REDWOOD CITY, Calif. — Texas Instruments Inc. and Liquid Audio Inc. plan to offer a hardware reference design and associated software to OEMs interested in developing portable digital-audio players.

TI, the market's leading supplier of DSP chips, and Liquid Audio, which develops systems to deliver music and audio online, said the reference design should stimulate the development of new consumer devices that play digital music, while providing secure transmission and copyright protection for digital-audio files.

The reference design, which will be available by midyear, will be based on a DSP from TI's C5000 family, and will include a standard chip set now in development at TI to support a portable digital-audio player. TI is currently a major supplier of DSPs for digital-audio players like Diamond Multimedia's Rio Player, which plays MP3-format digital-audio files.

The reference system will feature Liquid Audio software with the company's proprietary copyright-protection technology, including encryption, license management and advanced watermarking capabilities. Liquid Audio will provide an online delivery system and encoding tools for content. Liquid Music Server, which hosts the delivery system and content, will also be a part of the system.

Liquid Audio executives said they are already working with electronics manufacturers interested in using the reference design, but declined to name them. The goal of the system is to allow OEMs to develop portable digital audio players that will provide copyright protection and the secure transmission of digital audio files, all in time for the Christmas 1999 market, officials said.

Few technical details about the reference design were available from Liquid Audio executives, and a TI executive did not return phone calls by press time. The price of the reference design was not disclosed.

Sunjay Guleria, consumer product marketing manager for Liquid Audio, said the companies plan to submit the system to the Secure Digital Music Initiative (SDMI), a group formed by the Recording Industry Association of America (RIAA) in December 1998. The group is working on standards to prevent the pirating of digital music, to ensure it is copyright-protected and to see that the transmission of digital-audio files over the Internet is secure.

The reference design is only one of several technologies Liquid Audio plans to propose to SDMI, Guleria said, but he declined to detail the others.

OEMs who use the reference design will be able to develop portable audio devices that support a variety of digital-audio compression formats, including MPEG standard Advanced Audio Coding, which is defined by the MPEG-2 standard; Dolby Digital AC-3; and the Genuine Music Coalition version of MPEG-1 Layer 3 (MP3). Files for the Genuine Music Coalition version of MP3 have been legitimately encoded, include a digital certificate for signing tracks and advanced digital watermarking tools, and carry a Genuine Music Coalition logo. The Coalition was formed in late January by Liquid Audio, 48 record labels, software and MP3 vendors and others. Standard MP3 files are not copyright-protected.

Asked whether a device developed from the Liquid Audio-TI reference design will enable companies to create digital audio players that can play MP3 files that may not have been legitimately encoded and do not carry a digital watermark, Liquid Audio's Guleria said the capability to add MP3 compatibility will be available for OEMs to add to the device, but it will be up to the companies to choose which audio-compression formats they want to enable.

Companies that develop a standard, unencoded MP3 player could face legal tangles with the RIAA similar to those faced by Diamond Multimedia, which is involved in a lawsuit with RIAA over its Rio Player. The RIAA claims that the device encourages the pirating of digital music because the regular MP3 format is an open standard, so the material is not copyright-protected.

OEMs will also be able to choose the type of memory capacity, storage media and hardware-interface technology (USB, parallel port, serial port, etc.) they want to use.

Mark Paley, DSP engineer at Liquid Audio, said the company streamlined the Liquid Audio technology by changing the license model and going with a different content-storage file format to support small-footprint platforms, but he said the changes will be transparent to the user.