Can Microsoft win the media format war?

Even if Microsoft has no ulterior motives, content creators have other very good reasons to steer clear of Microsoft's DRM and Windows Media formats. "Content is what drives digital media behaviours in the home, not a platform," Jones said. "You will never see content owners changing their architecture to fit a device's architecture in the home. It's always the other way around. The device architectures always fit how the content enters the home. There are MP3 players because the content source was MP3; it's not the other way around." To date, Microsoft's strategy has worked to counter this behaviour, with the company convincing device manufacturers to support Windows Media formats. But that strategy has failed to gain much traction for the format against MP3. Still, the DRM is a big carrot that could convince labels to use Windows Media formats, which could greatly advance adoption. The timing is right, say analysts. "The labels are feeling a lot of pressure, especially from the retail side, like this Echo thing that was launched," Jones said. "That's a sign the industry is thinking seriously about alternative distribution platforms." On Jan. 27, a group of music retailers including Tower Records, Virgin Entertainment, Best Buy and Wherehouse Music formed a consortium to sell digital music--through an investment in Echo Networks, which formerly operated a streaming music community. Even if record labels embrace the toolkit and create millions of discs with Microsoft DRM-protected content, there's no guarantee Windows Media formats would gain any traction with consumers. In fact, many analysts believe content protection simply cannot succeed in the market place. "DRM solutions have not been popular with consumers," Jupiter's Gartenberg said. "It's not likely consumers will flock to this technology or replace either existing consumer-electronics equipment or PC equipment to help labels fight piracy or help Microsoft drive Windows Media adoption forward." In fact, the most serious indictment of DRM technology may come from Microsoft employees. A research paper published last fall, reportedly by four Microsoft employees, concluded that DRM technology would likely fail because of consumer resistance to content protection and acceptance of file trading. The researchers concluded "that a vendor will probably make more money by selling unprotected objects than protected objects." Gartenberg isn't surprised. "Consumers have shown resistance to anything that inhibits their use of the music that they purchase," he said. About 40 percent of 15- to 17-year-olds buying a CD in the last 12 months said downloading influenced their purchase, according to Jupiter; 28 percent had copied music from a friend. "The figures were 11 percent and 10 percent, respectively, for adults," Gartenberg said. "That seems to indicate consumers want flexibility with their music."

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