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Technology The Industry

The End of the MP3?

Last month the Fraunhofer Institute for Integrated Circuits ended its licensing program for the MP3 digital file format. This probably means that the MP3 format will begin fading away to be replaced over time by newer file formats. MP3 stands for MPEG Audio Layer III and was the first standard that allowed for the compression of audio files without loss of sound quality. The US patent for MP3 was issued in 1996 by Fraunhofer and since then they have collected royalties for all devices that were able to create or use files in that format.

While it might seem a bit odd to be reading a blog about the end of a file format, MP3 files have had a huge impact in the tech and music industries that they are partly responsible for the early success of the Internet.

The MP3 file revolutionized the way that people listened to music. In the decade before that there had been a proliferation of portable devices that would play cassette tapes or CDs. But those devices did not really bring freedom to listen to music easily everywhere. I can remember the days when I’d have a pile of tapes or CDs in the car so that I could listen to my favorite music while I drove. But the MP3 file format meant that I could rip all of my music into digital files and could carry my whole music collection along with me.

And the MP3 digital files were small enough that people could easily share files with friends and could send music as attachments to emails. But file-sharing of MP3 files really took off in 1999 when Shawn Fanning, John Fanning, and Sean Parker launched the peer-to-peer network Napster. This service gave people access to the entire music collections of huge numbers of others. Napster was so popular that the traffic generated by the platform crashed broadband networks at colleges and caused havoc with many ISP networks.

In 2001 Apple launched iTunes, a service where people could legally download MP3 files. Apple used the MP3 format initially but in 2003 changed to the AAC format, probably mostly to avoid paying the MP3 licensing fees. Internet traffic to iTunes grew to be gigantic. It’s hard to remember when the Internet was so much smaller, but the transfer of MP3 files was as significant to Internet traffic in the early 2000s as Netflix is today.

Napster, along with Apple iTunes, revolutionized the music industry and the two are together credited with ending the age of albums. People started listening to their favorite songs and not to entire albums – and this was a huge change for the music industry. Album sales dropped precipitously and numerous music labels went out of business. I remember the day I cancelled my subscription to Columbia House because I no longer felt the need to buy CDs.

Of course, Napster quickly ran into trouble for helping people violate music copyrights and was driven out of business. But the genie was out of the bottle and the allure of sharing MP3 files was too tempting for music lovers. I remember musician friends who always had several large-capacity external hard drives in their car and would regularly swap music collections with others.

One of the consequences from ending the licensing of the MP3 format is that over time it’s likely that computers and other devices won’t be able to read the MP3 format any longer. MP3s are still popular enough that the music players on computers and smartphones all still recognize and play MP3 files. But the history of the Internet has shown us that unsupported formats eventually fizzle away into obscurity. For example, much of the programming behind the first web sites is no longer supported and many of today’s devices can no longer view old web sites without downloading software capable of opening the old files.

It’s interesting that most people think that once something has been digitized that it will last forever. That might be true for important data if somebody makes special effort to save the digitized files in a place that will keep them safe for a long time. Bu we’ve learned that digital storage media are not permanent. Old CDs become unreadable. Hard drives eventually stop working. And even when files are somehow kept, the software needed to run the files can fall into obscurity.

There are huge amounts of music since 2000 that has been created only in a digital format. Music by famous musicians will likely be maintained and replayed as long as people have an interest in those musicians. But music by lesser-known artists will probably fade away and much of it will disappear. It’s easy to envision that in a century or two that that most of the music we listen to today might have disappeared.

Of course there are the online music streaming services like Spotify that are maintaining huge libraries of music. But if we’ve learned anything in the digital age it’s that companies that make a living peddling digital content don’t themselves have a long shelf life. So we have to wonder what happens to these large libraries when Spotify and similar companies fade away or are replaced by something else.

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Meet CCG

The Soundtrack of Our Lives

Today is my 365th blog entry, and while that has taken over a year and a half to publish that represents a full year worth of short essays. I am going to use this personal milestone to step out of my normal daily blog and talk about something that has been on my mind. It’s still something that is somewhat tech-related but it’s also quite personal and I bet most of you reading this will see yourself in here somewhere.

I want to talk about how I grew up with music and how the web has changed that experience. I was prompted to think about this a few days ago when on the last day of my recent vacation I played four Beatles albums end-to-end. That’s something I haven’t done for a while because the modern music experience doesn’t favor listening to whole albums.

I did this using a modern music web site, Spotify. This music service provides millions of songs on their service but also lets me import and integrate my own music library. I generally let Spotify mix up my music and use it like a radio station, but instead I listened straight through Magical Mystery Tour, Revolver, Rubber Soul and Sgt. Pepper’s Lonely Heart Club Band. And as I listened I got that old feeling of listening to music linearly like when we plopped albums onto a turntable and listened to them end-to-end. The satisfaction of listening this way came from the fact that I knew the words to every song, having listened to these albums many times, but I also always knew what song was coming next. My brain not only stored all of the lyrics of these Beatles songs, but also the play order on the albums.

