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Liquid Audio to dance to Microsoft's digital music tune

MS Audio licensing deal marks major shift away from Liquid Audio's own technology

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Liquid Audio tacitly accepted the failure of its own digital music format this weekend when it announced a far-reaching deal with Microsoft to support Windows Media Technologies' audio components. Not that that's how Liquid Audio is spinning the licensing agreement, of course, but that's what it means nonetheless. Liquid Audio would have us believe its decision to support MS Audio is part of its ongoing strategy to provide users of its Liquid Player software with access to as many of the key digital music formats as possible. Liquid Player already supports Sony's ATRAC 3 format, MP3, Dolby Digital and Advanced Audio. However, Microsoft deal goes further than simply supporting one more format. Liquid Audio said it will convert its entire catalogue of 50,000 songs and one million preview clips into MS Audio. It will roll-out Windows Media servers to host both its own music sales service -- which will use Windows Media Technologies' Digital Rights Management component for copy protection and royalties management -- and content it distributes on behalf of others. In short, it sounds to us like Liquid Audio is replacing its own technology with Microsoft's, and is retaining Liquid Tracks (its own copy-protected music format) for backwards compatibility. In fact, with all of Liquid Audio's catalogue available in MS Audio format, and Microsoft's Media Player available for free with every copy of Windows, there doesn't seem much point in retaining Liquid Player. That, and one line in the release announcing the Microsoft deal, suggest Liquid Audio may be pursuing different business goals now. Its agreement with Microsoft will see Liquid Audio "deploy Windows Media Servers for hosting and distributing content in the Windows Media format to retailers". It's not hard to envisage Liquid Audio providing record outlets with in-store systems to allow customers to select tracks from an online catalogue which can then be downloaded and stored on custom CDs. It's an interesting use of the technology and likely to be the next big thing for retailers worried by competition from Internet-based CD stores who can offer a far greater selection of albums than they can. However, it still leaves Liquid Audio as little more than a reseller of Microsoft software. ®

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