Audio engineers express concern that a proposed embedded watermark may be audible, ruining high-resolution recordings, while music retailers worry that restrictive technologies may so complicate music purchases that consumers will turn off to the idea of buying it online. The National Association of Recording Merchandisers (NARM) published a paper detailing its concerns this week.

In both cases the issues being raised involve the Secure Digital Music Initiative (SDMI), a multi-industry group that's defining a specification to protect digital music distribution. Calls to SDMI executives on both issues were not returned by press time.

Some members of the Audio Engineering Society (AES) are anxious that a watermarking technology for audio approved by SDMI and by DVD-Audio's "4C" entity, a joint organization of IBM, Intel, Matsushita and Toshiba, may eventually ruin high-quality recordings if it is forced onto all music formats — including CD; DVD-Audio; and Super Audio CD (SACD), a rival format to DVD-Audio developed by Philips and Sony.

Audio engineers plan a watermarking panel discussion at the 109th AES convention in Los Angeles Sept. 22 to 25.

In the meantime, engineers will discuss the issue in online forums, one in the United States and one in the United Kingdom.

Tony Faulkner, owner of Green Room Productions in London, wants to know if the watermarking technology, developed by Verance Corp. (San Diego), can be heard and whether it will harm the kind of high-quality classical recordings that he produces.

Faulkner, a member of AES' technical council, helped spearhead efforts to develop a panel discussion on the watermarking technology at the AES convention. The panel is expected to include audio engineers as well as executives from Sony, Warner Brothers, the Recording Industry Association of America and the International Federation of the Phonographic Industry, Faulkner said.

"Most of my colleagues and I agree about the need for watermarking Internet audio to prevent piracy, but we don't believe the technology chosen has been tested well enough," he said.

Tests criticized

Faulkner said audio engineers feel they have been left out of the technology's testing and the decision to use it despite the profound impact it could have on their work.

Tests of the watermarking technology by SDMI, DVD-Audio and developer Verance did not include testing in the higher, premium format ranges at 192 kilohertz and 176.4 kHz, Faulkner said. Typically, if a watermark creates noise it will get louder as the sampling rate rises.

Verance chairman David E. Leibowitz said he was aware of questions being raised by mastering engineers and expects to participate in their AES program on the subject, though his company has yet to be invited.

"For those who haven't been made aware of what was done with the technology and by whom, I can understand that they have questions and want to make sure nothing is going to be done to impair the audio content," Leibowitz said.

He said nondisclosure agreements have forced Verance to remain mum on details of its technology and the testing. But, he said, SDMI and the 4C group plan to reveal test details soon.

Faulkner sees a requirement to use a watermark on high-quality audio as a case of Internet encroachment. "I have a terrible fear that the Internet will dumb-down video and audio quality," he said. "This kind of quality aspect, removing the superiority of high-quality music formats, could put my business under."

While there is not yet a directive to use the watermark on all audio recordings and formats, Faulkner said it will be difficult to avoid using it if the major record labels insist on watermarking all their important repertoire. He said even high-resolution, low-noise formats like SACD could not survive without a mainstream repertoire.

A spokesman at Verance denied that the company's watermark technology was audible and referred all questions about the testing and evaluation requirements the watermark had to meet to SDMI and the DVD-Audio group, which he said conducted their own tests.

Meanwhile, retailers have issued a warning to SDMI that if it doesn't keep consumers in mind while developing a standard for online commerce in music it could backfire against the recording industry.

In a position paper, "NARM's Baseline Principles for Online Commerce in Music," the group asks SDMI to consider consumer rights in creating a secure digital distribution system. The paper charges that some technologies under consideration by SDMI constitute misuse of copyright laws.

Disregarding consumer and retailer interests, the group warned, could eventually undermine consumer confidence in e-commerce and consumer satisfaction with the retail purchase of music.

NARM president Pamela Horovitz wrote the position paper, which was published in the association's Sounding Board newsletter, which appears on the NARM Web site.

"The paper is designed as a guide for those who are developing the tools or industry standards for online commerce and specifically the digital delivery of music," Horovitz writes.

Consumers missing

In the paper, Horovitz says the "one voice not currently represented at any of the discussions of e-commerce in music is the one voice without whom the business of music has no business: the music consumer."

Akmed Tewfik, president and chief executive officer of Cognicity Inc. (Minneapolis), said his company is developing a noninvasive technology that will not complicate music buying and will benefit consumers and recording companies alike when it is unveiled in September.

Cognicity has submitted watermarking-based and nonwatermarking-based technologies to SDMI for consideration in Phase II screening.

Tewfik said NARM's paper echoes concerns inside and outside SDMI that the industry must not alter the music-buying experience too much or make it too complex for consumers.

"Consumers today have expectations that they can buy music and be able to play that same music anywhere," Tewfik said. "The concern is that the industry can't change these expectations without it backfiring."