This was refreshing to me since I hadn’t done this for a while. It was like meeting a long-lost friend. But it made me think about the difference in the personal experience of music today versus music back then. When I was young we obviously did not have millions of songs at our disposal. What we had instead was the radio, music stores and friends with album collections. Radio was pretty vibrant in those days, particularly when I moved to Washington DC, and it introduced you to a lot of great music. You would listen as much as you could to the radio or to friend’s collections to see what you liked and then you made an investment in buying an album. Since none of us had unlimited funds, the choices you made became the music that you listened to over and over (and over). You got to know certain artists really well.

I remember the great satisfaction once a month when I had enough excess funds to make a trip to the music store. This would always be on a Friday night and I would linger from bin to bin making the choices that I knew I would have to live with. Whether I had enough money to buy one album or half a dozen, these trips were one of the highlights of every month. And while buying a few albums at a time was somewhat limiting, it didn’t stop me over the years from migrating from classic rock, to punk, to folk, to reggae, and to new wave with many other side trips.

But then jump forward to today. Spotify, iTunes and other music services are more geared to songs than albums. I look at my daughter’s play list and she has one or two songs from hundreds of artists rather than a lot of a stuff from a few of them. And to some degree I have jumped on the same bandwagon because there is such an immense library of music available, including many of those things that I almost bought years ago on a Friday night buying trip. I can now indulge every musical whim.

But this smorgasbord of choices makes our music into a personal radio station. What I notice is that my daughter and wife drop and add songs all of the time, making their play list fresh and different. Artists are sampled and if something tickles their fancy it gets added to the playlist, and if it gets boring it goes. This is so different than the linear experience where you listened to an album with its good songs, bad songs and great songs and you came to know and love them all.

I’m not being nostalgic because I love the options that Spotify offers me. One of my favorite activities when I have a spare hour is to just leap from song to song, from artist to artist and listen to music I’ve never heard before. That is a freedom that was not there in the analog days. But I do lament the loss of intimacy and commitment that came from choosing an album and choosing an artist. That became your music and you listened to it and you learned it and it became ingrained in your mind and in your soul. Every person’s album collection was different and we each created our own personal soundtrack to accompany our lives.

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Current News Technology

Who Owns the Future?

Jaron Lanier (Photo credit: Thomas Hawk)

I just finished reading Who Owns the Future by Jaron Lanier and it was a really interesting read. He is a pioneer computer scientist and was involved in starting virtual reality. He is listed by Encyclopedia Britannica on a list of the 300 most important inventors.

It’s not the easiest book to read because it bounces from idea to idea, but some of those ideas are intriguing and thought-provoking. Let me hit on a few of them to give you a flavor of the book:

  • He says we have reached a point where technology is devastating the middle class. Industry after industry is folding and not being replaced. Historically, every new technology killed old industries but replaced them with new ones. But that is no longer the case. He points to Kodak which once had 140,000 employees, and it folded and was replaced by Instagram which had 13 employees when Facebook bought them. This has happened in other industries like music stores getting replaced by iTunes, video stores replaced by NetFlix, etc. And he thinks a lot more of this is on the horizon with the growth of 3D printing, self-driving cars, robotic mining equipment, robotic nurses and all the other technology that is being designed to remove the costly human element from the production process.
  • He says that wealth is now being concentrated by those who have the fastest computers. He gives this the name of ‘siren servers’ and he is talking about Google, Facebook, Amazon and all of the other companies that are creating wealth from gathering data about all of us in huge data centers. He argues that we are going to have to find a way to rebalance the information economy because these huge siren servers are using our information for free. He thinks that somehow we need to get paid for the data about us. I reviewed another book here last month by Eric Schmidt, the Executive Chairman of Google who made the same point but who thought that it was more likely there would be a future revolt by people who didn’t like what was being done with their data. But Lanier thinks it’s more likely that the siren servers will win and will know everything about us.
  • Lanier doesn’t think the problems being created are with the Internet, but rather with how the Internet has become organized. Major Internet companies like Google and Facebook tend to form monopolies on a global scale. These businesses succeed by offering something for free – such as the Google search engine, the Facebook social connections, the Linked-In business connections, etc. And for the use of these free services the public gives up tremendous amounts of information about themselves. And it is these huge databases of personal information that is creating the huge book values for these companies.
  • He also doesn’t have a very good opinion of the people running these huge siren server companies. He says that the technologists who are running the siren server companies are narcissists who are blind to the effects they are having on the world. He says that geeks are not really egalitarians despite the t-shirts and flip-flops, and that the technology world is one of pure Darwinism where only the very most successful are able to survive to the point of making money from their technology. He is not comfortable that these are the people who are running the world.

