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Despite its failure to take the lead in the online multimedia market thus far, Microsoft remains hopeful. Jonathan Usher, group manager at the companys digital media division, recently spoke to freelance writer Beth Szymkowski about Microsofts place in the online music world. Usher says Microsofts focus and strategies go back to the companys overall mission, which he describes as “getting people access to their entertainment and information anywhere and on any device.”
Are you affecting the way other people do business?
I think were creating a lot of opportunities. When a copy of Windows gets shipped, it includes the [Windows Media Player]. . . . That helps broaden the universe of people who can access content. Obviously, being able to access a broad audience is important to the [music] industry.
By providing a platform for artists to develop tools on, weve noticed quite a large number of companies developing encoding or authoring or editing tools based on Windows Media, and that gets back to Microsofts overall focus as a company: We tend to perform very well when were a platform provider, and other companies develop solutions on what weve provided.
Whats different about what youre doing than whats out there already?
Were actually a big part of whats out there already. There are about 220 million copies of Windows Media Player, either [version] 6.4 or 7, distributed. One of the key things that were looking to do is provide a really good experience on a PC, but also to expand that capability into numerous portable devices and consumer electronics devices. Thats one area where weve led the pack.
Certainly, MP3 is the technology thats discussed and used a lot, but MP3 is actually about a 10-year-old technology. So what were finding is, with the music industry now wanting to have the content available online, theyre looking for a next-generation technology format that provides much better compression so that you can get CD-quality audio in half or one-third the size of MP3, and yet thats inherently secure to allow them to protect their content. One of the key differentiators, I think, for Windows Media is we built our technologies from the ground up to include digital rights management support.
Do you see Windows Media being so widespread that it becomes the standard, just like MP3 had been in the past?
I think that Windows Media would be a leading contender to become the next de facto format standard. MP3 is really, from a content provider perspective, getting a little long in the tooth. Its 10 years old and it doesnt have any security inherent to it. If youre a content provider, youre generally not wanting to make your content available in MP3 format.
Youve seen with Napster what can happen when you do. It can be copied fairly broadly and you lose control of your intellectual property. The next-generation universal format, if there is one, I think needs to have security built into it from the outset and very flexible security. You want content providers to say, “I want this content to time out on Dec. 8, because Im using it as a promotion.” Or, “I want to give my customer the ability to copy the content a certain number of times, but maybe not burn it onto a CD.”
Those sorts of tools really need to be built into the next-generation format, and weve written like that for over two years now with Windows Media. . . . I think what weve seen over the last few months is providers, including Warner [Music Group] and the other labels, have embraced the format.
Do you foresee the existing formats coexisting three or four years from now?
Predicting anything three or four years from now is difficult.
So next year, RealNetworks will be out there. MP3 will be out there . . .
MP3 and RealNetworks and Windows Media will be out there next year. I think the thing to look for is which of the formats that are out there are the labels actually using to realize revenue from the Internet.
Which will that be?
I think well see an even broader move to embrace Windows Media for that. The key reason is we continue to innovate on the quality side, but we also engineered from the ground up Windows integrated security.
For every person who says they have something thats secure, therell be someone out there saying theres no such thing. So is your product any different?
Thats an interesting question. Theres no such thing as 100 percent secure. But we certainly believe weve delivered highly sophisticated technology that meets the needs of all the major content providers, whether theyre delivering music or delivering video, whether its streamed or whether its downloaded.
Where does Microsoft make money in all this?
We make money when we sell Windows. So Windows Media Encoder runs on Windows. Windows Media Services, which serves up the content, runs on Windows 2000 Server. Windows Media Player even is a part of Windows Millennium [Edition]. If we provide that sort of technology in Windows, it would make Windows a highly attractive purchase. . . . Digital media is one of the reasons now that people get excited about PCs. They want to find the cool new content online. So weve got to keep doing that; keep improving digital media. . . .
Theres one other area where we also do make money from digital media — thats where we license Windows Media support for people like chip manufacturers, people who build Windows Media support into some of the portable audio devices.
You also have licensing agreements with America Online, Compaq Computer, RealNetworks, Yahoo!. Theyre given the ability to play your content on their players?
Correct.
When do you think everything will fall into place in terms of music companies getting their catalogs online? Or is that not your primary focus?
Were certainly interested in trying to make it easier and faster for this industry to mass market as quickly as possible. That again drives interest for people in using PCs . . . so that goes back to Microsofts overall mission: getting people access to their entertainment and information anywhere and on any device. . . . Thats why were working aggressively with all of the music labels, providing all sorts of tools, making it easy for consumers to discover music and download and stream. Ive seen a noticeable pickup in activity from the music label side in, say, the last three to six months.
Why?
Because I think the technology is now to the point that they can be aggressive about making content available online, and know that its protected so they dont have to worry about their intellectual property.
The [music labels] initial move has been to use technology as a promotional tool . . . Now were starting to see them turn to, “How do I make money in this environment?”