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.'"

MP3

What exactly makes this different than .mp3? Other online music stores have had the option to sell unrestricted .mp3 files for plenty of time and still haven't decided to do that. Yes, AAC is arguably better than MP3, but both are quite "iPod compatible".

Re:MP3

Exactly. 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.

Re:MP3

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.

AAC is royalty-free

[i]MP3 is probably a little cheaper for licensing and has wider support.[/i]

Actually, AAC is an open standard and is royalty-free - it would cost other manufacturers to add AAC support to their players (as Sony already has - they have added AAC support to some of ther Walkman devices through firmware updates).

Re:AAC is royalty-free

Actually, AAC is an open standard and is royalty-free

AAC is NOT a open standard, unless you consider MP4 to be an "open standard", and it is NOT royalty-free. In fact, I'm pretty sure the licensing for hardware players is slightly more than MP3. This is why most portable audio players don't support AAC, because then they would have to pay double licensing fees (one of MP3, one for AAC) and MP3 is vastly more popular than AAC especially overseas.

Why do they include WMA? Because WMA really doesn't have any licensing fees, and it's as much of an "open standard" as AAC. Microsoft will even write code for your player. Hell, if you're big enough they'll even pay you to include WMA (I know they did for Rio). Nowadays they might be entrenched enough that they've stopped doing this but you can see how they got such momentum.

Apple has no serious interest in promoting AAC as an independent codec. AAC/FairPlay is an important "feature" of iPods and licensing it (Jobs has said outright that they will never license Fairplay) would only cut into their lucrative iPod business. It's the same reason they'll never license MacOS.

Ogg and FLAC aren't widely supported, despite being royalty-free, because of lack of popularity. It just isn't worth it to support these formats. I own one of the very few players that does, the Rio Karma. And yeah, I use FLAC a lot.

Re:AAC is royalty-free

Because WMA really doesn't have any licensing fees

Wrong [microsoft.com].

Re:MP3

Euhm, MP3 cheaper? No way, if you want it legal in the US, you'll have to pay our best friends with the patents and royalties and since multiple organizations claim to have patents on MP3, different countries have different enforcers, I think in the US it's Thomson and in Europe it's Fraunhofer. The same is valid for WMA

AAC is an 'open' industry standard, not requiring licensing or royalties to be paid for streaming or distribution. It's also better in that it requires less space for the same quality, or allows for more quality in the same space, something music sellers really like.

Re:MP3

AAC is MP4.

So an overall better codec. at 128kbs it sounds roughly the same as an 196kbs mp3. Or roughly the same as an OGG at the same bit rate.

the 256kbs mp4 that EMI wants to sell drm free is only good news.

MP3's staying power is odd. one can add support for both easily, yet most players seem to think WMA is the only way to go. They could support MP4, MP3, and WMA.

Re:MP3

AAC is MP4.

That's very misleading. mp3 is MPEG-1 Audio Layer 3, AAC is part of the MPEG-4 specification, .mp4 refers to the container format of the MPEG-4 specification that's based on .mov and can contain a large number of different video, audio and other streams in a number of different codecs.

So an overall better codec. at 128kbs it sounds roughly the same as an 196kbs mp3. Or roughly the same as an OGG at the same bit rate.

This is also misleading, although AAC *is* better. With codecs like these, the only thing that is fixed is the actual bitstream, leaving a lot of leeway to the different encoders. An mp3 encoded with an excellent encoder will be superior to an AAC by a mediocre encoder (e.g. I don't know about Quicktime's aac encodes but its AVC is complete and utter shit, even though AVC is an excellent spec). Also cpu-time constraints can have a serious impact on encoding quality, although that's normally not an issue if you do the encoding on a PC.

One big advantage of AAC are advanced features like 5.1 channels and such. There are hacks to tack on lots of features to mp3 but it lacks the (relatively) clean specs of MPEG-4 and it often lead to all kinds of problems.

the 256kbs mp4 that EMI wants to sell drm free is only good news.

yes, it is. (Good Apple; good EMI too btw, even though it took too long until they saw the light)

MP3's staying power is odd. one can add support for both easily, yet most players seem to think WMA is the only way to go. They could support MP4, MP3, and WMA.

It's not odd. Mp3 is the 800 pound gorilla of music formats and noone can do without it. Apple refused to share its DRM system with anyone (bad Apple), so for most competitors WMA was the easiest way to provide customers the capability to buy music (well, Big-4 music) online, thanks to MS's Played-for-Sure(TM) (until they got the URGE(TM) to squirt(TM) stuff all over the place =) and iirc it's the default spit out by WMP if you tell it to encode something for you. Few non-iPod owners use AAC, so there was no real reason to implement it (similar problem as Vorbis).

