That's (Digital) Entertainment!

Welcome to the revolution: Digital movies, books, and music are coming direct to your home by way of your PC. Soon, always-on entertainment will be just a mouse-click away.

Scott Spanbauer

Computers and the Web will change the way we access and pay for entertainment in the 21st century as profoundly as film, radio, and television changed it in the 20th. Napster has already proved that we're ready and willing to get our music over the Web. Digital books and movies aren't far behind--the end-user technologies for obtaining and enjoying them are falling into place right now, with more coming in the next six to twelve months.

Because digital entertainment isn't chained to a single device or physical location, it isn't hard to imagine a home entertainment system that links your television, stereo, PCs, and handheld devices to the Internet.

To be sure, technical issues abound. But the real obstacles are the movie studios, record labels, and book publishers afraid that this revolution will mean the end of their old ways of doing business.

They have reason to worry.

Adults Want MP3s

And we want them now. Today you can download music files from Web sites, Usenet newsgroups, Napster, FTP servers, and other sources, and burn them to audio CDs, transfer them to handheld digital audio players, or play them right on your PC.

Unfortunately, most online music files are illegal copies. Of course, that hasn't stopped big-name manufacturers like Sony, RCA, and S3 from marketing portable players; and now that kids have turned their parents on to these file formats, a whole new market is springing up for MP3-based home stereo equipment.

The first of these home audio products--from companies like S3 and Stereo-link--are available online or on store shelves now. Others are set to reach the market as we go to press, and more are due out by the holidays (see "MP3s Come to Home Stereos").

But getting music into your PC or portable player in the first place is still something of a hassle, particularly if you want to do it legally (see "Pay to Play: MP3s by Subscription").

In the future, these operations may be simpler. At long last, wireless home networks are fast enough to be practical; they can link your PC and its Internet connection to your home theater system, so you can stream files from the Net directly to your living-room dance floor.

Meanwhile, at the gym or in the car, you'll bring the music with you, using a handheld device or music-capable mobile phone that streams tunes over a high-speed wireless connection and hooks up with your car radio via a Bluetooth wireless link. And you'll probably pay for your music by subscription, just as you do for cable TV channels.

But who will you pay for access to this music? Don't count on the recipient being the current premier MP3 vendor, MP3.com. As we went to press, the company had just lost its copyright-infringement battle against Seagram's Universal Music Group, and could be liable for hundreds of millions of dollars, a financial burden that--if affirmed on appeal--would likely put the site out of business. "Suing MP3.com is exactly backward," states Forrester Research analyst Eric Scheirer. "At least with MP3.com, there is the potential for money to be made. But stamping out MP3.com is simply driving consumers to Napster."

Not that Napster is necessarily long for this world, either. But if the RIAA (the recording industry trade group) successfully sues Napster and Scour.com into near-extinction, less-vulnerable technologies will step into the breach. The Gnutella program and the Freenet and Usenet newsgroups are ownerless, don't rely on central servers, and are basically unstoppable. By contrast, MP3.com looks benign, and even potentially beneficial to copyright holders.

While the labels focus on lawsuits and fumble online sales, they risk losing control of the industry altogether. Sites like Garageband.com, IUMA.com, and Launch.com increasingly enable unknown bands to bypass the traditional recording industry and go directly to the masses.

Coming Attractions

Online video isn't yet as popular as online music, but it soon will be. The technology is almost here: DSL and cable are a must for downloading or streaming video that looks as good as what you see on TV; and encryption is improving, especially with the advent of new MPEG4 variants like DivX. You can watch streaming video with RealPlayer or Windows Media Player. And though they're illegal, you can download pirated MPEG and DivX movies and watch them on your PC or burn them to a video CD that plays in your DVD player (see "Will DivX Kill the Video Store?").

However, downloading and burning movies is a lot of work. "The danger of Napster-like video sharing is much less than with music because consumers use video differently," says Forrester's Scheirer, noting that most people don't watch the same video repeatedly, and that video rentals are cheap and fairly convenient. Webnoize analyst Ric Dube concurs: "You can already copy VHS tapes by using two VCRs, but it's simply not worth the effort. It's easier just to go and rent the movie." Further, unlike CD-based music, DVD content is currently sacrosanct, thanks to provisions of the Digital Millennium Copyright Act. Programs that allow you to defeat the format's CSS encryption abound, but they are likely to remain illegal hackerware indefinitely.

