Dig­i­tal Mu­sic Play­ers:

A Com­pressed His­tory


Which MP3 player came first? Tech­ni­cally, the Korean-made MPMAN, which was un­veiled in March, 1998, ap­peared first. But the MPMAN was ex­pen­sive, wasn’t widely avail­able, and it didn’t work very well. Only a few hun­dred units were sold.

An­nounced in Septem­ber, 1998, Di­a­mond Mul­ti­me­dia’s Rio PMP300, in con­trast, cost $199.95, was easy to use, and was pack­aged with all the nec­es­sary ca­bles and soft­ware. It also sold more than 400,000 units, mak­ing it the first com­mer­cially suc­cess­ful dig­i­tal mu­sic player on the mar­ket.

But the “which-was-first” de­bate is ul­ti­mately su­per­flu­ous. It wasn’t un­til a court rul­ing on Oc­to­ber 26, 1998 mak­ing it le­gal to man­u­fac­ture and sell the Rio and sub­se­quent por­ta­ble dig­i­tal mu­sic play­ers that the record in­dus­try was pulled kick­ing and scream­ing into its own enor­mously prof­itable dig­i­tal mu­sic-sell­ing fu­ture.

The Back­story

Di­a­mond Mul­ti­me­dia needed a bril­liant idea. The San Jose-based com­pany’s core af­ter-mar­ket graph­ics card busi­ness was slowly dis­in­te­grat­ing as chip mak­ers be­gan to in­te­grate graph­ics pro­ces­sors onto moth­er­boards. Con­sid­er­ing its young, PC nerd cus­tomer base, the nascent MP3 mar­ket seemed to be a ripe one to ex­ploit.

But how? The MP3 for­mat, in­vented in the early 1990s by a team led by Karl­heinz Bran­den­burg at Ger­many’s Fraun­hofer In­sti­tute, was still an in­fant, and the first Win­dows­based mu­sic player, Wi­namp, had only just been re­leased. Di­a­mond ex­ec­u­tive Ken Com­stock ad­mit­ted he “didn’t even know how to spell MP3.” But Di­a­mond’s au­dio prod­uct man­ager Todd Moore was quite fa­mil­iar with Wi­namp, and he pre­sented a plan for a por­ta­ble MP3 dig­i­tal au­dio player that he dubbed Loony Tunes.

Moore’s idea was well re­ceived, but Com­stock, mul­ti­me­dia di­vi­sion VP David Watkins, and ev­ery­one else at Di­a­mond also wor­ried that their small com­pany would be beaten to the por­ta­ble mu­sic player punch. Di­a­mond had to act fast.

Scour­ing the mar­ket, they dis­cov­ered the MPMAN and mul­ti­ple “crappy lit­tle ref­er­ence de­signs” of sev­eral MPMAN it­er­a­tions, ac­cord­ing to Moore, all us­ing an MP3 de­coder chip made by ESS Tech­nolo­gies and “hung to­gether by Band-aids, rub­ber bands, and glue.”

Us­ing his Korean col­lege chum net­work, Di­a­mond CTO Hyuang Hwe Huh tracked down the com­pany be­hind the MPMAN: Dig­i­tal­cast, a startup with 20 em­ploy­ees founded by a young en­gi­neer, Jung-ha Hwang. In the spring of 1998, Huh and Com­stock jumped on a plane and flew to Korea to meet with Hwang and Mpman’s de­sign­ers. In a ho­tel room in Seoul, they signed up Dig­i­tal­cast to work for Di­a­mond Mul­ti­me­dia.

For­tu­nately, the Korean team rec­og­nized the short­com­ings of its first MPMAN ver­sions and had ren­ders of next-gen­er­a­tion de­signs. Moore worked with Hwang and his team to fi­nal­ize a hard­ware de­sign, with Di­a­mond en­gi­neers sup­ply­ing the con­trol and in­ter­face soft­ware. In­tent on mak­ing the player a com­plete out-of-the-box so­lu­tion, they then ar­ranged for li­cens­ing of the Mu­sic­match rip­ping and Juke­box mu­sic data­base soft­ware, and of one hun­dred MP3 tracks from mostly un­signed acts. Mar­ket­ing VP Ken Wirt worked with a brand­ing com­pany to come up with the Rio brand name, pack­age de­sign, and mar­ket­ing and PR cam­paigns. The only thing miss­ing: broad ac­cess to mu­sic.

