Music Biz Pins Hopes on DualDisc

Is there a future for high-resolution audio? Will the music industry survive as a packaged-goods business? The answer to both of these questions is "Yes, probably . . ." if the DualDisc follows test market indications and become next year's must-have entertainment format.

"Yes, probably ... . " is also the assessment of producer/engineer Elliot Mazer, who took time away from his latest project on August 6 to discuss the issue with me, thanks to an introduction from Richard Schram of Parasound. A combination product that literally bonds a CD back-to-back with a DVD, the DualDisc was test-marketed with 14 titles in a couple of dozen music stores in Seattle and Boston earlier this year, with an overwhelmingly positive response from both browsers and purchasers.

The versatility of accessing music videos and concert footage on DVD players or computers while still being able to hear the music via CD players was originally thought to be the format's most compelling attribute. Among those who actually bought the discs, however, improved sound quality was the top reason they intend to buy more, they mentioned. "DualDisc is an added-value experience for music fans," Mazer observed, "and they're getting the extra benefit of high-rez audio, something most of them weren't aware they wanted. Better sound is sneaking in through the back door of added features."

DualDisc's added video features and DVD-Audio high-rez sound are the music industry's way of upping the ante as it seeks to sustain its traditional retail business in the face of growing competition from online music services and peer-to-peer file sharing. (Mazer believes that as many as 200 million audio files may be shared over the Internet each month.) Backers of the DualDisc format include the DVD Forum and all major record labels, including Sony, but Sony is sticking with Super Audio CD as its high-rez format. Sony-branded DualDiscs will feature Dolby AC3 audio on the DVD side, Mazer mentioned. Rykodisc, a major independent, is going "whole hog" on DualDisc, he added.

Executives at Sony Music were reputedly in favor of making DVD-A a unanimous choice by the record labels for DualDisc, but backed away from that position on orders from Sony Corporation headquarters, or so an early-August industry-insider email purported. A supposed internal conflict over DVD-A vs SACD wouldn't be the first report of infighting that has emerged from within the Sony empire. The irony of the situation wasn't lost on Mazer, in the midst of doing DVD-A mastering at a Sony studio just a few blocks from his New York apartment. "Sony has all the recording and mastering gear for DVD-A—pre- and post-production, including DVD-A listening rooms—but it's just a service business for the labels."

Mazer believes that there may be technical obstacles to bonding an SACD to a DVD, such as the lack of space to accommodate video. "It's a complex issue," he stated, "as much technical as legal." Stereophile colleague Jon Iverson believes that the real obstacle is the lack of agreement between Sony and the DVD Forum—in other words, a turf war. Mazer agrees, noting that SACDs are pressed on DVD blanks, and that the DVD Forum has declared that SACDs cannot be used with DualDiscs.

Contractual difficulties are definitely a factor in what could be the slow migration of a CD-based business model to a DD-based one, in Mazer's view. "The creative community, the record labels, and the equipment manufacturers have been 100% behind this," he said. "The bottleneck is the music publishers, who have to negotiate separate licensing agreements for every title to be released in a new format." The same problem hampered the release of many films on DVD; some are still not available in that format because of licensing disputes. Music publishers are also delaying the availability of legitimate digital downloads, Mazer pointed out. "They make licensing very difficult," he said.

Added to that is a rift over ownership of DualDisc technology. An August 6 report by Sue Zeidler of Reuters news service stated that lawyers for DVD Plus International, Inc. were negotiating with record label representatives over a purported breach of contract regarding hybrid discs. DVD Plus owns the patent. Phil Carlson, president of the North American division of the German company, accused Cinram International, current manufacturer of DualDiscs, of "hijacking our technology."

Legal problems aside, the advent of DualDisc is "a happy one," according to Mazer. "Studios all over the world are really trying to make something pleasing. So are the hardware makers— Pioneer, Denon, Yamaha, to name a few—they are all making excellent affordable universal players that make playing high-rez audio in any format a transparent activity for consumers." There are minor constraints on the content of DualDiscs— for one, the CD side is limited to 63 minutes, compared to 74 minutes for a normal CD. The DVD-A side, a "DVD 5" with 4.7-gigabyte data capacity, can contain 63 minutes of music in 96KHz/24bit 5.1-channel surround or 192/24 stereo. Slightly shortened play length shouldn't have a negative effect on sales. The primary marketing problem will be finding the right price point—somewhere between $20 and $30—where music fans feel they are getting a good value and record labels and retailers can get a sufficient return to make the format into something economically durable.

Critical mass is also important. The official worldwide debut of DualDisc is tentatively slated for February 2005, having been pushed back twice already from October 2004 and January 2005. Mazer said that the labels intend to have a collective 200 titles available when DualDisc launches, including at least "one million units" of a new work by an unnamed major artist. He expects to see the compact disc slowly fade from the market place, replaced by a format that offers far more entertainment options for what he called "a generation with attention deficit disorder." The move could at least temporarily solve the music industry's ongoing problem with CDs—the "total lack of control over their intellectual property once a disc is sold, and the perceived lack of differentiation between a CD and an MP3 file by many consumers."

And where does SACD—sound, no pictures—fit into this grand plan? Mazer sees it surviving as an audiophile product. "There are plenty of independent labels that can be quite profitable on small production runs—10,000 units or less. And there's an established market for their products, so I expect SACD to do quite well." DualDisc could be a win for everyone: artists, audiophiles, electronics makers, and perhaps most of all for record labels and retailers, who have just begun to emerge from the longest dry spell in the music industry's history.