Meanwhile, you can record movies from your TV in DVD form, though it's outrageously expensive. Panasonic's $4000 DMR-E10 DVD recorder lets you use new 4.7GB DVD-RAM discs to tape TV programs the same way you would with a VCR. Your TV input, however, remains analog, limiting quality for now.

On another front, the film and cable industries have shown competence at delivering video content via pay-per-view and subscription models, and are likely to adapt these to a Net-based delivery system. Dube says Blockbuster is preparing to test an interactive video-on-demand service in Arizona that delivers movies to TiVo recorders over DSL.

As with music, there's still room for the little guys. Web sites like AtomFilms, Ifilm, and WireBreak are inventing new and shorter kinds of video content more suited to PC playback. It's risky business, though, and many failures litter the landscape.

Reinventing Books

Though e-books have been around for over two years, only this year--with the arrival of Microsoft's Reader program and Stephen King's much-publicized foray into online self-publishing--did the technology attract buyer attention.

You can download thousands of books from Barnesandnoble.com's new Ebooks superstore or from sites such as Amazon.com, but e-books remain problematic (see "Pulp Friction"). As with legitimate digital music, selection is skimpy in comparison to what you can find in stores; and prices are about the same as dead-tree versions, a turn-off for buyers who need an incentive to move to a new reading paradigm. "If there is going to be a legitimate model for e-books, it's going to be significantly lower-priced," predicts Scheirer.

E-books face other obstacles. At the moment, buyers--and publishers--must choose between several incompatible reader formats, among them Adobe's Acrobat and Glassbook, Microsoft's Reader, and Rocket's EBook. And like music and movie producers, book publishers fear piracy.

What's more, consumers approach each type of media differently. So far, for reading, many people still prefer old-fashioned paper over a PC screen or a handheld device. To overcome that preference, hybrid formats are beginning to appear. These attempt to combine the customization that digital downloads make possible--you can select chapters piecemeal, for instance--with the comfort of a physical book. IDG Books, in partnership with IUniverse, plans to make custom books a reality in the near future.

Vox and Pox Populi

Though pundits argue that the entertainment industry has very little to fear from online copying--in fact, the RIAA's own reports confirm that CD sales are up, despite Napster--publishers will likely continue to move slowly toward embracing online sales as a revenue channel. For one thing, there's no single solution to the problem of digital media distribution. "We're going to see experiments, and they're probably going to fail," predicts Dube, who says he isn't holding his breath for the media conglomerates to devise a quick solution. "They aren't known for a real sense of adventure," he observes.

Subscription models currently offer the best mix of convenience and control, but these could still fail if content owners place overly restrictive conditions on use. Consumers are accustomed to buying and owning content, not keeping track of how often they transfer it from one medium--their PC, home theater system, or portable player--to another. Says Scheirer: "Consumers fundamentally want content that's easy to use and friendly. If the only thing out there is secure formats, then they're going to be driven to pirate sites."

Nothing is going to stop the digital entertainment revolution, because we've already decided that we want to use the Net and our PCs as a media conduit. We will still read books made of paper, buy CDs, and go to the movies. But we want our MP3s--and we're going to get them.

MP3s Come to Home Stereos

I'll be blunt: Until fairly recently, most MP3s sounded crappy on a home stereo. But as the format's popularity has exploded, software for creating high-quality (160-bit or better) MP3 files has improved. Now hardware vendors are jumping on the bandwagon with components designed to unite PCs and stereo systems. These new products, including two real standouts--S3's Rio Digital Audio Receiver and Stereo-link's SL1200--deliver top-notch sound.

Stereo Component as PC Peripheral

The SL1200 from Stereo-link connects to your PC via a USB cable and to your receiver or preamp with standard RCA jacks--there is no software to install. And since your sound card is out of the loop, your music is free of interference from the PC's internal noises. On top of that, the SL1200's 20-bit digital-to-analog converters far outclass anything on a PC sound card.

The result is exceptionally sweet sound, particularly with high-bit-rate recordings: no more screeches on the high end, and much richer and fuller bass. I couldn't hear much difference between a CD of Garbage's "I Think I'm Paranoid" and a 192-bit MP3 version I have.

The SL1200 is well worth its $199 price if you consider sound quality your top priority. You must, however, set up everything on your computer manually--organizing your songs, choosing your playlist, and pressing go. There's no remote. The SL1200 is merely a conduit for the music, and since cables keep the device tethered to your PC, you must keep your stereo close at hand.

