Open source software developers hoping to create a free replacement for MP3 technology are pushing ahead with their project after the collapse of their parent, Webcasting start-up iCast. For the last few months of its existence, CMGI's iCast was the official home of the colorfully named Ogg Vorbis project, an attempt to create a digital music compression format that would sound as good as or better than the MP3 format but lack prohibitive licence fees. Although most consumers view the popular online music technology as wholly free, companies that create software or hardware to play or encode MP3, as well as those that distribute MP3 downloads, must pay patent royalties. Webcasters ultimately will be in the same boat, probably as soon as next year. With the demise of iCast, a casualty of CMGI's recent round of belt-tightening, the Vorbis programming team was cut loose. It was allowed to keep all rights to its work, a provision that was part of its original deal in joining iCast, the programmers say. But the lack of a corporate sponsor has left the team, at least temporarily, without funding and without the prospect of a high-profile showcase for its work. The developers, never ones to pay much lip service to corporate parents, say the speed bump has barely affected their progress on the format, which is identified by files that end in the ".ogg" extension. "The project isn't affected all that much," said Christopher Montgomery, the programmer who leads the Vorbis effort. "We're sort of operating in battery mode right now." Just how long those batteries will last, and how far they will take the ambitious open-source project, are still unknown. The group is seeking some sponsorship but hasn't decided details of such a deal or what types of companies would be interested. In the five months since the Vorbis project went public with a test, or "beta", version, it's made some significant inroads in the online music community. The technology is supported in the popular Sonique player, and a plug-in is available for America Online's Winamp player, for example. A few Web sites have begun offering Vorbis files, and Montgomery says hardware manufacturers are beginning to include the specifications in some of their products. The tipping point, developers say, will come when Vorbis comes out of beta with version 1.0, which they say will exceed the quality of MP3 in almost every respect. Many big companies have internal policies barring them from supporting beta technology, a barrier to adoption that will fall away once a non-test release is available. Analysts say the open source effort has gained more ground in its short existence than many had expected. Some say it's more likely to succeed in applications such as video games since developers loathe paying MP3's licensing fees and can take advantage of the free format without worrying about whether consumers have players. Even if Vorbis takes off, however, its future as an MP3 alternative is not guaranteed. If the format gains enough popularity, it will almost certainly face a patent infringement challenge from the owners of the MP3 standard, analysts said. "I had been sceptical that anything would come of it," said Forrester Research analyst Eric Scheirer. "But it is a [technology] that is competitive with MP3... The question is how well it will stand up to patent challenges." The owner of most of the intellectual property inside the MP3 format is Germany's Fraunhofer Institute, a massive research organisation with interests far beyond audio technology. It has licensed its rights to Thomson Multimedia, which collects the growing patent royalties. That company already charges MP3 download companies about 1 percent of royalties, while hardware companies must pay 50 cents per unit shipped. MP3 encoder companies, such as Musicmatch, pay Thomson about $5 per unit, contributing to the relative scarcity of free MP3 "rippers". Thomson hasn't yet decided what to charge Webcasters using the MP3 format. Vice president of new business Henri Linde says that fee will likely be 1 percent of annual revenue, or an annual fee of $1,000 for small companies. Despite those payments, the MP3 format is still soaring in the marketplace. Thomson's figures show that 10 million hardware devices supporting the format have been manufactured, and roughly 150 million software units have been downloaded or otherwise distributed. That gives Thomson and Fraunhofer a huge head start in the market even as other music formats such as Windows Media are gaining ground. It also gives them a huge stake in protecting that lead against any sign of encroachment by Vorbis. The Ogg developers staunchly defend the notion that they have created everything from scratch, or at least have built their system without using any of the Fraunhofer-owned technology. But their rivals say they aren't so sure. "We doubt very much that they are not using Fraunhofer and Thomson intellectual property," Linde said. "We think it is likely they are infringing." Whether this is true, analysts say Thomson and the German company are likely to file patent lawsuits the moment Vorbis appears to be a viable market candidate. By creating a perception of uncertainty around Vorbis' future, MP3's parents could prevent conservative digital music companies from adopting it. "If you're going to go into a marketplace where people play hardball, that's what hardball looks like," Scheirer warned. Take me to the MP3 Special Have your say instantly, and see what others have said. 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