Apple's Move May Make AAC Music Industry Standard

stivi writes "BusinessWeek has up an article about a war: a standards war in the online music business. Apple's recent deal with EMI to sell DRM-free songs from the publisher's catalog on iTunes may clinch the iPod's AAC format as the industry standard. The article talks about possible reasons why AAC might marginalize WMA, as well as deals with some of the implications of drm-free aac-standardized industry. 'Online music stores, like Napster, Yahoo Music, URGE, and all the others that sell WMA songs will be forced to consider jumping into the DRM-free AAC camp, and thus become iPod compatible, and in so doing become competitors of iTunes. Apple will be fine with this, because in its range of priorities, anything that sells more iPods can only be a good thing. With time, practically all music stores will be selling iPod-compatible songs. This will be considered a Richter 10 event at Microsoft.'"

Comments

aac is not in EVERY hardware player

[TheGratefulNet]

and so it will never capture the market share that mp3 based hardware (chip) players have.

I have so many mp3-only players - why on earth would I convert to a diff format when mp3 meets ALL my needs?

now, if all players were firmware upgradable, fine. but the fact is, most are chip based and if there is no
AAC support in the chip, you are SOL.

AAC is a nice idea, but its not 'everywhere'. mp3 IS everywhere. that's all that matters, in the end.

Re:aac is not in EVERY hardware player

[adisakp]

True... but iPods do currently make up something like 75%-80% of the market all by themselves. Thus AAC is one of the predominant portable digital music player formats even if relatively few other players support AAC.

Not to mention quite a few players support AAC without really going out of their way to bullet point it as a feature.... for example Zune players.

Re:aac is not in EVERY hardware player

[BKX]

You're forgetting two things.

First, mp3s cost the online music stores money per song download, whereas AAC does not.

Second, most new players support AAC out of box. Nobody cares about your Rio.

Third, since 80% of mp3 players out there today are iPods (which all support AAC), and most of the rest either support AAC and can be firmware upgraded to support it. Why would the music stores give a crap about supporting the less than 10% of music players that don't do AAC?

Forth, you're not thinking about this from the music stores' points of view. To them, selling DRM'd music costs a certain DRM'd-format-royalty on a per song downloaded basis. Right now, they mostly pay that royalty to Microsoft since they all use WMV, since Microsoft is the only company licensing a DRM'd format. Selling non-DRM'd music makes them free to choose among non-DRM'd formats, and there are a shit ton of them:
WMV: costs money per song, and is only supported by a small number of clients.
MP3: costs money per song as well but is supported by nearly 100% of clients.
AAC: is free and is supported by 90% of current clients and soon to be 100% of future clients. (Even the Zune supports non-DRM'd AAC, and that's saying something.)
Other formats: no format has wide enough support and small enough bandwidth requirements to even be considered.

Which format would you choose?

Re:MP3

[jmorris42]

> There are no online stores that have been able to sell DRM-free MP3's, at least not if they are
> selling music from the larger labels.

Which is exactly the only thing new here, but some asshat wanted to spin it pro Apple. If EMI is willing to A) give up DRM and B) allow non-Apple retailers in the deal why would they mandate AAC? No, when Yahoo, Walmart, etc enter the DRM Free game they will be selling whatever format(s) customers demand since they have no motive to help Apple lockup the hardware market.

Of course if EMI and the other labels only allow Apple to sell without DRM then yea, Apple wins.

Re:MP3

[99BottlesOfBeerInMyF]

In addition, if one reads EMI's announcement about them selling DRM-free music, it's clear that it's neither AAC nor iTunes exclusive. Other music stores will be selling EMI's songs in mp3 format soon, and nothing will have changed with respect to the popularity of mp3 vs AAC.

I disagree. This is likely to change the relative popularity of MP3 and AAC. There are several reasons for this. First, the iTunes store is currently the most popular of the online music services and likely will be the first one taking advantage of this offer. As a result, a lot of MP3 manufacturers are going to be looking to add AAC support to their player to capitalize upon Apple's work and to make transition easy for existing iPod users. This will expand the potential market for AAC files from iPods and Zune, to almost all portable players. With that change, a lot more music services will consider using the AAC format either instead of or in addition to MP3.

Second, right now almost all commercial services require DRM. That means such a service must choose to either use WMA, RealMedia, or roll their own solution. Support for Real is nonexistent among hardware vendors, so they target WMA as the easiest solution. Very few commercial services offer MP3. So how does this event change things? All those WMA offerings are now going to be looking for format for non-DRM'd files that targets the iPod. That rules out WMA. So they are probably going to be choosing AAC or MP3 or both. MP3 is probably a little cheaper for licensing and has wider support, but AAC allows for smaller files for the same level of audio quality, saving bandwidth costs and speeding up downloads. Further, record companies will have already converted masters to sampled AAC for Apple, possibly making that a preference from them.

I don't see that MP3 or AAC will immediately dominate for DRM free music sales, but I bet Apple is not the only major store selling AAC downloads by then end of 2008.

Re:MP3

[e4g4]

they have no motive to help Apple lockup the hardware market. How does mandating an open format help apple lockup the hardware market? It's a more or less trivial process for DAP manufactures to add AAC decoding capability, and substantially cheaper than including WMA decoders, I would imagine. Not that a record company would necessarily mandate format, I'm just saying that any mandate of a AAC format would only benefit Apple in the very short term, as other manufacturers catch up.