MP3 Newswire Turns 10. How it Started Part I

By Richard Menta 1/20/09

"Ten years man" repeated Jeremy Piven in the film Grosse Point Blank. "Ten years". It's still hard for me to wrap my mind around those words as they ring in my own ears. Have I really been a scribe on digital media that long? MP3 Newswire pre-dates Napster and has outlived everything from the Secure Digital Music Initiative (SDMI) to Sonic Blue to Grokster. On the Internet, where the life expectancy of the average Web initiative is somewhere between a fruit fly and a small rodent, a decade is an achievement only a handful a sites get to witness. MP3 Newswire reached this milestone last month.

It has been a tenure of merit. In my left hand I hold a book I just received from Amazon a few days ago. The book is titled i-Quote: Brilliance and Banter from the Internet Age and I just recently found out that I am among the technorati quoted in it. I am also listed in the back of the book under a Who's Who section that includes many of the most esteemed names in technology. There it says "Richard Menta is the Editor of MP3 Newswire, founded in 1998. His commentaries were key in fostering debate on the role of digital music".

First, I would like to say that I am humbled by the acknowledgement. Second, it makes me wonder "how did I get here"? Ten years of writing, sure, but it goes back farther than that to the events that led me to start MP3 Newswire in the first place. A time when I was one of a very small group of people already experienced in building digital media business models.

Before MP3 Newswire

In 1995 I became a founding member of Simon and Schuster's New Media group. Specifically, I worked for the company's higher education division, Prentice Hall, which was viewed as having an ideal audience for technology, because college students had broadband at a time when everyone else worked off of a 14.4 modem. The Internet was opened to commercial endeavors just two years prior and the CD ROM drive had just become a standard feature on all PCs. Our objective was to take these distribution mechanisms and build new tools that would supplement traditional texts.

It was a pioneering effort in merging education and technology and I was fortunate to be a part of it from the beginning. Many of the strategies this group created, including a few of my own I am proud to say, forged the foundation for what makes up today's distance education and training endeavors.

This was a group that was built to address the challenges - but most importantly the opportunities - proffered by new technology. This is critical to understanding my long years of involvement in this space. When I later turned a critical eye to how the record and film industries handled the disruptive potential of technological change it was from the perspective of someone who had faced head-on the very same change.

The Fear of Change v. Opportunity Cost

Now I would like to point out that Simon and Schuster is itself a division of Viacom. The very same Viacom that seemed so out of touch with technology when it sued YouTube, was once the parent of one of the most proactive mid 90's corporate drives to harness the power of the Web. Still, not everyone in the company felt comfortable with what we were doing at the time. Even our best ideas took some selling and not everything sold.

I know first hand that attitudes regarding disruptive technologies are not always in sync between middle management and the top executives. During my tenure there I built Simon and Schuster's first online catalog, essentially a non-eCommerce brochure of the product line. Having followed the progress of a then young, my group pitched taking it to the next step and expanding the catalog into a full service online bookstore.

But the divisional presidents were concerned that this would alienate college bookstores, who would now view us as a competitor instead of a supplier. Prentice Hall made a lot of money doing business the old way and the bosses let us know that they had no desire to rock the boat. Sound familiar?

The project was killed.

Opportunity cost is the benefit lost when an opportunity is not properly leveraged. When Viacom put Prentice Hall on the block in 1998 the Internet was white hot and the prospective bidders put emphasis on technology as part of the valuation process. They overvalued it, frankly. So much so that had we built that full-blown eCommerce platform I have no doubt it would have generated a higher price for the business.

How can I be so sure? When Prentice Hall was sold that year the world's most profitable text book publisher went for $4.6 billion., which was smaller and unprofitable, was valued at $11 billion.

In my earliest MP3 Newswire commentaries I always looked for the opportunity costs. When the major labels sued Napster I asked what opportunities were lost by not partnering with the service. When the same labels demanded high royalty fees from US-based Internet radio stations I asked what opportunities would be lost if Net radio shifted overseas to cheaper royalties. What are the opportunity costs of over-restrictive DRM and lawsuits against file traders? You get the idea.

Pioneering in Digital Media

After the online bookstore was shelved I went on to the most notable project I helmed at Simon and Schuster, The Guest Lecture Series. This series was first set of video lectures commercially streamed over the Internet.

Prior to this project, Prentice Hall was part of a consortium of universities and enterprise that used satellites to broadcast lectures on a variety of topics. The group had been around for a while and used older satellite technology that required dishes the size of a garage. While it worked reasonably well, satellite education was expensive and cumbersome as a distanced learning solution. For example, due to costs schools receiving the broadcasts limited viewing to only a couple of lecture halls specially wired to play the signal.

Streamed video and audio offered a myriad of advantages. Not only were there significant cost savings, but streaming is more convenient to the viewer as the stream can be viewed by anyone with a connection. Furthermore, satellite lectures had to be viewed live, while Net lectures were viewed either live or on demand.

In late 1996 I began to construct the platform for that project, experimenting with the then very nascent video and audio streaming technologies available. Harvard University Physics professor Eric Mazur opened the series and its success drew quite a bit of attention. Canada showed strong interest in the Guest Lecture series as a solution to educate people in its most remote provinces (and brought me in to speak at the Canadian Consulate in Manhattan). In 1998 Multimedia Magazine recognized the project for merit and named me one of the top producers on the web.

As I said I experimented with every audio and video codec I could find. This included the MP3 format which had a small culture of users who made it their codec of choice for sharing music on the Internet.

For delivery I mostly looked to the more entrenched players like Real and Quicktime, because they were the ones most PC users already had. The MP3 format simply didn't have the market penetration at that point.There were no MP3 players back then. There was no, there was no Napster and the letters RIAA meant nothing to the average music fan. RealNetworks was then called Progressive Technologies and I was experimenting with beta versions of pretty much all the streaming technology I tested.

MP3 was a minor player in my opinion at the time. By the early autumn of 1998 I changed that opinion.

Next, Part II - the Birth of MP3 Newswire

Richard Menta

Other MP3 stories:
MP3 and the Family Treasure
File Sharing and the Free Public Library


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