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Audio Formats Stumble
In Quest to Replace CDs
By Mike Musgrov
Washington Post
The appeal to consumers was supposed to be better and more
lifelike sound quality. The appeal to music companies was
supposed to be a new digital format that consumers couldn't
Napster-ize or cheaply copy so it could be sent across the
Internet to all their friends.
But instead, two newish audio media formats, DVD-Audio and
SACD (short for "super audio compact disc"), seem to be
stuck at the starting gate. Rather than replacing the enormously
successful CD, these two formats are starting to look like
two Next Big Things that may never find a place in tomorrow's
all-digital, relentlessly networked living room.
The lack of enthusiasm adds yet another chapter to the hit-or-miss
nature of digital innovation, and, experts said, a cautionary
lesson in what happens when companies try to impose new
restrictions on a product where once there were few or none
at all.
Both of these shiny, palm-sized discs look just like standard
audio compact discs but contain about six times as much
digital information, delivering a sonic picture so detailed
their backers brag you could practically hear Mick Jagger
strut his stuff across the stage.
Both have been available since 2000 and cost about the same
as a CD -- while the machines needed to play each disc cost
only about $200, slightly more than traditional CD gear.
Yet for both, sales have been negligible.
During the six-month period ending in June 2003, only 100,000
DVD-Audio discs were sold, compared with 245 million CDs,
the Recording Industry Association of America reports. Even
traditional vinyl records outsold DVD-Audio -- by a factor
of six to one.
Rather than growing, sales of DVD-Audio discs are actually
down from the same period a year ago. The RIAA does not
track SACD sales.
Three years might not seem like a long time for a new format,
but by this point in the CD's life cycle, sales had begun
to triple and quadruple as consumers lined up to buy into
the format.
The CD had a smoother road to introduction. The recording
industry and the consumer electronics industry presented
a united front when they sold the world on the benefits
of the CD 20 years ago, but with the newer formats, there
is no unanimity. Each is backed by different industry players
(for instance, Warner Music Group likes DVD-Audio, while
Sony Music Entertainment Inc. supports SACD). Even many
audiophiles with golden ears can't tell the difference between
the two.
It's "shades of Beta versus VHS," said Tom Edwards, analyst
at NPD Group Inc., a market research firm. "It's a format
war all over again, but the differences aren't as obvious
this time around . . . and right now it's more a question
of whether either of them will win."
"It's fair to say neither format has set the world alight
to date," said analyst Jim Bottoms, president of Understanding
& Solutions, an English firm that specializes in entertainment
media research.
To keep users from easily copying songs featured on DVD-Audio
discs and SACDs into MP3 files, both formats use encryption
technology, which is supposed to keep the digital information
in those song files locked away and unreadable except by
authorized DVD-Audio or SACD players.
Since consumers have proved reluctant to buy a format they
can't play in their car, SACD backers are offering "hybrid"
discs which also feature unprotected (or copy-able) CD layers.
A hybrid DVD-Audio is also in the works. Since the CD format
was not designed with such security in mind, users can still
copy song files off of discs that have this CD layer.
Still, there are no portable, Walkman-style devices to play
either format, nor can either type of disc be played in
any car except the 2004 Acura TL, which includes a Panasonic
DVD-Audio unit.
Some low-cost "home-theater-in-a-box" systems from Sony
or Philips include SACD compatibility. And music buyers
may have to look through the liner notes to discover they've
bought an SACD. Sometimes it is more difficult.
When Sony re-released the Rolling Stones catalog as hybrid
SACDs, it left out the word "SACD" on the packaging material
-- folks at the label feared the albums would be relegated
to some "high definition" bin in the far corner of record
stores. The reissues sold about 2 million copies.
David Kawakami, director of Sony's SACD efforts, said that
hybrid discs have allowed the company to "get around the
whole chicken-and-egg conundrum" that is common to new technological
formats.
Though he admits that many owners of the hybrids don't have
SACD players yet, he thinks they're still good marketing.
"If you're a die-hard fan you're probably going to want
to check out the SACD player at some time," he said.
David Dorn, vice president of strategic marketing at DVD-Audio
backer Warner Music Group, pointed out recent DVD-Audio
releases by R.E.M. and Outkast as a sign that big-name recording
stars are beginning to take to the format.
"If we're able to get more artists to work in the format,
I think it's really going to work," Dorn said. "It is always
the artists who drive the adoption of a format."
While record companies have been choosing sides over which
type of disc to support, consumer habits have been drifting
away from discs entirely.
Apple's online music store iTunes, just one of a number
of new online shops that sells copies of individual tracks
for consumers to download to their computers, recently sold
its 30 millionth song since it opened up this spring.
The research firm Ipsos-Insight estimates that roughly 10
million Americans paid to download music or MP3 files off
the Internet in the first half of the year.
Sony's Kawakami has seen this behavior firsthand. "My 17-year-old
daughter lives on her Mac, it's her portal to the world
-- she does everything on it, including listening to music.
For the time being, she's tied to her Mac and her iPod."
Kawakami hopes she'll be won over by SACD when she gets
older.
"I have a feeling that, when she grows up, she's going to
desire quality, and she's going to end up buying the albums
of several bands she was introduced to on the Internet,"
he said.
© 2004 The Washington Post Company
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