Re:MP3

> Only "open and free" to a certain extent

The part that actually matters in this context is that AAC audio is "opener" and "freer" than MP3, which is the previous MPEG perceptual audio encoding standard, and the only other reasonable choice for content producers.

An audio producer can purchase an AAC encoder for say $25 and then use it to encode their work and there are no further fees to pay to the encoder maker and there is no restriction on how the resulting AAC audio files can be sold or used. This is not true with MP3 and certainly not with Windows Media, which both require us to pay a percentage of the sale price of MP3 or WMA files to the encoder maker.

When an audio pro or record company uses MP3 or Windows Media it is like selling a percentage of every song to Fraunhofer or Microsoft.

Windows Media is well known among PC users because Microsoft uses it in their products but it is going nowhere. Microsoft is even less respected in the music industry than they are in the typewriter business where they make all of their profits.

Re:MP3

The only advantage I can see is that you can bookmark within an AAC file. For me that's a pretty major point.

Re:MP3

> 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

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.

Re:MP3

Licensing. AAC doesn't require royalties (it's a MPEG standard), but WMA is proprietary.

Re:MP3

Hell, it isn't even pro-Apple. Apple doesn't own AAC. Apple doesn't own MP3.

No, it is anti-Microsoft because as long as the format isn't Window Media, then who cares?

The only reason why AAC is better than MP3 is because it is actually a better format and also I think MP3 has some patent issues.

Microsoft would like their format to become dominate, but hopefully that will not happen because an open format like AAC is better for everyone.

Further ..

Microsoft would like their format to become dominate, but hopefully that will not happen because an open format like AAC is better for everyone.

This further underscores why Microsoft should stop fixating on the music/video business and turn their attention back to their core business.

Patent issues

I think MP3 has some patent issues.

I think AAC has some patent issues too. [vialicensing.com]

Re:MP3

More to the point, they are going to sell DRM-free at a premium, and only a limited catalogue. Seems like its designed to fail in the marketplace to justify DRM. Nothing will change because of this.

Meanwhile, new bands will continue doing thier promotion via sites like Myspace, and eventually the labels will have to tout themselves to artists, instead of the other way around.

Re:MP3

In my mind, the premium is really for the higher bit rate (256 kbps instead of 128 kbps). The DRM-free status is more of a free perk.

Re:MP3

since they have no motive to help Apple lockup the hardware market.

AAC is not an Apple-only format. Apple just uses it as the default format for iTunes/iPod. Many mp3 players (both portable and software players) play AAC including the venerable Winamp and it *could* be considered the next-gen mp3 due to it's built-in error correction and more robust features (namely more channels and sampling rates). So I'm not sure how that could "help Apple lock up the hardware market."

While it would be great to have DRM-free OGG files, thereby eliminating licensing fees for players and encoders and bringing costs down across the board. Although I'm not totally sure that would be the best idea since I'm not sure how they match AAC in terms of quality vs filesize and next-gen features.

Re:MP3

"AAC is not an Apple-only format. Apple just uses it as the default format for iTunes/iPod. Many mp3 players (both portable and software players) play AAC including the venerable Winamp and it *could* be considered the next-gen mp3 due to it's built-in error correction and more robust features (namely more channels and sampling rates). "

And, unlike mp3, AAC can be taken all the way up to lossless in quality. If they'd sell that to me w/o DRM, I'd be fighting my way to the front of the line to buy music from them.

I don't care if it is FLAC or AAC-lossless, but, if they'd just take the ONE more step to go that far, I'd be happy to do business with them. And since the iPod can already play AAC-lossless...they could easily go for it.

Re:MP3

I don't think there's such a thing as "AAC-lossless". I think you're confused about Apple Lossless Audio Compression (ALAC), which is the same idea as FLAC, only different. I've heard that the main difference is that ALAC requires less CPU activity to decode (and therefore less battery drain) than FLAC.

Re:MP3

I've heard that the main difference is that ALAC requires less CPU activity to decode (and therefore less battery drain) than FLAC.

that's not true, aside from compressing more, FLAC decodes significantly faster than ALAC. see http://flac.sourceforge.net/comparison.html [sourceforge.net]

Re:MP3

> Why are we STILL paying for songs that aren't even CD quality?

