Tuesday, April 23, 2002
Really Compact Discs
New format - a tad bigger than a quarter - enters crowded market
By PETER SVENSSON
AP Business Writer
NEW YORK — As if she wasn't ubiquitous enough, Britney Spears' music will be available this summer on a new type of disc for small handheld players.
The discs look like CDs an inch across and are housed in plastic cartridges. They can store any kind of data, including video and software and are attractive to the music industry because they are strong on copyright protection.
While the format is novel, analysts say getting consumers to adopt it will be a tough sell for consumer electronics and record companies.
Dataplay Inc., the Boulder, Colo. company behind the technology, is counting on prerecorded discs — and some weighty partnerships — to get a foothold.
“We want to start with music to get overall format adoption,” says Dataplay's Todd Oseth. “That's how the CD became popular — by getting people to buy prerecorded music.”
The company's partners include big hardware companies Toshiba and Samsung, which are planning to make players for the discs. Three big music companies — BMG, Universal and EMI — are going to put out music discs.
Dataplay is also making a strong play for the teenage market. Independent music company Zomba Records will release discs featuring its roster of stars, including Britney Spears and 'N Sync. One of the music players, made by Evolution Technologies Inc. of Raleigh, N.C., will be co-branded with cable music network MTV.
The discs will cost about $16 when they are released in stores in early June, with one album of music ready to play. But because the discs pack data densely and the music is compressed using methods similar to that of MP3 software, each can contain up to five albums of music.
Some music companies will release the discs with hidden extra albums, which can be activated by entering codes bought at their Web sites for $8 to $13.
The extra disc space can contain videos and lyrics, accessed by connecting a Dataplay player to a computer. When connected, a user can also store data on the discs — 250 megabytes on each side, for a total slightly less than the 650 megabytes that fit on a CD.
Data can only be written to the discs, not erased.
Dataplay incorporates safeguards to prevent songs sold on the discs from being copied to computers, a major plus for the music industry. On Tuesday, a music industry group said worldwide sales of CDs fell 5 percent last year, the first drop ever. The group attributed it to the rise of Internet services like Napster, which distribute music copied from CDs.
“What the record labels like about Dataplay is that it's a format they can control,” says analyst Phil Leigh at Raymond James Financial. “They would probably like to see all CDs go the way of the Dataplay.”
Even with music companies behind it, Dataplay faces a lot of competition as an audio format, and there are discouraging precedents.
Sony introduced the compact, rewritable Minidisc in 1992, and while moderately popular in Japan and Europe, it has never caught on in the United States.
Analyst Tom Edwards of NPDTechworld says part of the reason is that Americans like to buy CDs and play them in their cars, while the Japanese have more use for small music players because they use mass transit to get to work.
“If you get on the Ginza (subway) line in Tokyo, there's not much room for a piece of paper, let alone a CD player,” he says.
Two years ago, Iomega Corp. launched MP3 music players that used its Click discs, but did not manage to make much of a dent in the market.
The Dataplay discs are more versatile, have larger capacities and wider industry support than either predecessor. Consumers, however, are likely to prefer MP3 players that use memory chips rather than discs, or portable CD players that can also play MP3s, according to Leigh.
And many consumers will resist the Dataplay format precisely because of the copyright protection that makes it so attractive to music labels.
“My general take is that it's going to be a niche application” said Leigh.
Blank discs costing $5 to $12, and the first music players, for $300 to $370, will hit stores at the end of May.
Other partner companies plan to incorporate Dataplay discs in digital cameras and small handheld movie viewers, to be released later this year. A disc can store a two-hour movie at a low resolution suitable for small screens.
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