In digital explosion, music industry grapples with MP3 devices, file formats

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NEW YORK - Varying MP3 devices and music file formats are creating new challenges for the music industry as labels look to sell more songs online and on mobile phones, according to speakers at the "Digital Music Forum East" conference that took place Feb. 27-28 and Wednesday at the Museum of Jewish Heritage.

In "Mobile Music Revolution: Music Beyond Ringtones," a panel on the future of selling music on mobile devices, Matt Schwartz, manager of music opportunities and business development at Verizon Wireless, discussed the challenges with the browsing experience for consumers.

"Right now, in the best-case scenario, when the consumer knows exactly what they want and how to use the service, it takes about five clicks to complete a purchase for a song," he said. "We're trying to move into less clicks because for every extra step it takes, you lose 20 percent of your audience."

John Burris, vice president of wireless data at Sprint Nextel, agreed. He, too, is looking to make browsing easier.

"The real crux is how to make this simple on a handset," he said.

MP3 devices present their own challenges. Even Apple CEO Steve Jobs admitted as much recently in an open letter he wrote to encourage music labels to adopt an open MP3 file format without copyright protection.

In another panel - "Device and Format Wars: Who Will Be the Winners and Losers" - executives from various online music sites talked about the challenges of selling to consumers who own multiple devices.

John BaRoss, vice president of global sales and strategic development at Click and Buy, the payment platform that powers Apple's iTunes and AOL, said there is a challenge in the marketplace because consumers own multiple devices that are not always compatible.

"Consumers want to be able to listen to songs that they have bought across devices and not have to buy [them] again," he said. "But we will have to come up with new ways to create revenue if consumers share open MP3s."

Despite these challenges, music business executives are excited about the potential of the growing digital marketplace as downloads and ringtones continue to show profitability.

"The future for us is brighter than ever, but it's more complicated than it's ever been," said Rio Caraeff, general manager of Universal Music Mobile. "We are working with artists to try and develop content that is intended to play specifically on phones."

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