According to UK trade mag Music Week, the Secure Digital Music Initiative (SDMI) is on the verge on accepting the MP3 format as an interim measure. Such a deal is likely to fall short of endorsing MP3 in the long term, however. Industry insiders confirmed that "a deal was in the air" that involves all the major record labels, consumer electronic and IT companies. It is likely the SDMI will "tolerate" MP3 until it can be supplanted by a more secure technology. MP3, a format that allows music to be easily compressed in digital form so that it can be uploaded onto a computer/network, has been shunned by the Recording Industry Association of America (RIAA). Its members, major records labels and artists, fear illegal MP3 downloads will rob them of royalty payments.The RIAA was not available for comment. Paul Jessop, director of technology at the International Federation of the Phonographic Industry (IFPI), baulked at the idea of MP3 winning the digital music standard war. "How far can unprotected technology of any sort, including MP3, be used? The debate about how unprotected file formats can be allowed into secure playing systems is not over yet," said Jessop. According to the IFPI, of the 3 million MP3 tracks downloaded each day, the majority were illegal. "Vanishingly small amounts of legitimate music is being distributed and little money is made from selling MP3 tracks," he said. If the SDMI does take this route, it is likely to anger members who have been busy thrashing out secure open standards for Net music distribution for the end of June. Diamond Multimedia's spokesman Neil McGuinness, said the recent Sony/Microsoft pact may have provoked this "political" reaction from the SDMI. "The big record labels mistrust Microsoft. The Sony deal may be the catalyst that turns SDMI members towards MP3. The big five [record companies] each have their own agenda." McGuinness added that Microsoft's Audio 4.0 technology now stood little chance of being signed up by the SDMI because of the alliance with the music giant. The final decision of the SDMI is likely to encompass some form of filter technology to trace where music originates from -- be it an illegal source such as a CD or a legitimate record company's site -- to the consumer. "Watermark technology is available that record companies, distributors and any one else in the chain can deploy to track the product," said Jessop.