• Illustration: Secure Audio Path Technology

The tight integration of Windows Media Player 8 with Windows XP is part of Microsoft's effort to establish the Windows Media Format (WMF) as the de facto standard for digital audio and video. The links between Media Player 8 and Windows XP, along with some changes to Media Player's default configuration, make it more convenient and desirable for Windows XP users to create, store, manipulate, and play WMF files than other multimedia formats. At the same time, Microsoft is providing incentives to convince more content providers to create and host files in the format.

Microsoft does not receive revenue from any Windows Media products—the players, encoding tools, and Media Player SDK are available as free downloads, and the ability to host and stream WMF files is included with Windows 2000 Server and requires no additional license. So why does the company need to promote its format?

There are at least three reasons:

• To spur sales of Windows servers for streaming media and respond to the threat posed by competing formats offered on Unix-based servers
• To spur sales of devices, such as handheld digital music players and TV set-top boxes, based on Microsoft technologies. The company recently formed a new "eHome" group to help realize this goal
• To create a market for its upcoming Web-based entertainment services

The Benefits of Owning the Format

Publicly, Microsoft's reason for developing the WMF is simple: it wants Windows to have native support for the highest quality audio and video at the greatest rates of compression possible. The new WMF 8, released in Mar. 2001, can encode an audio file at 48Kbps that sounds similar to an MP3 file encoded at 128Kbps, but the WMF file downloads in one-third the time and takes one-third the space on a hard drive or portable device. (Note that WMF 8 files can be played on versions 6.4 and later of the Windows Media Player; they do not require the Media Player 8 client that comes exclusively with Windows XP. For details, see "Windows Media Aims for Broadband and Mobile" on page 4 of the Feb. 2001 Update.)

But Microsoft does not need to develop, promote, and constantly improve its proprietary format just to have native audio and video support in Windows. Why not cede the format wars to third parties, or select an established standard like MPEG and then concentrate on building playback and hosting technology that supports an appropriate variety of formats?

As outlined earlier, Microsoft has several other reasons for pushing the WMF.

Promoting Windows Servers for Streaming

Windows Media Services, Microsoft's server software for hosting and streaming WMF files, is bundled with and runs exclusively on Windows servers. If the WMF achieves dominance among consumers, content companies will be forced to purchase Windows servers in order for their multimedia files to reach the greatest number of customers.

In contrast, companies deploying streaming media in alternate formats have no incentive to buy Windows servers. Though costly, RealNetworks' server software runs on a variety of platforms, including Windows, Linux, and several flavors of Unix, and MP3 audio files can be hosted on inexpensive Linux servers.

Microsoft also hopes that the broad success of the WMF will convince enterprises to use it for internal multimedia applications, providing an extra reason to buy Windows servers and removing the incentive to keep Unix servers around just to deliver Real-formatted files to employees.

Boosting Microsoft-Based Devices

If the WMF becomes the standard for digital media, consumers will be most attracted to Microsoft-based devices that can store, organize, and play WMF files.

As reported in the Spring 2001 OrgChart, Microsoft has quietly formed a new "eHome" group to create products for storing, organizing, and sharing digital media between PCs, mobile devices, and domestic entertainment devices such as TV set-top boxes and home audio equipment. Here, Microsoft is responding to the threat of consumer electronics devices morphing into Internet-connected entertainment centers. Sony, for example, recently announced that its PlayStation 2 gaming console would connect to the Internet via AOL and play Real-formatted video and audio files by the end of 2001.

Microsoft is also working to expand the number of devices that support the WMF. The company has released versions of its Media Players for CE that will play WMF 8 files (including the just-announced Media Player 7.1 for PocketPC); licensed the Windows Media codec to chip manufacturers such as Texas Instruments and Cirrus Logic; and demonstrated WMF video files playing on "Stinger" smart phones.

Building a Market for Online Media

If the WMF becomes the de facto format for multimedia files, consumers are more likely to pay for services that have the best selection of these files available—including forthcoming services on MSN.

Microsoft already operates WindowsMedia.com, a Web site with WMF files by popular music artists, and it recently launched a version of the service for portable devices. Although these services are free, Microsoft "absolutely" plans to offer subscription-based music services in the future, according to MSN Product Manager Bob Visse. It is likely that these services will, among other things, feature premium downloadable content.

The Plan to Establish Dominance

Microsoft is taking a two-pronged approach to establish the WMF's dominance. First, it will leverage its control over the operating system (OS) and applications to make it more convenient for users to create, download, and play files in its format. Second, it will work to increase the WMF's appeal to content producers, distributors, and enterprises.

Targeting Consumers with XP

Windows XP is being marketed as a top-notch system for working with multimedia. And, indeed, the new OS has many new features that make it more multimedia-friendly—as long as users work with Microsoft-approved formats. For example, in Windows XP, a "play selection" button appears on the left side of the screen whenever a mouse pointer moves over a WMF or MP3 file. But because the integrated Media Player 8 cannot play files in the Real or Liquid Audio formats, the interface does not display this button when these files are selected. Many consumers are unwilling to download (and even fewer are willing to pay for) a separate player for these alternate file types; Windows XP's interface advantages will make it even less convenient to use competing multimedia formats.

