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“Compatibility among competing digital music devices by 2005″?

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This is an interesting dilemma: Apple’s iTunes leads the legitimate music download biz, and with nominal margins and profits in the per-song approach, Apple head Steve Jobs has made it clear that he’s in it to drive iPod and computer sales. So if he’s selling music to drive iPod sales, then why would he want to make the music compatible with any other players?

    The music industry is pushing bitter technology rivals — most notably Microsoft and Apple — to shake hands in the interest of promoting digital downloads, Billboard has learned.

    Hardware makers and digital format developers, including many traditional adversaries, are engaged in private talks aimed at meeting the music industry’s goal of compatibility among competing digital music devices by 2005.

    “There’s a substantial discussion going on among these companies about interoperability,” says Paul Vidich, executive VP of strategic planning and business development for Warner Music Group.

    Consumers are embracing commercial digital music in increasing numbers, and the trend is likely to be aided by a Pepsi-Apple promotion launching Feb. 1 during Super Bowl XXXVIII. But incompatibility among certain digital music services and portable players remains an obstacle.

    “Consumers are going to demand that there be interoperability in devices and software players,” Vidich says.

    Executives with knowledge of the talks say much of the focus is on transcoding — the process of converting a file from one format to another.

    ….Music from Apple Computer’s iTunes Music Store — the leading seller of digital tracks — cannot be transferred directly to any portable device other than the iPod. Those who compete with iPod by and large support Microsoft’s Windows Media Audio (WMA) format.

    At the same time, tracks from every other legitimate service — a field that includes Napster, MusicMatch, RealNetworks, Wal-Mart and Sony — are incompatible with the iPod.

    To load iTunes tracks on a device other than iPod or to load songs from a rival onto Apple’s device, consumers must burn the tracks to a CD and then rip the tracks from the CD back to the computer in the MP3 format.

    ….With Apple controlling much of the nascent legitimate digital music market, the onus for concessions in the compatibility debate largely falls on the company — a prospect one rival executive likens to “unilateral disarmament.”

    “Increased operability is great for consumers. But if you’re in Apple’s situation, it’s not in your interest to do this,” says a source.

    ….”There has to be a handshake at some point between the technologies. That requires an exchange of some level of trade secrets,” Marks acknowledges.

    What’s more, critics argue that transcoding makes for a clunky consumer solution. The conversion process from one format to another is time consuming. Also, audio quality can be lost in reformatting.

    “There’s a lot of buzz going around about how to bridge the gap to create a seamless experience. But there are some tough issues with that,” says Dave Fester, GM of Microsoft’s Windows Digital Media division. “We collectively need to do the right thing for the consumer.” [Billboard]

So what may be best for consumers and for the industry as a whole may not be best for Apple, the industry leader. Hmm.

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About Eric Olsen