New Audio Formats Said To Be Up

The Consumer Electronics Association (CEA) is reporting that sales of DVD-Video players also capable of playing high-resolution audio formats have taken off this year, compared to 2002. According to CEA market research, manufacturers shipped 148,000 DVD-A and 100,000 SACD players to retailers through May of this year.

But format success may take time. If history is any judge, the CEA's Sean Wargo says, we could see the majority of consumers enjoying high-rez audio by the year 2015, "with an even more rapid acceptance of the new audio technologies across the next decade and really driving growth in the audio market." The CEA adds that audio manufacturers are experiencing an industry-wide drop in sales, which were down 12% for the first four months this year compared to the same period in 2002, noting that many manufacturers are hoping high-rez audio will be the "next hot product to capture the hearts of consumers."

Wargo suggests that there is a similarity between the introduction of high-rez audio and that of the CD back in 1984. "Each product—CD, DVD, DVD-A, and SACD—met the 250,000 units-shipped mark by the third year. The audio industry tends to cycle through periods of growth as each new and improved technology is introduced."

While high-rez battles for market share, the CEA says that the MP3 and compressed audio categories, as well as the new area of distributed audio products, also show promise. CEA market research shows that MP3 player sales are up this year across all categories, and sales of in-dash MP3-compatible CD players increased 186%. Additionally, portable CD/MP3 player sales are up by 116% and sales of portable MP3 players increased by 10%.

Apple's iTunes and its AAC-compressed audio files have given the downloaded audio market plenty to crow about. More is on the way, as Roxio announced last week that Napster will return with version 2.0 as a "legal, paid music service" by Christmas. Roxio says that Napster 2.0 will give users access to up to 500,000 tracks any way they choose: by paying for individual downloads, by monthly subscription, via Internet radio, or in any combination. The company claims to have extensive content agreements with the five major record labels, as well as several independents, to offer artists from Eminem and Miles Davis to the Dixie Chicks and Bob Marley.

Not to be outdone by Apple and Napster, Microsoft's Bill Gates said his company is looking at how to launch a music download service tied to its multimedia applications. Apple has announced that iTunes, currently only available to Mac OS users, will support downloading from the Windows platform by the end of this year.

Analysts see the expected Microsoft move as a way to hold Apple at bay with Windows users, but not much of a money-maker for the company. Gates commented, "It's maybe a feature your platform should offer, but it's not like you're going to make some big markup." Any move towards actually selling media files would be a departure for Microsoft, which has so far only focused on creating multimedia software.

Last week also saw Buy.com announce the imminent launch of music download service BuyMusic, which, the company says, will be supported with a $40 million advertising budget. Other competitors who are currently, or will soon be, crowding the recently revived downloading business are Listen.com, RealNetworks and its Rhapsody subscription service, AOL, Yahoo, and Amazon.com, which is expected to launch its own service soon.

But all is not rosy in downloadville. Early in July, Vivendi's MP3.com announced that it would be shutting down its MP3.com Europe subsidiary, and Tonos.com announced that its service, which connects independent songwriters and performers with the market, may close in a month if more funding doesn't turn up soon.

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