Music Everywhere

Much like the SL1200, the Rio Digital Audio Receiver from S3 can connect your PC, stereo, and speakers, but its real appeal is its ability to pipe music to any location in your home over an ethernet- or phone-line-based network.

The $249 Rio DAR has its own amplification system (10 watts per channel), so you can hook up your speakers directly to the unit. Then you plug the DAR into an ethernet port (or into a phone jack if you use a Home PNA network) and install the simple software on a networked PC. Turn the DAR on, and it searches your PC for music files.

Though this little unit is a bit underpowered, it delivered surprisingly robust audio, particularly when I connected it to my beloved NHT SuperOnes bookshelf speakers ($350). One downside: Your music may not be PC-bound, but your playlists are. You can't create a list from the DAR; you can only play a list already created on a PC, use the remote to play albums, or tediously search by author or title.

Unlike the others, the AudioReQuest from Request Multimedia is a high-end product that comes with a 20GB hard drive and a Celeron CPU, and you can use it to record, store, and play back MP3s and WMA files. It also functions as a CD player. Its best feature is its ability to digitally encode anything you can play through a stereo, which means you can turn that old Steppenwolf cut into an MP3. But in the end, this big (17 by 3.5 by 13 inches), heavy (25 pounds), pricey ($799) machine's conveniences--MP3 playback without your PC, and the ability to rip CDs and vinyl records into MP3s--weren't enough to justify the price.

Overall, these first home audio components for downloadable music suggest music fans have plenty to look forward to. Now if I can just find a well-recorded version of Hendrix's "Midnight" to play through an SL1200, I'll be a truly happy camper.

--Ramon McLeod

Will DivX Kill the Video Store?

Surreptitious Web sites, file-sharing tools like Gnutella and Scour Exchange, and pirated movies on Usenet newsgroups and Internet Relay Chat channels all prove one point: Many people already use the Net to get movies home-delivered.

But while downloading a movie may be fun for bandwidth-rich techies, it's also illegal and cumbersome. That means most of us will continue to get our movies offline--at least until broadband access is more widespread and downloaded movies are as high-quality and as simple to obtain as movies from your local rental store.

A new compression format could help speed that change. Hackers have reverse-engineered Microsoft's proprietary MPEG4 video-compression scheme and turned it into a digital-video equivalent of MP3. Several versions of the MPEG4 crack exist, but the one destined for stardom is DivX, named after (but unrelated to) Circuit City's failed DVD rental scheme.

Still, despite having a smaller download size than competing schemes (DivX files take 10 to 20 percent as much space as other formats), DivX is still probably more trouble than it's worth for now.

First, most of us aren't eager to devote the time needed to download a 600MB file. And watching a DivX file on TV means first converting it to MPEG format (add a day), and then burning it to CD--an error- and curse-prone process. What's more, DivX quality is currently a crapshoot: Although some DivX films are winners, many others are dark and are marred by compression artifacts that distort motion and speech.

Because all DivX movies are pirated, you have to solve all the problems of getting them off the Net and into your living room--downloading, decoding, converting, and saving. But don't yell "cut" yet. As broadband becomes more prevalent and compression tools improve, studios could adopt DivX-like solutions (many of which are in the works) to deliver their content to you in a tidy package. And using that package could one day become a viable alternative to jogging down to the video store.

--Scott Spanbauer

Pulp Friction: E-Books Take On Paper

Since electronic readers appeared two years ago, we've heard heaps of hype about how they'll replace p-books, revolutionize publishing, save the rain forests, reduce global waste, and bring peace to the Middle East.

Okay, maybe not that last one.

So why don't airports stock e-book readers instead of Grisham paperbacks?

It's the Visuals

First, most e-book reading devices are too small. For instance, the reading area of the $499 HP Jornada, a Pocket PC unit that comes with the free Microsoft Reader, measures about 1.75 by 2.5 inches--not exactly a comfortable read, despite the Reader's Clear Type feature. The screen on Franklin's upcoming EBookMan ($130 to $230), which also uses the Reader, will be only slightly larger at 2.75 by 3.25 inches.

The $199 Rocket EBook offers more, with a 3-by-4.5-inch screen and a rounded, thick edge for easy gripping, but even it can't match a paperback's viewing area. (Gemstar TV Guide International, new owner of Rocket EBook and its competitor, Softbook, has stopped making these products. Instead, it has licensed the technology to RCA, which plans to release two new e-book devices, the $300 REB1100 and $600 REB1200.)

