by Paul Barrow, Editor

On June 18, 1997 Global Music Outlet, a futuristic music marketing company, began revolutionizing the way we enjoy music.

By integrating advanced digital technologies, GMO pioneered a fun and versatile music delivery system for the 21st Century. Songs could now be downloaded on the Web and played on PC or home stereo speakers.

With the help of AT&T Labs engineers, GMO combined an audio compression, secure server, and online transaction program into a new digital stereo audio format, called Electric Records, for producing and distributing songs electronically. The Electric Records distribution system allows hundreds of artists and record companies to offer music lovers thousands of songs for purchase via online music storefronts.

On July 16 only one month later N2K Inc., one of the leading online music entertainment companies, debuted what they call "a commercially viable and legally responsible system" to sell CD-quality music tracks over the Internet, available exclusively through Music Boulevard, the company's online music superstore at http://www.musicblvd.com./e_mod.

Working with Liquid Audio, another pioneering developer of secure Internet music delivery systems, N2K joined Global Music Outlet in offering consumers the opportunity to purchase and download music tracks in high-quality sound, adding to the momentum in creating a fundamental, if not radical, shift in the traditional music distribution process.

Earlier, at the time of GMO's entry into the DMT (download music technology) market, I contacted its CEO and Chairman Anthony Stonefield and began developing a relationship with this firm that would hopefully lead to WARP's becoming a point of purchase for Electric Records. Since GMO was apparently the first to make this technology available on the internet, it was clearly at an advantage in securing a strong foothold on this market.

When N2K introduced its entry, I asked Anthony Stonefield to comment on the information available in the press release. I then forwarded his remarks to Gerald Kearby, CEO of Liquid Audio, and asked for his comment. These in turn were forwarded back to Stonefield for expanded comment.

By mutual consent I have agreed not to publish Stonefield's original remarks, because they were not intended for public consumption.

I will state without hesitation that Kearby was quite clearly annoyed with Stonefield's comments, however. "Liquid Audio," he immediately assured me, "recently released a system that is in no way similar to GMO's.

"If you want to evaluate our Liquifier for yourself before quoting [Stonefield], please give me a call and I will arrange for you to have an evaluation copy. Many of the industry's leading record producers including Phil Ramone, Jerry Harrison, MC Hammer and others will disagree with ole Tony. They use our product productively every day and are about to change the face of music distribution forever. You might also want to talk to me about others who have evaluated our system and pronounced it a winner. Or you might talk to the leading audio engineers and industry professionals who recently nominated the Liquifier for a Mix Magazine Tec Award for software product of the year. The Mix Tec Award is the pro audio's stamp of approval."

I didn't take him up on his offer of looking at the Liquifier personally. I didn't really feel qualified to make a comparison myself. I was rather more interested in the exchange between two obviously highly qualified people in the field who had become competitors in a technology so revolutionary that it promises the possibility of permanently changing the entire structure and face of the recording and music entertainment industry.

"I was lucky to have a few day's use of the Liquifier beta," Tony responded. "It seemed like it was intended to be a very useful electronic song and audio stream production tool. I imagined it would be possibly useful for speeding up our audio production process. I contacted Gerry Kearby to explore the possibility of replacing the Dolby audio encoder with our Electric Records encoder as, in the first two song tests, I found our encoder to be significantly superior in audio quality per bitrate, particularly in the range of bitrates that I consider key for use in download sales of songs -- 64kbps through 128kbps (or 450Kb/min of audio through 900Mb/min). Gerry told me it wouldn't be too difficult to replace the encoders and that he'd be willing to give it a try. We might have gone ahead with that plan, except I couldn't see how to reconcile our different methods of associating cover graphics, textual files, nor our database updating and song encryption procedures into the suggested Liquid Audio server architecture. We wanted the cover graphics to be bigger than the Liquifier's set size.

"Nor did I feel that the Liquifier offered an ability to switch graphics or text files *after encoding* or allow us to optimize the audio files without messing with the Equalization. Also, this early in the life of this new industry, we felt that we should stay flexible w.r.t. [with respect to the] overall infrastructure or file formats that are absolutely sure to change.