Because CD-quality songs will overtax today's technology. If you replace the AAC on a typical iPod with a lossless codec you will end up with 1/4 of the song selection and 1/4 of the battery life and if it is a hard disk iPod the hard disk will run all the time and wear out much sooner.

However Apple just announced a trade-in program. You can trade-in your AAC 128 kbit/s plus 30 cents for a 256 kbit/s version of the same song. You lose nothing compared to buying the 256 kbit/s one fresh today. In the future they will obviously upgrade people all the way up to the CD, and then go beyond that.

In music studios it has been common to work at 24-bits for a long time now, and sample rates are up to 192 kHz even in small studios. Since most of the music you bought on CD over the past 10 years is actually a degraded 16-bit copy of the true 24-bit master (it's dithered to lose the extra bits) there is no point in holding up the CD as some sort of ideal. The actual audio content is degraded to fit into your CD player just like audio is degraded in a different way to fit into an iPod.

Even mixing 64 audio channels down to 2 is a way to fit the actual audio content into consumer gear. There are compromises everywhere.

> Why are we taking several steps BACKWARDS in the development
> of digital music?

No, it is not a step backwards. The mistake you're making is that you're defining "audio quality" too narrowly, only looking at specs such as bit depth, sample rate, lossy/lossless encoding, etc. and imagining them in a best case scenario that does not exist in the real world. It is a common mistake. What is always compared is a 16-bit/44.1 kHz raw audio file and a 16-bit/44.1 kHz perceptually encoded audio file, in a music studio or a good listening room, with associated graphs and spectrograms to prove just how much "better" the raw audio file is.

The problem with the above comparison, though, is that no CD's are actually involved, and no CD players. When you put your 16-bit/44.1 kHz audio file onto a CD, right away you have greatly degraded its quality because the bitstream that the CD player sees will not be the same due to the CD's unique and funky volume format and massive error rate. Therefore the CD player will make up the missing bits (so-called error correction) which dramatically degrades audio quality.

What's more, if the CD skips even once during playback you have blown your entire advantage over an iPod. It is gone. The slight improvement in quality that you might have from the CD is gone as soon as it reminds you it is spindles and gears and little whirring parts and lots of 1980's technology. CD's wear out ... the older a CD is the worse it sounds due to scratches that become errors or skips and you probably don't have a backup copy either. Your iPod tracks will play the same way forever and you can back them up more easily also.

If you consider other factors like power requirements, you can easily imagine a situation where user A plays their iPod LOUD all day long, enjoying every feature of every song they listen to, while user B is playing their portable CD player at half volume in order to not run out of battery life. The way the human ear works, a loud iPod is better quality audio than a soft CD player no matter what the authoring specs.

Consider a person listening to an iPod with 10,000 songs on it, shuffling away by itself, and they are deeply into the music between their headphones, not having to even lift a finger to change a song or pick a song because it is all playlists, and compare them to another person who is manually shuffling a smaller selection of CD's into and out of a player. Who will perceive the better audio quality during their listening session?

Finally, consider that the iPod did not in fact replace the CD, but rather it replaced the portable and mixable audio cassette. iTunes is two years older than iPod, and iTunes has a CD in

Re:MP3

Did you not read what you JUST quoted? It supports MP3's, from 16 to 320Kbps (this is constant bitrate), AS WELL AS MP3 VBR.

I was there was a -1 Incorrect mod.

aac is not in EVERY hardware player

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

AAC isn't everywhere yet, I'll agree. However, if Apple actually moves it's entire catalog to unprotected AAC files, it seems to me quite reasonable that the vast majority of players released from that point forward will support AAC, considering Apple's dominance in the online music sales market. If one sells music player hardware, wouldn't you want it to support the most popular format (for sale) on the market? Especially considering AAC doesn't require royalty payments.

Re:aac is not in EVERY hardware player

Especially considering AAC doesn't require royalty payments.
Yes it does. Like MP3 it's patent infested:

Well, yes and no - semantically, I was considering royalties and patent licensing fees as separate entities. AAC decoder licensing fees run as low as $0.12 per unit [vialicensing.com], whereas MP3 licensing fees appear to be independent of volume of devices sold and cost ~$0.75 per unit [mp3licensing.com]. Additionally, the sale of mp3 files costs the seller 2-3% of their gross revenue from the sales in royalties - the sale of AAC files does not require royalty payments. So yes, while AAC is not free per se, it is in fact cheaper than mp3 for both hardware manufacturers and content distributors.

Re:aac is not in EVERY hardware player

> the fraun-created 128k (yes, really) files are VERY close to the 44.1k cd sources in .wav format.