I preferred the Rocket EBook to the HP Jornada hands down, though the single-purpose Rocket meant I had to carry around an extra device just for reading. The Rocket was easier to read in bright light and also was more intuitive, even with its advanced features such as text searches and annotations. The Rocket lets you import any.txt or HTML file in a few simple steps. With HTML, you even have the option of including images and grabbing associated links. The Rocket also promises longer life: 40 hours from its battery versus the Jornada's 8 hours.

You can read e-books on a PC using either Microsoft Reader or Glassbook 2.0, a free application now owned by Adobe. (Note: Not all Microsoft Reader e-books can be read on the Pocket PC version of Reader.) Glassbook uses.pdf files and lets you view two pages side by side. It also lets you rotate one enlarged page to a horizontal view to read on your laptop as if you were looking at a book--nice in theory, but awkward in practice.

Content Discontent

Beyond a sprinkling of popular novels and classics on sites like Amazon.com and Barnesandnoble.com, today's e-book pickings consist largely of nonfiction and technical titles. Rocket EBooks has the widest selection--over 5000 titles, including some 30 magazines and newspapers--while the newer Microsoft Reader lists about 800 works. Books range in price from free to about $40. Prior to buying a book, you must register your electronic reader, go through the typical billing steps of any online purchase, and then factor in download time. Unfortunately, e-books are format-specific: You can't read Rocket e-books on an MS Reader, or vice versa.

Although e-books offer an alternative for reading and storing technical and business titles (most devices can hold the content of at least eight standard books), they're unlikely to replace the printed word anytime soon. I might be persuaded to purchase an e-book for business, but I prefer the old-fashioned kind for pleasure.

--Kim Zetter

Pay to Play: MP3s by Subscription

Only a few companies currently offer legitimate ways to get your tunes easily and for a reasonable fee, and their collections are limited. But the music delivery system that these pioneers offer should become increasingly attractive to Net-proficient music fans who simply must have tunes and want to obtain them legally.

Independent labels operate most of the existing subscription services, offering music either from their own catalogs, as SpinRecords.com does, or from catalogs aggregated from several independents, as EMusic.com does. RealNetworks offers both free independent-label music and subscription-based multimedia content. Some major labels have announced subscription plans, but none of these have debuted as yet; a few of the big-name labels do make a select (read: skimpy) number of albums and songs available for purchase, however.

Taking a Spin

Spinrecords.com uses its $5-a-month service to promote its bands. It offers an unlimited number of MP3 files of songs by its roster of over 900 artists, but unfortunately the site's interface is cluttered. For $10 a month, EMusic.com has a larger catalog--125,000 MP3s--including some well-known artists. One nice feature is that you can buy albums on a one-shot basis. The sound quality is reasonably good, but downloads are slow.

Real.com Media, RealNetworks' free delivery service, takes a different tack: It automatically downloads two independent-label or live songs each week to your PC, using bandwidth that's left over while you're online. The free service downloads songs quickly over a broadband connection, but a good bit of hard-drive cranking accompanies the delivery. Sound quality is comparable to what you get at EMusic.com, and the download happens without any effort on your part. The service lacks specificity, however, letting you choose only a music genre.

For $10 a month, subscribers to RealNetworks' GoldPass service can receive original content from partners such as ABCNews.com and House of Blues. But considering the site's limited and mediocre streaming video content, the monthly charge seems unduly high.

Running the Gauntlet

Major labels sell good downloadable music, but not conveniently. Universal's Bluematter service, offered via online retailers like Music.com, requires RealJukebox2, a Bluematter plug-in, and a Magex digital wallet account. But when I tried to buy a $2 single, I couldn't get the 6.3MB plug-in to download in three tries.

Sony's site sells $2.50 singles, but you must register, provide billing info, and get a plug-in for Sony's ATRAC3 format, which select jukeboxes accept.

EMI Group offers 100 albums in WMA and Liquid Audio formats, but at CD prices--and finding the music can take all day. I had to agree to restrict playback to one PC, record to a CD only twice, and export to a portable player no more than three times. Over a T1 connection, a 69MB album downloaded in 10 minutes; I wouldn't try it by modem. Quality was reasonable, but for the same price I could buy the CD and rip it onto multiple PCs.

Indies are leading the way, showing that subscription services could solve many problems plaguing major-label downloads. But for now, the big-label services are cumbersome, demonstrating that the lure of free music isn't the only reason people love Napster.

--Cameron Crouch