"For example, we held back our public release of the Electric Record Player to make sure it is compatible with the upcoming MPEG coder standard that will only be established later this year. So, instead, we developed our own simple production interface that satisfies our specific needs and allows us advanced encoding parameter controls across an unrestricted range of bitrates.

"Although neither we nor AT&T has current plans to productize a Liquifier-like home audio production tool for Electric Records, we are busy designing a professional "Electric Records Press" production suite that will utilize several multi-processor machines and an audio mastering rig. It will likely be offered to music production houses as part of an electronic distribution service license. We are concerned that making any aspect of the encoder available to the public logarithmically multiplies the potential of unauthorized intrusive engineering (hacking) that could compromise the security of copyrighted songs. We therefore see our entire strategy as one designed for professional or aspiring professional musicians who have an interest in maintaining copyright security over all music in as many levels of the system as possible. Of course, we can also serve an industry rebel like Todd Rundgren, who couldn't care less about his copyrights. It is our job to care about copyright integrity."

I contacted George Petersen of Mix Magazine to confirm Kearby's comment regarding Liquifier's nomination for software product of the year. He replied that "Yes, Liquid Audio's Liquifier Pro package was one of six products nominated for a Mix TEC Award in the category of "Outstanding Technical Achievement, Computer Software and Peripherals". The nominations are made not by Mix Magazine, but a panel of top engineers, producers, studio owners and other industry professionals. Attached is a short piece concerning my observations on Liquid Audio, written after it made its world debut at last November's convention of the Audio Engineering Society (AES)... " (See Mix Magazine Article).

Stonefield commented, "we have no consumer product (other than the music and the player) to compare with Liquid Audio's Liquifier or Cerberus' Virtual Pressing Plant. Our only software product is our Electric Record Player package, and that's free to music lovers."

The exchange became somewhat heated over a statement in the press release that "N2K Inc. is the first music entertainment company to successfully merge online technology with original music and entertainment content." Stonefield called it "gaseous."

Quite clearly Global Music Outlet had released their version of this technology a month before, and Stonefield was quick to point out that Cerberus, a British firm, had started doing this two years before.

(Note: I did a search with Yahoo for "Cerebus" and all I could come up with were "democratically existential" references to a crazed ferret and someone who claimed to have sex with God. Then I realized that I had made a mistake with the spelling and finally found this reference to "The Cerberus Archive:

"In his debut post, Memo from a Wog Dog, Cerberus tells Scientology how to reform itself. In a follow-up, he offers some sympathy for our infamous friend Woody the Clambot.

"In Demonology 101, Cerberus continues by revealing Vera's true nature. Woody the Clambot wrote a response, and Cerberus followed up with this gem..."

Strange word. The Cerberus Digital Jukebox, we now know, is at http://cdj.co.uk/.)

Kearby replied, "Regarding our (actually N2K's) assertion that we are the first to offer CD quality audio on the net: Please refer to the DVD standard and the DTV standard which have chosen Dolby AC-3 as the audio format. Early systems from Cerebus use MPEG II...never approved as CD quality by the music industry. And, the Liquid Audio system is the only technology that allows the user to take the music out of the computer and play it back on an industry standard device in one easy to use application... flash memory devices harken memories of the 8 Track and DCC. Anyone remember Beta?"

Stonefield replied, "We are currently working on a similar mechanism but, because of the drawbacks of such a solution for the consumer, we see it as a low priority. Burning a CDR at home is fairly complicated task that calls for hundreds of dollars worth of additional equipment, and for what? A home-made CD of songs all with different volume levels? Surely it is easier to mail order the original CDs? Obviously, the concept is sound for making records that can be played in your existing CD players, especially as more and more music lovers become computer users and get CDR burners as general storage devices. Still the solution negates the size advantage of digitally compressed audio. Since you could save more than an hour of music in Electric Records format on a reusable credit card-sized 30Mb memory card, it seems re-recordable cards will the obvious consumers' choice in the future. Time will tell. So far the AT&T protoype has been very enthusiastically received (see http://www.ElectricRecords.com/flashpac.html ).

"W.r.t. DCC, 8 Track and Beta, I don't see the relation. Only one of these is portable (DCC), none use flash memory or compression, and Beta is a professional standard that originally lacked only content support. DVD is a fixed storage medium that will be able to store our compressed audio files as easily as any other."

