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The Half-Life of MP3 Business Models

KlipschdockKlipsch released a $400 speaker system that will work with any iPod. As Adam Baer points out in the New York Times, the increased audio quality comes with a price: perhaps for the first time, you will now be able to hear the distinct flaws so common to MP3 files.

This is an inheritance from the original CD mastering process itself: in the early days of the Sony/Philips collaboration that led to the CD - a process that Sony's outgoing CEO Nobuyuki Idei participated heavily in - there was much discussion about the loss of sound during the digital sampling process. As consumers become increasingly aware that 128 kilobit sampling rates are subpar, expect them to look beyond higher bit rates to find the audio systems (and DRM) to support their increasingly sophisticated tastes in music.

There's another snag: digital does not mean forever, which means the music CDs on your shelf will have a useful lifetime of 5 to 50 years (Adobe Acrobat required). Unlike vinyl, your CDs - and the hard drives you use for your iTunes and MP3s - are probably not going to be something you bequeath to your descendants.

Increasingly sophisticated audio systems, combined with unexpected storage requirements, create  openings for entrepreneurs. Future business models might take into account different bit rates (FM quality for free, DVD-audio quality for a premium). There's also the opportunity for unusual approaches: despite the physics of audio CDs, simply applying a special green paint to the edge of a CD has been reported to result in much better sound definition...a by-product of the way light bounces around inside a CD player.


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