This is the kind of book I really like because it made me think hard. Lanier is looking at the tech world from the perspective of the ultimate insider and is seeing things that I have felt but never was able to put into words before. I personally have always been very leery about how the information gathered on all of us will be used in the future. I read recently that there is an average of 12.5 different places on the Internet that has gathered personal data on each person who uses the Internet. I am growing more leery of accepting the equation of using a site for free and paying for the privilege with information about what I like, who I know, what I am interested in. Lanier says that we are going to lose the battle with the siren servers unless we can find some way to balance the relationship between us and the big companies. I hope we find a way to do that, because I don’t want to live in a Big Brother world.

Categories
The Industry

Will There Be a Tipping Point in the Cable Industry?

The Tipping Point: How Little Things Can Make a Big Difference (Photo credit: Wikipedia)

This is not a book review, but a few years ago I read a book called The Tipping Point: How Little Things Can Make a Big Difference by Malcom Gladwell. This booked looked at examples of tipping points – when minor events reach a level which triggers a more significant change. In the book he looked at a number of popular culture events such as how Hush Puppy shoes went from being something worn by New York hipsters to being in every mall in America in a short period of time. It was a thought-provoking book that looked in particular at how certain types of people are able to effect much bigger changes in the world than ought to be expected.

What made me think back on this book is that I have been thinking a lot lately about the cable TV industry. There are a ton of those ‘minor’ events happening in the industry and I have talked about some of them in my blog before. And I have been thinking about whether these small trends can accumulate together to fundamentally change the industry or if it will just change more slowly over time. I’ve been trying to think about what it might take for the whole industry to reach a tipping point.

We have a parallel to what might happen with cable TV service by looking back at what happened to home telephone service. Fifteen years ago about 98% of households had a traditional home telephone. But then Vonage and other VoIP carriers came along a little over a decade ago and whittled into the home phone market. But the VoIP carriers collectively did not do that great and after a couple of years in the business had captured only about 3% of the total market. But then other factors began hitting the industry. For instance, companies like Skype arose allowing people to make calls over the Internet without even using a phone. But the number one factor that has killed many home telephones has been the meteoric rise of cell phones. In looking back I think the landline phone industry really started losing lines when the cellular industry introduced family plans and all of the members of a family could have a cell phone.

In a study done in the first half of 2012, the Center for Disease Control asked many questions including ones about telephone usage. They found that the number of households with landline phones has dropped below 65%. In looking at the statistics in that study I conclude that the landline telephone industry never reached a tipping point. The industry certainly declined over a fairly long period of time and will almost certainly continue to do so. But there has been no tipping point such as was seen in the music store business which went mostly bust within just a few years after iTunes got popular. And so I ask myself if there will be a tipping point with the cable TV industry or if it will instead go into a long steady decline like the landline telephone business?

There are a number of factors that are affecting the cable TV industry, and most of them are relatively new. Some of these include:

  • Over-the-top video where programming is available on the web instead of by a traditional cable TV subscription.
  • Cord-cutting. Neilson has estimated that there are now 5 million homes in the US that don’t watch any form of TV and that this number grew by 1 million last year.
  • Cord-nevers. These are young households who get their entertainment from cell phones, pads and other methods and who do not sign-up for traditional cable TV packages when they start a new household.
  • Rate fatigue. The ever climbing cable bills that are pricing cable service out of the range of many households. This leads some customers to leave cable but others to downgrade to smaller packages.
  • Ever increasing programming costs. To a significant degree the cable TV rate increases are being driving by the programmers who charge more each year to cable operators for carrying their content.
  • Tons of companies competing for cable’s customers like NetFlix, Hulu, Amazon Prime and many others. And to some degrees the broadcast networks are helping them by making programming available on the web soon after it is aired live.
  • Companies like Aereo making it easier for customers to watch TV on any device.
  • Really simple devices like Roku, Apple TV, Playstation and many others making it easier for the non-technical household to get alternate programming onto the TV.
  • Unique programming being created just for the web. NetFlix and others are now developing programming directly for the web. There is also a movement to pick up popular shows that get cancelled and to continue them on the web.

There are a few experts that believe that the cable industry will be able to hold its own, even with all of these trends going on. But there are a lot more experts who are positive that the industry will decline, but the predictions of how fast vary from a slow decline like telephone service up to predictions of a fiery crash like what happened to CD stores due to iTunes. And there is ample evidence that the decline has begun. I saw a statistic that said that in 2012 the cable industry as a whole added a net of 50,000 new customers, wherein past years that would have been millions. And there is evidence that every one of the above trends is hurting the industry.

And there is more disruption to come. Wireless connections have gotten faster making it easier to watch TV while on the go. John McCain just introduced a bill that would promote (but not guarantee) a la carte programming. Comcast just increased their cable modem speeds nationwide. It just becomes easier and easier for a household to elect something other than the traditional cable TV packages.

Like many I certainly foresee an industry that is going to lose customers at a faster and faster pace over time. But I just don’t know if all of these little factors can somehow produce a tipping point for the whole industry. With that said, I believe that the effect of these changes will differ by market and I expect that there will be companies and markets that reach a tipping point long before the whole industry does.