Try listening to classical music sometime, not pop music.

Re:aac is not in EVERY hardware player

TW, I'm not an apple fanboy. My entire music collection is now in MP3 and I'm not looking forward to re-ripping my music.

Why would you have to? Any portable music player that matters already supports MP3's and will continue to do so for the foreseeable future. It's not a one or the other proposition. Most people have ripped their music to MP3, therefore hardware players will support MP3's for the foreseeable future. If the majority of online sales happen in AAC format, which is sure to happen if Apple can convince more labels to drop the DRM since it's already the market leader, then hardware manufacturers will simply add support for AAC in addition to what's already available.

Re:aac is not in EVERY hardware player

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

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:aac is not in EVERY hardware player

From your link:

"# Are there use fees for MPEG-4 Audio?
No. License fees are due on the sale of encoders and/or decoders only. There are no patent license fees due on the distribution of bit-stream encoded in an MPEG-4 Audio format, whether such bit-streams are broadcast, streamed over a network, or provided on physical media.

Alert! Alert!

Spock, arm the lawyers, set chairs to stun.

Why not MP3?

Every digital music device can play it, and it's already a more well-known and common standard than AAC.

I know AAC is technically superior to MP3, but so was Betamax. Popularity beats technology a lot of the time, especially when the technical advantage is not exactly glaringly obvious.

Either way WMA is going down thought. As it should.

Re:Why not MP3?

First, MP3 is embroiled in multiple licensing and patent issues that make it legally more murky than AAC. Second, as you point out, AAC is superior technically to mp3 while still being an open standard. It has a standardized tagging system, is better at lower bitrates, more channels, etc. All of which make it significantly more desirable than mp3 from the standpoint of a content provider, as well as from our standpoint as consumers.

Oh, and stop using betamax as a comparison point. Please, just stop it. Betamax lost the format war more because of bad marketing, licensing, and format confusion than because of lockin. Even to the degree that it could be path dependency, such is not a relevant comparison point here since AAC is already a widely adopted standard (not as widely as mp3, I'll grant, but I'll ask one simple question: what percentage of players in the hands of consumers can play AAC? Considering that it includes the iPod, the Zune, the PSP, and a great many phones its probably quite high).

Re:Why not MP3?

Believe it or not, MP3 actually has more patent issues than AAC at this point. Supposedly, if you run an online store, you have to pay royalties on every song sold to MP3-related patent holders. AFAIK, AACs don't require royalties to be paid per-song. There are also outstanding lawsuits regarding MP3.

So even though it may make sense to you, as a consumer, to stick with mp3, it may not make sense to a business. So if you imagine that MP3 is disqualified, what else is likely to become the defacto standard for online music stores? To answer that, you might want to ask yourself, "Besides MP3, what other formats play on the most popular portable music player?"

Yeah, that pretty much means AAC. It's not that I wouldn't like it to be something that's completely unencumbered by patents, but either way, it's better than dealing with Windows Media files.

check the boxes

Apple's Move May Make AAC Music Industry Standard

So selling DRM-free AAC files will dethrone DRM-free MP3 files as the industry standard?

How, exactly?

Re:check the boxes

No, the original article is talking about winning a standards war with Microsoft. If all the music stores turn to selling AAC, or even MP3 and AAC, Microsoft's effort to make WMA the standard media format will have failed. That's the point.

Don't get me wrong. I think the author takes the point too far when he leaps to conclusions of AAC dominance, but I do think that he may have a point about Microsoft. The interesting thing to me is that would be a victory *against* Microsoft but not one *for* any other company in particular. Apple uses AAC, but AAC is open to anybody despite what a lot of people think. For Apple, it is a victory in that they do not have to be beholden to Microsoft in this area. The same is true for nearly every other company but Microsoft.

Vorbis? FLAC?

There are plenty of free codecs out there that do a fine job. Why would a music store gravitate towards a non-free codec?

Re:Vorbis? FLAC?

So that people could play the music on an iPod, the #1 DAP on the market? Yeah, that might be a reason.

Re:Vorbis? FLAC?

>>the #1 DAP on the market?

Whats a DAP? Is it like an iPod?

What?

Ok, tell me why they wouldn't simply use low-compression .mp3, or the often "underlooked (and therefore lamented)" .ogg format? The only news here is that non-drm files are being offered through I-Tunes, and that it might harm DRM-WMAs, which is a Good Thing (tm) for consumers.

oh well...

Who really uses