The panel proved quite lively with extensive debate on the current status and viability of the Stereo Compact Disc as well as differing methods and technologies to deliver music to the consumer. Here are some of the comments from the speakers and session highlights:

David Kawakami, Director of Super Audio CD Project, Sony
David Kawakami of the Super Audio CD Project started off the opening comments of the speakers. He provided an “SACD Status Report” noting that more than 1 Million SACD players had been sold and 1,000 SACDs were available worldwide (648 of these in the U.S. market) through the end of 2002.

Kawakami then provided a progress report on the Rolling Stones Remastered SACD series. In this series, 22 Rolling Stones were issued in the U.S., Europe and Japan as single inventory, Hybrid Stereo SACDs. Kamakami noted that in his most recent conversation with ABKCO Records President Jody Klein, worldwide sales of the Stones SACDs had topped 2 Million copies through the end of 2002 with a 50/50 split in terms of sales in the U.S. and the balance of the sales in Europe, Japan and other markets. He said that doing tie-ins with the Stones’ recent concert tour and marketing aimed at both Baby Boomers and Teens had led to both groups turning out to buy these SACDs.

Turning to the question of surround, Kawakami said that it is “one part of the tool kit” that gets people excited about SACD. He noted that artists are using surround differently – in some cases they recreate the ambience of a performance while in others they create excitement and fun by surrounding the listener with music.

Kawakami noted the recent RIAA statistics that the record industry has just experienced its second consecutive year of a drop in record sales. He feels that this shows now is the time for high resolution audio formats to bring people back into the record stores with “a compelling product”.

Craig Eggers, Director of Consumer Electronics Technology Marketing, Dolby Laboratories
Next up was Craig Eggers, Director of Consumer Electronics Technology Marketing at Dolby Laboratories. Eggers noted Dolby’s support of surround through a variety of technologies and formats including Digital TV (Dolby Digital), Gaming (Pro Logic II is being used in the X Box) and Car Audio (Pro Logic II, DVD Audio in Delphi Car Players and Dolby Digital in DVD Videos now being played in SUVs).

Going forward, Eggers cited two newer Dolby technologies – Dolby Virtual Speaker (provides surround sound through 2 TV speakers) and Dolby Headphone which will be emphasized more by Dolby in the months ahead.

In terms of DVD Audio, Dolby feels it “brings the consumer back to the record store” with high resolution audio as well as several value added features including slide shows, full motion video and web site links where you can “talk to the artist” about their album. This combination of audio and features will “energize the music business” according to Eggers.

Alex Limberis, Director of Business Development, Digital Media Division, Microsoft
Bringing a different perspective to the panel was Microsoft’s Alex Limberis. He talked about Microsoft’s new Windows Media Pro encoding products which allow either 5.1 or 7.1 surround to be encoded to either 128k or 192k through the use of the Windows Media lossy codec. Microsoft sees CD sales “flattening out” and he sees Microsoft’s codecs and tools as a way to help the music industry as CD sales continue to drop in the years ahead.

In terms of selecting audio encoding rates, Microsoft chose the 128k and 192k rates after determining that a data rate of 1.5mb/second would be necessary for “DVD Video Quality” video playback. This required them to use 700k for the compressed video and 128k or 192k for the audio portion of the program. He also mentioned that Microsoft has just released a new lossless codec that can be used when storing an existing music library in quality form before compression.

Paul Bishow, Format Launch Director, Universal Music Group
Bishow talked about “working in the physical world” and saw the music industry’s future as offering music in several different formats. He feels that “people still love music” so the record industry needs to find ways to offer it to them so they will continue to buy it.

In terms of experimenting with new formats, Bishow cited the recent Data Play bankruptcy as “an interesting idea that didn’t come to fruition.” Bishow also talked about allowing consumers to download a 5.1 track from Peter Gabriel’s new album in Microsoft’s Windows Media Format as another interesting experiment.

When it comes to high resolution audio, Bishow said that Universal Music Group has released 20 SACDs so far and has “quite a few more coming soon.” At the same time, he said that Universal’s activity with SACD disc releases “doesn’t preclude DVD-A releases” but “we will continue to emphasize the SACD format in the future.”

Jerry Del Colliano, Publisher, AudioRevolution.com
Online publisher Jerry Del Colliano said that while people still love music as Bishow said, “The game is different now. To me, the CD is dead. Things are only going to get worse for the record industry.” Del Colliano feels that the consumer wants convenience – like the ability to put “5 1/2 days of MP3 music on an iPod” or to place an entire record collection on a hard disk server. He also said that today’s albums are no longer “hit oriented”, instead they contain “only one or two good songs” and are a poor value compared to a DVD Video disc that offers more than a CD at a lower price in some cases.

David DelGrosso, Vice President of Marketing, DTS Entertainment
David DelGrosso noted that DTS is now celebrating its 10th year. He feels their key to success is embracing “the experience of surround sound”. Noting that music “is still an art form”, DelGrosso sees surround sound as a way for music artists to “put the listener where the performer is”.

In terms of stimulating sales, DelGrosso feels that properly demonstrating both surround sound music and equipment is the key. He called on the dealers in the audience to take the time to set up proper surround demos saying that “hearing is believing”. Dealers that do this will be rewarded with higher hardware and software sales in DelGrosso’s view.

DelGrosso also sees surround appearing in more places beyond music. He sees Video Games and Car Audio as two future markets that hold great potential for DTS and other companies participating in the surround sound field. According to DelGrosso, “surround is just beginning to change the world.”

Discussion of the Road Ahead
The moderator then led the panel into a lively discussion of the points raised earlier. Universal’s Bishow strongly objected to the notion that recording artists purposely record “only one or two good songs”. From his viewpoint, no artist sets out to do this – but ra
ther artists create a complete work that people will listen to and decide whether it is something they want to own. He cited the recent Beck Multichannel SACD as an example of “an extraordinary album” which features a concept running through it as well as “an excellent surround sound mix by Elliot Scheiner”.

In response to a question from the audience suggesting that “Home Theater In A Box Systems” aren’t really of audiophile quality, Sony’s Kawakami, Dolby’s Eggers and Universal’s Bishow all defended these products as well received by the public and a way to create a market for new SACD and DVD-A discs. Going back to one of the points raised by DTS’ Del Grosso, Bishow talked about how Fry’s Electronics much hyped in-store demos of Bose surround speakers systems led to many sales of these products as consumers entered and left “the Bose bubble”. He suggested that in store demos of high resolution audio was as necessary to promote these formats.

Talking about the number of high resolution audio releases, both Kawakami and Eggers agreed that more titles in the market were needed. Kawakami touted the new single inventory Hybrid SACD releases by the Rolling Stones and the addition of SACD to new Sony DVD players as a way to “make the transition seamless” to high resolution audio. Eggers took a different tack suggesting that DVD Audio’s advantages involved providing web links and video on the same disc as high quality audio. He said that “video products like flat screen TVs are sexy” and the record industry needs to find ways to make its products “sexy” as well.

In response to a question on allowing digital outputs on SACD and DVD-A players, both Kawakami and Eggers agreed that this would occur in the future. Kawakami noted that both formats have developed 1394 Firewire Standards for digital outputs but that industry sign-offs for this approach was a difficult issue for both formats and was still some time away.

In terms of future music distribution, Microsoft’s Limberis said that it is “time for the record industry to go cold turkey on CD and move to protected Internet files” for future music releases. Such an approach, coupled with “legislative initiatives and increased security” will lead to a brighter future.

In summary, the session provided some interesting thoughts and commentary on the record industry and high resolution audio.