AT&T to Test Digital Music Downloads

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AT&T Corp. said late last month that it has agreed with
Matsushita Electric Industrial Co. Ltd., BMG Entertainment and Universal Music Group to
test digital-music-download security on a large-scale basis.

The companies did not disclose details of the consumer
trials, such as where, when or how large the first selected markets would be.

And while its recent MSO purchases make AT&T extremely
interested in the way broadband capabilities will play into digital-music distribution
over the Internet, the first consumer tests are likely to be primarily among narrowband
users, AT&T Labs research vice president Ron Brachman said.

Digital-music downloads in the United States are expected
to command $1.1 billion in revenue by 2003, according to Cambridge, Mass.-based Forrester
Research Inc. senior analyst Mark Hardie.

"Anyone with a pipe wants a share in that e-commerce
activity," Hardie said. "The problem is, it isn't clear how they'll get
paid."

The four companies involved in last week's announcement are
all members of the Secure Digital Music Initiative, which is developing an open standard
for digital-music copy protection.

Without a way to protect their copyrights, many recording
companies and artists would be reluctant to distribute their content online for fear of
pirated distribution.

Under the Panasonic brand name, Matsushita plans to develop
for the AT&T alliance the same copy-protection technology that has already been
incorporated into DVD-related products.

In addition, a Panasonic spokesman said, Matsushita plans
to provide technology and development for terminals that will receive content over an
electronic distribution system, music-playback devices designed around semiconductor
memory cards and authoring tools for electronic-music distribution.

The category won't reach mass-market acceptance until three
issues can be resolved, Brachman said.

First, the content that consumers want must be readily
available. Second, the content must be portable, meaning that the consumer must be able to
carry a song or album over to another listening device and not be bound to a personal
computer. And third, the industry must find ways to make music downloads available to the
large percentage of households that don't have personal computers.

"It's possible to imagine a stereo set-top box that
gives consumers access through a user interface on a stereo console, or a television
hooked up by cable to the Internet," Brachman said.

Audio compression allows digital recordings to travel over
dial-up modems today. Broadband will offer not only faster delivery, but also new
applications.

The alliance is developing production tools that would
allow artists to package not only music, but also text lyrics, video footage and even
links to artists' Web sites.

Downloading digital music over narrowband is more of a task
than an entertainment experience, Hardie said, but this can change once the industry moves
to broadband.

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