Kearby: "Regarding the assertion that Liquid Audio system might beg for piracy...nothing could be further from the truth. Liquid Audio is the first company to design an end-to-end solution for music distribution that uses RSA encryption as a key component. Our system contains two levels of watermarking for anti-piracy protection and an updatable encryption scheme that constrains the end user to only making one copy of a cd.

Stonefield: "Firstly, once the user has made one CD he or she can make an infinite number of CDs using the same CD burner. A passive watermark 'aint gonna make any difference to a pirate or bootleg buyer (might even be considered a quality brand).

"Secondly, apparently Kearby feels that the CDR-burner component allows him to consider his system the first end-to-end solution, which I think is a stretch. Because otherwise, he is ignoring the fact that we launched our first beta trials using RSA Encryption back in December. We currently use cryptographic hardware in our audio server and digital song keys using Triple-DES Encryption."

Kearby: "If [Anthony Stonefield] is talking about analog copies from a CD or other non-standard memory device, the Liquid Audio system is the only one that can be redigitized in order to read the watermark containing copyright owner's information and the certificate number of the purchaser. Any system is not immune from analog copying."

Stonefield: "No, I'm talking about a simple matter of being able to send a custom-burned compilation CDR to China for unauthorized mass digital-to-digital reproduction. As electronic distributors, I believe that it is our responsibility to copyright owners to cast audio degradations in the path of copyright pirates. Currently, you can only make an analog-input copy of the songs we server. We shall release a portable record (flash memory, CDR or both) only when we are sure we have vastly reduced the value in the piracy option.

"I'd also like to see an embedded purchaser certificate stand up to a pirate hacker. It would be as good as absent."

Kearby couldn't resist characterizing GMO as "a kind of skunk works test lab for AT&T technology. Liquid Audio," he added, "is very impressed with much of this technology (in fact an announcement will be made very soon about licensing similar componentry)."

A "beautifully odious description!" Stonefield responded. "In fact, GMO is a completely independent company. GMO's electronic distribution system, Electric Records(tm), was entirely conceived by GMO as the best way to market it's music. The Electric Records Player and database and server architecture was designed by GMO.

"AT&T Labs lends its expertise in repurposing its powerful audio compression and digital security technologies to support GMO's vision. The deal is that AT&T gets implementation and market trial information from GMO that AT&T is using to develop a large-scale electronic music marketing service of its own--and within which Electric Records(tm) may be one of many distribution channels.

"Right at the end of my time at IUMA in late 1994, I contacted AT&T/Bell Labs with my idea for using their amazing compression scheme to transform the way in which music is marketed. They were very encouraging and hired me as a consultant. Since then we have been collaborating with a handful of brilliant engineers in AT&T Labs. They have been very obliging in responding to our requests and suggestions.

"In fact, we had our own audio guru, Clif "Doctor Bliss" Brigden fly out to Jersey and help tune the compression scheme to the industry-leading standards that it is presently.

"Clif is one of the best polymedia magicians in the world. His last production was Thomas Dolby's "Gate To The Mind's Eye". Clif and AT&T's Jim Johnston, one of the world's most respected DSP engineers, worked to give us subtle controls over the encoding process so that we could deliver a very small audio file with astounding quality.

"Equally, AT&T Lab's Jack Lacy conceived and repurposed some of his security strategies to afford us a very versatile, manageable and user-transparent copyright protection system. It can easily be modified to be used in super distribution as well as in a range of song license arrangements--like one-time play or infinite plays, one-copy only or inifinite copies, and all options in between. We are currently using perhaps the simplest implementation of that security capability.

"Yesterday, [July 22, 1997] AT&T Labs hired GMO's Director of Technologies, Shane Dewing to take over the management and development of the security module.

"Suffice it to say that AT&T has treated us better than a skunkworks project. Instead, they have committed effective resources and afforded us the freedom to continue our operations with the conscience of an independent music distributor. When contrasted with Liquid Audio, I am proud to say that we have developed what we have to date with a committed 8-person team and without relying on one penny of venture capital. We're not trying to sell anyone anything except great and unusual songs."

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