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My.MP3.Com In-Depth: A Q & A With Michael Robertson

My.mp3.com allows users to listen to a personalized music collection from any computer, or any internet-connected appliance. One of the key elements of this new service is the ability to quickly transfer CDs already in the user's collection to his or her my.mp3.com account, using Mp3.com's Beam-It(tm) software. Sounds like a great idea, right? There's only one problem: the non-profit Recording Industry Association of America (RIAA) says that the service encourages (and even constitutes) illegal piracy.

On January 21, 2000 the RIAA filed suit against Mp3.com, seeking "relief against an ongoing infringement of the copyrights in the sound recordings on some 45,000 audio CDs," claiming that Mp3.com's database of CDs is being illegally distributed.

Less than 2 weeks later, on February 3rd, Mp3.com retaliated by suing the RIAA, accusing them of trying to "undermine" Mp3.com's business using "bullying tactics" and "unfair business practices."

What has resulted is a debate that raises questions about the meaning of fair use, and about the ways in which people will be allowed to listen to their music, in an increasingly digital age.

How my.mp3.com works:

Music is added to each user's personalized account in one of three methods: users can transfer tracks over from existing artist pages on the Mp3.com site, they can purchase CDs from Mp3.com's retail partners and have their selections made instantly available for listening, or they can "beam" CDs already in their collectionsto their my.mp3.com accounts using Mp3.com's new Beam-It(tm) software.

Instead of actually uploading music, Beam-It(tm) randomly checks data patterns on a CD to verify that the user has an original CD, and then grants the user access to a pre-digitized copy of that music, if it's already in the Mp3.com database (45,000 titles and growing). Users are then allowed immediate access to listen to their music in either Hi-Fi (128 kbps) or Lo-Fi (28 kbps) streaming Mp3.

The following Q & A with Michael Robertson of MP3.com was conducted over the past week by streamingmedia.com reporterScott Bass, by email.

streamingmedia.com: At the initial release of Beam-It(tm) you said that you didn't expect to be sued. Really? What do see as the real basis of the RIAA suit?

MR: The music giants are frightened that the economics of digital delivery of music will cannibalize their existing CD business. So they're filing lawsuits against any new technologies which come along.

My.mp3.com is designed to make CDs more valuable and sell more CDs because the only way to load music into your account is to have the CD. Additionally, we built quite a few safeguards into the system to encourage people to do the right thing. My.mp3.com will grow existing CD sales PLUS plant the seeds for completely new revenue streams from music, a subscription system. The net effect for the music business will eventually be a doubling or tripling of revenues. Our retail partners have seen their CD sales go up 100% once they added Instant Listening(tm), which lets a music buyer hear all the songs from any CD they buy immediately after buying it. We thought they would recognize the economic boom to their industry my.mp3.com brings, but they didn't. We believe they eventually will because it's the right thing for their business.

streamingmedia.com: Could the increased CD sales of Mp3.com retail partners be attributed to increased promotion from my.mp3.com and not necessarily consumer reaction to instant delivery?

MR:We haven't really advertised the stores other than listing them as Instant Listening(tm) partners. I encourage you to buy a CD or talk to someone who has used the service. Once someone uses Instant Listening, they generally won't go to the "old" type store where they don't get immediate gratification.

streamingmedia.com: It must require an amazing amount of bandwidth to support the my.mp3.com service. Is there a limit to the number of people that can be connected concurrently, or to the number of people that can listen to the same file at the same time?

MR: We've spent an enormous amount of time on the engineering since this is a gigantic engineering undertaking. Our infrastructure is scalable meaning it can grow with our user base, so capacity should not be an issue. Each user account is limited to 6000 CDs in their personal library.

streamingmedia.com: Mp3.com can detect multiple users using the same my.mp3.com account and then ban those users. Have many users have been banned? Is banishment from my.mp3.com the worst penalty abusers face? What keeps banned users from opening new accounts with different email addresses?

MR: We do detect multiple users on an account and log off users whenever we detect such a situation. We have never banned a user. I'm not sure if you can "ban" someone from the Internet. We can terminate an account if we identify repeated violations.

streamingmedia.com: You've mentioned that my.mp3.com will become particularly useful once "internet appliances" become commonplace. What kinds of appliances do you envision and when do you think we'll begin to see them?

