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Abort, retry, fail?

Great ideas and new technology don't guarantee commercial success. Has industry just let slip its best chance of an all-in-one replacement for MP3 and the CD, asks Kurt Kleiner

THE Dead Media Project is a bizarre collection of inventions that once manipulated information in some way, but which have since been wheeled off to the morgue. Housed on the Web at , it contains descriptions of objects such as the 200-tonne music synthesiser called the telharmonium, which was killed off by the birth of radio, and the humble Betamax video, beaten into submission by VHS.

The latest offering in this temple of obsolescence could be a tiny alternative to the CD, whose life may end before most of us even know it exists. DataPlay of Boulder, Colorado, saw the launch of the first portable music player to use its new format in early summer. But by summer’s end the company was heading for bankruptcy and had temporarily laid off its staff. After receiving $200 million from big digital companies such as Samsung and Toshiba, the company could not find the extra $50 million to tide it over while the listening public gave its verdict.

DataPlay’s experience shows the vagaries of bringing a new product to market. It’s not enough to have a great idea or better technology than exists already. Industry alliances make a difference, and – like a good stand-up comedian – timing is essential.

The company is built around an optical disc the size of a large coin, able to store 500 megabytes of data – not far from the 700 megabytes that fit on a CD. It wants the disc to become an all-purpose memory for everything from cameras and PDAs to mobile phones, game consoles and home PCs. But its strategy was first to conquer one of the world’s toughest markets – pop music.

The technology is similar to DVD, but smaller, faster and less power-hungry. The disc is 32 millimetres across, enclosed in a square, protective case. Information is stamped on its metallic surface as tiny pits that can be read by laser in the same way as those on CDs and DVDs. To squeeze more data onto the tiny disc, the pits have been shrunk to just 435 nanometres long, with gaps of only 740 nanometres between them. That’s about half as big as the pits and gaps on a CD. The disc player will eventually be smaller too.

To shrink the disc player, the company integrated the laser, lens, mirrors, chips and other components into a single unit. This “micro optical engine” is only about 50 millimetres square and 11 millimetres thick. And the optical head – the device that actually reads the disc – is a tenth the size and weight of existing heads. The company hopes that by shrinking the whole system, other manufacturers will incorporate it in devices such as mobile phones and PDAs.

DataPlay players can also record, using a process similar to burning a CD. But where a CD burner is a relatively power-hungry device, DataPlay uses an optical head that is operated by a small battery. There’s a limitation, however. For now, at least, DataPlay is write-once only. It’s not possible to record over an existing track.

If the hardware is smart, so too is the software, which comes with a powerful system to restrict copying. This was needed to bring the music industry on side. Three of the big five recording labels – Universal, EMI and Bertelsmann – signed on, as did independent label Zomba, which this summer released a Britney Spears album on DataPlay.

The copy-management system relies on the format’s ability to write to the disc: each disc will carry a permanent record of how many copies purchasers are permitted to make, and how many they have already made. It’s up to record labels to decide how many copies consumers can make. Zomba, for example, allowed Britney lovers to make five copies of her album. As each copy is made, the action is recorded on the original disc. Once the limit is reached, the original won’t allow itself to be copied any more. And every copy will bear a code that prevents it from being copied again.

DataPlay also restricts the types of devices people can copy to. The player will hook up to a computer or the Web only through DataPlay’s own software, which enforces the copy prohibitions. If you want to transfer a track to an MP3 player, forget it. The system won’t let you. MP3 files will play on a DataPlay player, but once in the new format, they can’t be converted back or uploaded to a website.

The new format does bring benefits to consumers. Perhaps the biggest is that the disc can store about four hours of near-CD-quality music, whereas a CD manages only 80 minutes. And with DataPlay’s compression system it can store 11 hours’ worth. Another perk is that albums you buy will have blank space to allow you to add your own tracks.

Finally, the system could mean that if you’ve bought a Britney album and decide you want to buy some of her earlier work as well, you won’t need to go back to the record shop or sit through an interminable download. Her entire back catalogue could be stored on a single disc – but “locked up” so you can’t get at it. When you want to “buy” another of her albums, you pay online and download the key to release it. Because the key is then written onto the disc, you could even lend the disc to a friend to listen to. All these clever schemes are enforced through layers of encryption.

So, with all this groundwork done, what stopped DataPlay in the final straight? The music industry is likely to have few complaints – until a hacker cracks the format’s encryption system. That is virtually inevitable, says Bruce Schneier of Counterpane Internet Security of Cupertino, California. But it’s also likely to happen to other new recording formats.

Strangest of all is why the firms that helped DataPlay get so close to market will not go the extra mile. There were rumours that at least one electronics company could not make the player’s mechanism robust enough, but these fears have been dispelled: two firms, iRiver of Korea and Hong Kong’s Musical Electronics have both launched well-received players. Perhaps the companies thought consumers wouldn’t be happy with a write-once medium, or with the copying restrictions. But why wait so long before making that decision?

It’s also true that developments in other media might have made them think again. The Dutch multinational Philips, for example, is developing a tiny disc read by a blue laser that will store 1 gigabyte of data on each side. But that won’t be ready for two years (see “Cellphones may double as a pocket video store”).

It’s likely, then, that the answer is more prosaic. Trying to launch at a time when technology stocks are in the dumps may be a tragic case of bad timing. Ryan Jones, consumer electronics analyst for the Yankee Group in Boston, says the technology crash has probably made investors realise what a costly, risky and long-term proposition it is to finance a new format.

DataPlay may yet pick itself up. If it doesn’t, all is not lost, says Jones. Protected by 129 patents, the company’s format is still a potential goldmine. He believes a major electronics company may buy it and promote it. Either way, reports of DataPlay’s impending doom may be greatly exaggerated.

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