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Sudden awareness of free digital downloadable music on the Internet sent the music industry into a panic last year. The Secure Digital Music Initiative, a coalition of record labels, software companies, and electronics manufacturers, worked overtime developing standards for encrypting music in an attempt to thwart piracy. Preliminary guidelines for copyright protection were issued in June. Most recently, the SDMI completed a series of listening tests intended to find the least intrusive form of encryption. The organization seemed to present a united front in the anti-piracy war.

Such apparent unity may have been short-lived. Infighting among organization members is said to have caused the industry to fail to deliver SDMI-compliant devices in time for the holiday season. Music lovers see no value in copyright protection, said one SDMI member who was widely quoted in several news stories: "SDMI does not provide value or added benefit to the consumer. The issue of security, which is not a consumer issue, suddenly becomes a consumer issue. Authentication is of greater concern to the content creator than the consumer."

A major point of contention is the possibility that if even one non-SDMI-compliant portable device is available to consumers, they may have little motivation to buy those that are compliant. Not all consumer-electronics manufacturers have agreed to incorporate anti-piracy technology in their forthcoming products. Adding further confusion is the fact that, as a promotional gimmick, record labels have begun offering free MP3 recordings for a limited time before the release of a new CD.

Forrester Research analyst Mark Hardie says that, from the beginning, SDMI has "set themselves up for lack of success, because the pace [of technology] won't wait for a group of people to go off and meet in hotel ballrooms around the globe every six weeks and discuss the ways to do something."

Diamond Multimedia and Sony Electronics are each launching new portable players that include different approaches to implementing early efforts at "watermarking." Sony is pushing hard to get copyright specifications finalized as quickly as possible. Diamond and other small companies, which stand to gain from the delayed rollout of SDMI-compliant devices, are not nearly so eager. Any delay might render watermarking efforts irrelevant, some observers say, because the digital music market gains popularity daily. Philips, RCA, Toshiba, Creative Labs, and other companies have announced plans to ship MP3 players without copyright protection.

The music industry is adamant that future downloadable formats be fully protected, but no one at present can predict how any copyright-protection technology will affect sales. As one SDMI member noted, there is no history upon which to base any decision.