MR: The big benefit to consumers of storing your music digitally in a my.mp3.com account is that it can be delivered to any digital device with net access. Casio was demoing a MP3 watch at the latest consumer electronic show. Imagine having your entire music library available on your watch! Any computing device with a net connection is possible including your Palm Pilot or even your phone. Once higher speed net access comes to cellular phones anywhere your phone works, you'll have all of your music. And of course your phone will snap into the dashboard of your car, so you can rock out while you're driving as well.

streamingmedia.com: A recent paper published by Rice University found Beam-It(tm) to have adequate security for ensuring users are using original CDs. The authors did however express some concern about privacy issues for people using the service. How do you react to their concerns?

MR:I think you're understating their findings. I think "[my.mp3.com] provides strong protection against a user pretending to have a music CD without actually possessing it" was what they concluded. With any server based system there's an issue of privacy. If you use Hotmail, they have access to all of your email. My.yahoo knows all of your interests and your stocks. My.mp3.com knows all your CDs. Our privacy policy is well stated on our web site.

streamingmedia.com: What do you think of user-created programs like beam-rip or beam-back (and other sure to follow) that circumvent my.mp3.com's security measures and allow users to download my.mp3.com files to disk?

MR: If the music is coming out of your speakers, then somewhere along the process it can be captured. This goes for all music formats and every "secure" music strategy. You can't defy the laws of physics. The best you can do is make it troublesome and much easier for people to do the right thing.

streamingmedia.com: In your own words, by offering the my.mp3.com service, mp3.com becomes the world's first "Music Service Provider." How does a MSP make money? Is it primarily from subscription fees, partner revenues, advertising, or something else? How does this represent a shift in your business model?

MR:It's not a shift in our business model, but rather an extension. MP3.com will continue to be the best place for an artist to market their music through an extensive digital toolset. We now have more than 50,000 artists taking advantage of our site to promote their music and build their fan base.

Our launch of my.mp3.com is part of our MSP (music service provider) strategy designed to make music a service. To date, it's primarily been a product you buy and not a service you subscribe to. Look at movies. They're products you buy (in the box office), but they are also services you subscribe to such as premium movies or basic cable service. We're building the same opportunity for music and it will grow the music business just as video rental and cable more than doubled the film business.

A MSP will make money through subscribers fees and through advertising similar to cable operators. There's the possibility for a monthly fee with different tiers of service, but there's also advertising. It may be that your music service provider fee is part of your DSL or cable modem account. Or it could be part of your wireless phone account. There are still many questions to be answered, but they'll need to be answered soon because the technology is moving quickly.

streamingmedia.com: As more and more net services become free or advertising-based, why do you expect users will be willing to pay for a MSP?

MR: It's all about the value proposition. If there's value, people will pay for it. There's a lot of free news on the Internet, but I still subscribe to BusinessWeek, Forbes, Industry Standard, etc. I think it's a valuable service to have my entire music collection at my fingertips, but consumers will ultimately have to decide if it makes sense for them.

streamingmedia.com: Do you see the success of my.mp3.com as dependent on the legality of Beam-It(tm)?

MR: The significant part of my.mp3.com is the massive infrastructure to store, manage and deliver music for tens of millions of users. This is really the backbone for a music service provider. Beam-It(tm) is just one piece of the puzzle and only relates to how music is loaded into the system. There are many ways to load music into your account even today. Listeners can buy new CDs via Instant Listening. Or they could potentially upload their own music - it would just be slower.

streamingmedia.com: The RIAA also recently filed suit against Napster. What's your take on that case?

MR: Napster's argument and I think it is a strong one is that they are simply a tool like Microsoft Word. Someone can use Microsoft Word to write a ransom note and that doesn't make Word illegal and they're sure to say the same argument applies to them.

streamingmedia.com: Mp3.com has shown itself to be one of the most interesting and innovative music companies of the digital world, what services do music-loving web surfers have to look forward to in the future?

MR: Thanks for the compliment. I'm very proud of the innovation the MP3.com team has delivered to date. I think it's critical to sustain leadership in this dynamic space that we continue to produce to stay ahead of the pack. As for the specifics, music fans will have to keep visiting MP3.com on a regular basis to find out!

streamingmedia.com: Many thanks for making yourself available for this exchange.

MR: No problem.

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