The music industry, led by the EMI Group, presented Microsoft with a “wishlist” yesterday of what it would like to see in the next version of theWindows operating system, codenamed Longhorn, scheduled for release inlate 2006.
Microsoft requested the wish list from EMI, according to a source close tothe negotiations who spoke to TechNewsWorld who spoke to TechNewsWorld on the condition of anonymity.
The source would not reveal any details of the wish list, but said, “Itwill make sure that CDs with third-party CD protection are treated in a waythat provides the best possible user experience and the greatest level ofsecurity for the labels and the artists.”
The Right Way
“The feeling is,” the source continued, “if you do provide things like DRM[Digital Rights Management] portability, if you support every DRM standardand every portable player out there, if you support every jukebox thatanyone would ever want to use, if you allow consumers to make back upcopies of their CDs — if all that is done in a rights managed way, then consumers won’t care that they can’t just rip into MP3.”
The source praised Microsoft’s openness in the Longhorn development process.”They’re doing it the right way,” the source said. “They’re starting early,and, just as they did with Service Pack 2 in working with all theanti-virus and firewall vendors, they’re working with the labels and the softwarevendors for CD protection, making sure it’s tightly integrated into theoperating system so you have better effectiveness against ripping and aseamless experience for the user.”
Asked if efforts would be made to get the largest seller of online musicto alter the operating system for its computers to recognize CD protectionschemes, the source responded, “The majority of iPod users are PC-basediPod users so from that point of view, Apple is covered from Windows.
“From a Mac point of view, it’s less than one percent of the PCpopulation. In the minds of the labels, it’s not posing a revenue threat in terms of volume.
“If you just cover the PC platform and left one percent of the rest of themarket ripping into MP3s, you probably don’t lose a lot of sleep over it.”
Could Impact OS Sales
Microsoft has to walk the DRM line very carefully, according to MattRosoff,an analyst with Directions on Microsoft in Kirkland, Washington. “Theyhaveto give the record companies some of what they want, but recentlyMicrosofthas been stepping the other way and giving consumers what they want,” hetold TechNewsWorld.
If the software colossus is perceived as being toocozywith the recording industry, it could have a negative impact on futureoperating system sales, maintained Jarad Carleton, an IT industry analystwith Frost & Sullivan in Palo Alto, California.
“Seeing indications of record industry pressure on the software companiesthat make operating systems will without a doubt have an effect on new OSsales if the record industry succeeds,” he told TechNewsWorld via e-mail.
Last Line of Defense
According to Carleton, “Word of new restrictions will get out rapidly among the tech savvy, andupgrades to the new version of Windows will be sluggish in the SOHO marketif Microsoft (or Apple with it’s future OS upgrade) cave into overlyrestrictive record industry demands.”
“It’s sad, but true,” he lamented, “that these software firms are one ofthelast lines of defense for the mass consumer market that is concerned aboutupholding the legal concept of fair use.”
Babble Means More Bucks
Other analysts were skeptical of the sincerity of the record industry’snegotiations with Microsoft.
“Music companies are actually generating some real revenue from downloadsnow — surprisingly, more from ring tones than whole songs,” Ray Wagner, aresearch vice president at the Gartner Group in Stamford, Connecticut,toldTechNewsWorld via e-mail. “I think they actually recognize a benefit fromthe current environment of multiple, mostly incompatible standards, sinceitmeans people might have to buy things multiple times.”
“This is anti-user, of course, but the music industry has been partial to’what the market will bear’ for some time, and in the absence of acompletely controllable DRM mechanism, they will be unlikely to move inanyunified fashion,” he added.
End of CD?
While recent record industry moves are aimed at increasing CD sales, thosemoves could have the opposite effect, argues Rob Enderle, president andprincipal analyst with the Enderle Group in San Jose, California.
“We’re looking at the countdown for obsolescence of CDs,” he toldTechNewsWorld.
“What the record industry is going to do by driving this particular schemethrough is probably drive people away from CD purchases,” he said. “It’snotMicrosoft that’s driving that but the record industry itself.”