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2008 - Year of MP3, Demise of Windows Media, TuneWatch

My goal when I sat down to pen this Minute was to write about TuneWatch - a fantastic new feature from MP3tunes that automatically puts any song or album you purchase directly into your personal Music Locker. But first I want to tell you about a high powered banking meeting that took place back in the early days of digital music and give you my predictions for 2008.

In 1999 at an investor conference in NYC the energetic and pioneering Rob Glaser, CEO of Real Networks was the first up to speak. He explained how his company powered 70% of media servers and his Real Audio format was poised to dominate digital music. He listed the many media companies using his services as evidence. Next to speak was persistent and methodical Will Poole, Vice President of the Windows Digital Media Division. He announced partnerships with major record companies and device makers and told the audience that Microsoft's Windows Media would dominate digital music. As CEO of then public, I was also invited to speak and stunned the audience by saying that the Real and Microsoft's corporate partnerships were irrelevant -- MP3 would be the dominant audio format of the future.

I recall Mr. Poole scoffing at the notion that MP3 could prevail without any major company backing. But I thought it was preposterous to propose that anything but MP3 would prevail because it is the best format for consumers. Thanks to the Internet, top-down-Soviet-era-style mandates from corporations or even groups of corporations are largely meaningless. That might have worked in the 80s or early 90s but no longer. Now it is consumers who collectively have more power and dictate the course of technology.

Now for some predictions about what to expect with digital music in 2008...

1) Windows Media DRM as an audio format will officially be buried. All remaining online stores selling music in this format will abandon it just as Microsoft did last year. Some retailers are getting less than 10 orders per day and that doesn't even cover their electricity bill. Some like Virgin Digital have already halted business. Look for the bigger names (Walmart, Best Buy, and BuyMusic) and all the smaller names names to stop offering Windows Media. Microsoft will announce it's still supporting this technology -- that's only because the massive profits from their operating system and Office suite allow them to make irrational business decisions, and for longer time periods than other companies would find acceptable. (Note: Sony recently announced their music store called Connect will close in early 2008. It uses ATRAC3 - their own failed DRM format.)

2) The major labels will offer their entire catalog for sale in MP3 format. EMI is already doing this. Universal Music will expand its trial with Walmart and Amazon to be catalog wide and include an expanded set of retailers. (But still not Apple!) Warner Music will move to MP3 in Q1 forced by continued sagging CD revenues. Sony, unable to remain the only holdout, will grudgingly go along with the MP3 trend in time for the holiday season.

3) The CD becomes the $0.50 lure for the digital album. For two decades, the CD has been the monetary mainstay of the music industry. Widespread digital music player adoption has lessened the need for CDs and 2008 will see the continued deterioration in CD sales, matching the 20 percent decline in 2007. The CD as a standalone music product is unsaveable -- the industry foreclosed that opportunity when they sued to block's Beam-It and InstantListening in 1999 that could have extended the life of the CD another decade. Progressive accountants in the music industry will realize that the only value of a CD in 2008 is marketing -- to compel the 99 cent song purchaser to spend $9.99 on a digital album. To achieve this they'll offer a free CD to those willing to buy a digital album instead of a single track. For those who are accustomed to CDs (like me) this is heresy, but the industry simply must get more people to buy albums. People are making more music purchases now than ever, but the average dollar per sale has dropped off dramatically thanks to the 99 cent single. The industry must compel someone to pay for 10 tracks when they were really shopping just for one. With CD production costs under $1 the CD becomes a logical giveaway.

4) TuneWatch becomes the "must have" digital music product. First came Winamp, then came iTunes and now TuneWatch becomes the product no discerning music fan can do without. TuneWatch is a new service within LockerSync from MP3tunes. It quietly watches all the digital music you're acquiring. Once TuneWatch detects a song, album or even multiple albums it automatically syncs those files to your personal Music Locker. MP3tunes offers Music Lockers with unlimited storage for free and you can sign up for one here. TuneWatch works great with amazonmp3, iTunes (Plus songs only), eMusic, Walmart Music Download and every other MP3 music store. When you download a purchased track it will automatically be backed up to your Music Locker -- so you get free music insurance for any digital catastrophe. Perhaps more importantly,
seconds after you download new music, you can stream it from your Music Locker or any net enabled device. It's also handy if you buy music at work and school because you'll be able to easily sync it to your home or laptop computer.

If you download any of the millions of promotional songs swirling around the net from one of the many popular online sources such as Spin, MySpace, Filter Magazine, or your favorite record label site such as Roadrunner Records, TuneWatch will dutifully store those files in your personal Music Locker for your streaming and downloading pleasure. You'll never lose another track and you'll have your music with you wherever you go!

-- MR

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