A Future of Digital Audio Watermarking and SDMI?

According to a report released last week by Cahners In-Stat Group, a high-tech market research firm, the market for personal digital music players using audio compression technologies will experience a tremendous increase in growth through the next several years. Nearly $800 million in player sales are expected in 2003, spurred largely by widespread Internet access. The report also states that products in this segment will initially focus on downloading technologies like MP3, and over the next 12 months consumers should expect to see more features integrated into the players such as FM tuners, increased storage capacity, and security systems like Secure Digital Music Initiative (SDMI).

Cahners' Mike Paxton says that "what is happening now in the music industry is both a radically new phenomenon and a natural evolution. The new phenomenon is how the Internet is changing the distribution model for music. Access to broadband transmission will be vitally important to the success of digital audio. The natural evolution is taking place on the hardware side of the industry and shows how a change in content storage changes the music playback device. Just as LPs and 8-track tapes gave way to cassettes and CDs, those audio storage methods will slowly give way to digital downloads."

It's no secret that the the music industry is trying to find ways to control the use of digital media. The report claims that by mid to late 2000, the record companies will start including digital "watermarks" that trigger the SDMI filters, preventing playback on non-SDMI devices. The report concludes that "its rollout and effectiveness at curbing digital content piracy will depend on the cooperation between the recording industry and the high-technology sector."

The report also speculates that the fight over "secure" digital recordings and "open access" technologies will continue over the next two years, with SDMI eventually replacing the de facto standard MP3. The phase-in of SDMI will then boost sales of portable digital music players, with the most dynamic unit growth occurring between the years 2000 and 2002. Over the next two years, however, portable music devices will support multiple compression technologies—including MP3, a2b (from AT&T Labs), and Liquid Audio—until the SDMI standard is finalized. In the not-so-distant future, the report finds, computers will not be required to transfer digital audio content as they are now; retail kiosks, set-top boxes, or even cellular telephones will be used to download selections onto the flash memory of a portable music player.

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