En­ter the RIAA

While on a press tour in New York, Com­stock met with ex­ec­u­tives from Sony Mu­sic. But in­stead of hip mu­sic in­dus­try types, the con­fer­ence room was filled with stern-look­ing lawyers. When Com­stock tried to tell them about how Di­a­mond had this cool new dig­i­tal mu­sic play­ing de­vice, the lawyers in­ter­rupted. “No you don’t.”

“I got the sense— not that it was said, but im­plied— that they were go­ing to try and sue us to stop us,” Com­stock re­called. “It was a very un­com­fort­able meet­ing.”

The record in­dus­try not only wasn’t sure how they were go­ing sell dig­i­tal mu­sic, they weren’t even sure they wanted to. Sell­ing CDS was a healthy, prof­itable busi­ness. They also didn’t know how they were go­ing to copy pro­tect songs ripped from CDS by con­sumers. What record la­bels knew for sure was that they didn’t want a de­vice that could dig­i­tally copy and move their mu­sic around for free.

Judge­ment Day

Rio an­nounced the PMP300 on Septem­ber 15. Then, on Oc­to­ber 9, the RIAA filed for a pre­lim­i­nary in­junc­tion in U.S. Dis­trict Court for the Cen­tral Dis­trict of Cal­i­for­nia al­leg­ing that Rio vi­o­lated the Amer­i­can Home Record­ing Act of 1992. On Oc­to­ber 16, Judge Aubrey B. Collins is­sued a TRO en­join­ing Di­a­mond from fur­ther man­u­fac­tur­ing or dis­tribut­ing of the Rio.

Dur­ing hear­ings, Di­a­mond lawyers ar­gued that Rio didn’t vi­o­late the AHRA be­cause it was akin to a Roach Mo­tel. “The mu­sic checks in but it can’t check out,” Wirt sum­ma­rized. Di­a­mond also ar­gued that the Rio of­fered other con­sumer ben­e­fits, par­tic­u­larly that mu­sic wouldn’t skip un­like with sen­si­tive por­ta­ble CD play­ers. Ac­cord­ing to Wirt, Judge Collins noted, “yes, I can imag­ine us­ing it while I am vac­u­um­ing.”

On Oc­to­ber 26, Judge Collins de­nied the in­junc­tion, con­clud­ing that “be­cause the

Rio is ca­pa­ble of record­ing le­git­i­mate dig­i­tal mu­sic, an in­junc­tion would deprive the pub­lic of a de­vice with sig­nif­i­cant ben­e­fi­cial uses.”

Within a week of Judge Collins’ rul­ing, the Rio went on sale and was an im­me­di­ate hit. “We made mu­sic more por­ta­ble, more per­sonal. You could lis­ten to your mu­sic how you wanted, when you wanted,” Watkins re­called. “That’s what struck a chord with peo­ple. We couldn’t build them fast enough.”


The RIAA ap­pealed Judge Collins’ de­ci­sion, but her rul­ing was up­held by the Ninth

Cir­cuit Court of Ap­peals on June 15, 1999.

Ev­ery­one at Di­a­mond knew the Rio needed to be paired with a match­ing le­gal mu­sic store to suc­ceed long-term. But with con­sumers es­sen­tially steal­ing mu­sic via the just-launched Nap­ster and other mush­room­ing peer-to-peer ser­vices, the record la­bels were in no mood to li­cense their li­braries to Di­a­mond or any other dig­i­tal mu­sic player com­pany. And Di­a­mond wasn’t big enough or pow­er­ful enough to con­vince them other­wise. “It took Steve Jobs to pull that off,” Com­stock freely ad­mits.

The launch of Ap­ple’s ipod in Oc­to­ber, 2001 and the sub­se­quent launch of itunes in April, 2003 even­tu­ally doomed the Rio. “No ques­tion, we were the test case,” Watkins ob­served. “It opened the door for ev­ery­one else.”—

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