De Facto Undecided

Multimedia distribution standard eludes MS

Microsoft speaks. people listen.

And if Microsoft has its way, people will listen in Windows Media format. The software giant wants its Windows Media Technology to become the industry standard for online music distribution, even though the industry hasnt agreed there ever will be such a thing as a standard.

But thats not for lack of trying on Microsofts part.

"Theyre essentially subsidizing their way in the marketplace," says Richard Doherty, director of research at The Envisioneering Group, a technology assessment and market research firm. "Theyve gone from virtually no presence 18 months ago to one of the eagerly anticipated facilitators of the industry."

Microsoft lags far behind RealNetworks popularity as the prevalent technology used to download multimedia on the Web, but it surpasses Apple Computers QuickTime and is gaining users at a faster rate than RealNetworks. According to a November report by Nielsen//NetRatings, 27.7 million users downloaded content in RealNetworks format, 13.2 million downloaded content in the Windows Media format and 7.9 million used QuickTime.

"Everybody loves a bidding war," Doherty says. "The challenge Microsoft has made to Real [Networks] has made it a strong two-horse race, with QuickTime down the chart."

While the race is hardly over, analysts say Microsoft clearly has something competitors dont: the Windows franchise. Operating systems. Servers. In other words, a way to get its product into millions of homes and businesses at no extra cost or effort to the user.

Its not clear yet whether the advantage will be enough to dominate the industry — if anyone can dominate.

"Theyre in the middle of the rugby scrum pack," says P.J. McNealy, an analyst at GartnerGroup. Until all the Big 5 music labels get their online catalogs up and running and create the partnerships necessary for the task, no one can be declared the leader, he says. "Theres no clear winner. And theres not necessarily a clear loser. Nobodys broken through yet," he says.

Also, its likely that content providers will use more than one format in order to reach the widest audience, McNealy says, so there may never actually be a clear winner.

But even with its natural advantages, Microsoft is not flexible enough to become the industry leader, according to Steve Banfield, general manager of consumer products at RealNetworks. Microsofts focus — being a one-stop shop for everything from encryption to digital rights management — is its biggest weakness, Banfield says.

"Everybody wants multiple op- tions," he says. "Content providers want to try new things. They want flexibility and freedom. No one is committing their future to any one type of technology."

Banfield downplays the power of Windows in the equation. Microsoft has shipped some version of its Media Player with Windows since 1995, he says. "Microsoft has been trying to do things for six years, and they havent achieved world domination yet."