Broadcast.com: MP3 Will Die by Judy Bryan 3:00 a.m. 15.Mar.99.PST AUSTIN, Texas -- Mark Cuban sees no good reason for MP3 to be the format for delivering digital music. He thinks distribution, not content, will be king, that pay-per-view services will eclipse free downloads, and that in everything digital a little babe will lead us. In the next several years, "MP3 will die," Cuban said. "The rate of change is accelerating to create an Internet dominated by digital media in shapes and sizes we can't even imagine." Animated and glib, and wearing jeans and a black company T-shirt, the broadcast.com president delivered the keynote speech at the South by Southwest Interactive Festival, which runs through Tuesday. Cuban's slight southern accent betrayed his non-Silicon Valley roots. Broadcast.com is headquartered in Dallas. Despite its popularity, MP3 is here to be replaced, Cuban said. When an audience member remarked the recording industry and IBM were working out plans to use the codec, Cuban replied, "So what? Disco was a popular culture." And it died, too. People want audio off the Net, but MP3 is not the best delivery system for it, he said. One strike against the format, in Cuban's view, is that MP3 files are similar in size to streaming files, and the average person can't distinguish the difference in sound quality between an MP3 and a streaming file. "The [music industry's] marketing infrastructure will change," said Joe Cantwell, executive vice president of new media for Bravo Networks. "But the movement surrounding MP3, where artists can affect a greater sense of control over their work, will not change," Cantwell said. "The desperate and the successful are the ones who shape new markets." Cantwell used Chuck D as an example of an artist using his success to shape the new digital-music market. Five years ago Bravo's Independent Film Channel could have been counted among the desperate. Cantwell said the channel was launched by people who were passionate about building an audience for independent films. Although some folks laughed then, the channel has spawned a competitor, the Sundance Channel. David Pescovitz of MTV online said Cuban only said what others were thinking. "Someone had to be the first to say it," he said during a panel discussion Sunday afternoon. The Recording Industry Association of America has created a red herring in its campaign against piracy, Cuban said. Pirates are going to find a way to distribute illicitly, no matter what defenses companies create to safeguard music. "I'm a pirate, I'll pay US$11.98 and buy a CD, then copy it as much as I want to," he said. Cuban said companies that focus on thwarting pirates actually lose money. Protection and profits are practically mutually exclusive. "The more effort you spend protecting, the less effort you spend promoting and selling," he said. It's no surprise that the broadcast.com president would back streaming media -- it's his business. And, while he won't say whether broadcast.com has its eyes on RealNetworks, he predicted that someone -- probably a telco -- will buy buy the company, if for no other reason than to eliminate a competitor from the market. People want audio and video on the Net, Cuban said, and anyone who doesn't deliver it will be left in the dust. Content's reign is over, Cuban said. Content managers and distributors -- like broadcast.com -- will profit from content, not those who create it. Cuban has some interesting -- and conflicting -- ideas about digital distribution. He advocates the Grateful Dead approach of using content as a promotional tool: giving it away for nothing, and charging users for something else, a concert, in the Dead's case. So downloading will remain free, for the most part, Cuban said. But hosting Web sites will one day cost a lot. In an apparant paradox, Cuban said the best distributors will target niche audiences that are willing to pay for their passions, such as WCW wrestling fans, who pay Broadcast.com $5 to $10 to view matches they can't get or can't afford on cable. Cindy Cashman agreed with Cuban's prediction that a 15-year-old who doesn't want to do his homework will develop the next major media app. Her son, Erick Nelson, is a 17-year-old hacker who runs Cues.com, a site where users can design their own pool cues. "He's 17, but he's one of the geniuses [Cuban] talked about," she said. Nelson echoed Cuban's notion that pay-per-view is on its way as the Web's next big business model. "I think that if people want content enough they'll pay to see it, even if it's five frames per second and choppy," Nelson said. He and his peers are avid Net-video watchers, and he's working on a project that could employ the pay-per-view model. Bob