In addition to its tight integration with Windows XP, Media Player 8 itself has some new features that could bolster the WMF. Based on early betas, Media Player 8 may be the first version of Media Player that lets users create MP3 files from audio CDs (Microsoft is still undecided whether this feature will make it into the final version). However, these MP3s will only be able to be encoded at a low-quality rate--probably 56Kbps. The standard among serious MP3 collectors is 128Kbps. After doing a quick quality comparison, casual music fans are likely to dismiss MP3 as a poor format for storing their personal music collections on their PCs, and rip audio files in the WMF instead.

Additionally, Media Player 8 users will be presented with a check box asking if they want to use copy-protection when they first create a WMF file from an audio CD. In current players, WMF copy-protection is turned on by default. While Microsoft would certainly never condone swapping copyrighted material, this more lenient copy-protection interface could encourage wholesale file-swapping of WMF files, a practice that helped create MP3's runaway popularity.

Finally, Microsoft's control over the applications bundled with its OS can also help bolster the format. For example, Windows XP includes MSN Explorer, which contains links to WindowsMedia.com and its WMF-only files. Previously, MSN Explorer was available only to MSN Internet Access users or as a separate download. (See "Latest MSN Launch Integrates Brand, Targets AOL" on page 22 of the Dec. 2000 Update.) Microsoft might also use its control of the desktop to encourage third-party application vendors to promote its technology—early media reports indicate that Microsoft is trying to convince AOL to use Media Player, rather than RealPlayer, as its default multimedia client when AOL’s current contract with RealNetworks ends in July. (AOL and Microsoft are currently renegotiating the contract that gives AOL an icon on the Windows desktop, but have not released any public information about these negotiations.)

Encouraging Producers

Microsoft is also taking steps to popularize the WMF among content producers, distributors, and enterprises. Apart from offering WMF encoding and hosting capabilities at no charge, Microsoft is targeting producers in several other ways.

Quality and compression. Improvements in quality and compression appeal not only to users, who can download better-quality files more quickly and store more content in a given space, but also to content distributors, who can stream higher-quality files over lower-bandwidth connections. With WMF 8, "near-DVD"-quality video can stream at 500Kbps, bringing it within range of most cable connections, and closer to the most common residential DSL downstream speed of 384Kbps. In contrast, the RealVideo 8 format requires 800Kbps to stream similar quality video.

Better copy protection. Because Microsoft owns the OS, it has the unique ability to create digital rights management (DRM) systems with OS-level protection. For example, Windows XP (like Windows ME) will support a copy-protection technology called Secure Audio Path (SAP) that could make it extremely difficult for miscreants to bypass copy protection for WMF audio files. (For more details, see "Secure Audio Path Technology".) If Microsoft can convince sound card manufacturers to support it, SAP could provide a powerful incentive for content owners to encode audio files in the WMF. Long-term, similar OS-level protection schemes for video could also boost the format among content companies.

Media Producer. Microsoft plans to release a corporate application called Media Producer that will allow users to take video from nearly any source, combine it with other items (such as PowerPoint files), and add a wide range of effects to create WMF presentations for distribution over a corporate network or on an Intranet site. This could bolster the use of the WMF in the enterprise environment.

Can WMF Beat the Competition?

Although the WMF and its associated tools are gaining popularity, they do not enjoy the dominance associated with Microsoft products such as Windows, Office, and Internet Explorer. RealNetworks boasts that 85 percent of the Web pages that offer streaming media do so in one of its formats (although many of these pages also offer media in other formats). Producers often prefer RealNetworks' solutions precisely because of their platform agnosticism: no Unix shop wants to buy new Windows servers just to offer WMF files. And despite the fact that users must download the RealPlayer separately, RealPlayer usage not only retained its lead over Media Player in 2000, but also grew faster, according to Jupiter Media Metrix.

Although tracking MP3 usage is more difficult because no single company distributes MP3 players, major record labels Vivendi Universal and Bertelsmann recently expressed interest in the format, or at least the marketing power of the name, by purchasing MP3.com and MP3-swapping service Napster, respectively. Here, Microsoft faces an interesting dilemma: if the WMF allows strict enforcement of copy-protection, users will continue to use third-party solutions to rip and swap unprotected MP3 files; if Microsoft is too lenient, content producers may relegate the WMF to "outlaw" status and refuse to offer WMF files at all. Although Microsoft is redoubling its efforts, particularly with the release of Windows XP, the WMF still has an uphill battle to overcome its two main competitors.

Resources

The latest Windows Media downloads, including players, encoding tools, Windows Media Rights Manager, and third-party add-ons, are available at www.microsoft.com/windows/windowsmedia/en/download.

A security patch for Windows Media Player 6.4 to prevent attackers from using it to run malicious code is available at www.microsoft.com/technet/security/bulletin/MS01-029.asp. (Microsoft recommends that users of Windows Media Player 7.0 upgrade to the new version, 7.1, in order to avoid the same security vulnerability.)

More information about Secure Audio Path technology is at msdn.microsoft.com/library/psdk/wm_media/wmrm/htm/understandingthesecureaudiopathmodel.htm.

For background on Windows XP, see "Making the Call on Windows XP" on page 8 of the May 2001 Update; "Application Compatibility Features in Windows XP" on page 16 of the Apr. 2001 Update; and "Next Windows, Office Named XP" on page 27 of the Mar. 2001 Update.

Microsoft's Windows XP page is www.microsoft.com/windowsxp/.

More information on RealNetworks' products is at www.realnetworks.com.

The RealPlayer is downloadable from www.real.com/player/.