, in part, to the press' near pornographic-obsession with it, the file format has become the proxy for describing the opportunities and perils of all downloadable music. Notes Jason Olim, co-founder and CEO of Fort Washington, Penn.-based CDnow, the giant music e-tailer that recently merged with Columbia House Online, MP3 "is a term that has far more meaning ascribed to it than is necessarily appropriate."