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To date, roughly 100 million devices play digital audio encoded using MP3, the MPEG-1/MPEG-2 Layer 3 standard developed by the International Organization for Standardization. More than one billion MP3 files are downloaded from the Internet each month, according to MP3 patent manager Thomson, a large French-based consumer electronics company.

The downside to this, some say, is that MP3 is controlled by Thomson, whose licensing fees arguably put MP3 encoding out of the reach of some independent developers and broadcasters.

Xiph technologies –- including the Ogg bitstream format specification and the Vorbis RTP packet spec -– are currently under standards consideration by the Internet Engineering Task Force.

Perhaps more importantly, gaming companies, hardware manufacturers, Web publishers, streaming audio developers and various other independents interested in digital audio are incorporating Vorbis into their products -- far from enough to unseat the MP3 hegemony but enough to make some ripples in the software world.

"We may never overcome the MP3 mindshare, but our goal wasn't to build a super-strong brand," says Jack Moffitt, executive director of the Xiph.Org Foundation and developer of open source streaming media system Icecast. "It was to make multimedia technology free in every sense of the word -- to build a stable and excellent platform for future development."

At the high end of the fee scale, MP3 licensees can pay as much as $5 per device to use the MP3 encoder; the decoder fee ranges from a flat $50K for traditional MP3 to $90K for the next-gen MP3PRO. Thomson is seeking 2 to 3 percent of revenues in fees from companies that broadcast MP3s as well.

Xiph.Org, meanwhile, which distributes Vorbis for free under the BSD license, is attracting a growing community of developers and manufacturers unwilling to pay the price for MP3 technology.

Licensing Ogg Vorbis was a "no-brainer," says Joe Born, chairman and CTO of Chicago-based Digital Innovations LLC, which licensed Ogg Vorbis for use with its Neuros audio device. "Much of the innovation in digital audio has come from the open source community," Born says. "We wanted to open up our player and encourage that kind of development."

Xiph.Org is an umbrella organization for a group of open source multimedia development projects. Other projects operated by Xiph.Org include Ogg Theora, a video code developed in cooperation with On2 Technologies; Free Lossless Audio Codec (FLAC); and Speex, a low bitrate codec designed for speech compression. Vorbis, however, is probably the highest-profile aspect of the project.

To speed adoption, Xiph hopes to make things as easy as possible for users. Rather than create its own player, Xiph.Org offers plug-ins which allow well-known players such as Winamp and Linux-based xmms to play Ogg-formatted files. The idea, Moffitt says, is to make things simpler for consumers by creating a file format that can run on all standard players.

"Anyone on a Mac who tries to play WMA is out of luck," Moffitt points out. "They'd have to figure out where to find the media player for Mac, install that, and hope that the MIME types get registered correctly. QuickTime does not play WMA or WMV and Windows Media Player won't play QuickTime."

So far, Ogg Vorbis's biggest supporters have been in game development space, Moffitt says. A growing list of game developers have chosen to license Ogg Vorbis rather than pay the $2,500 to $3,750 per title Thomson charges game developers.

Thomson execs, for their part, say they have no interest in squeezing out of the marketplace free software from Xiph.Org or anyone else. In fact, Henri Linde, vice president for new business with Thomson's patent and licensing unit, dismisses Ogg Vorbis as a market force. "It's not on our radar," he says.

Thomson engineers have tested Ogg Vorbis data compression and quality and concluded that it performs more or less on the same level as Real Networks and Microsoft technology. Without offering a dramatic improvement over these other technologies, Ogg is unlikely to attract mass consumer adoption, Linde contends. "You'd want to see instead of compressing data 10X, compressing 100X or 200X the original data," Linde says. "That's the only area where I can see an order-of-magnitude improvement. I don't think there's much room for improved quality."

It's Microsoft, whose Windows Media Audio standard competes with MP3, that gives Thomson pause, Linde says. After all, the Windows Media Player is included with every copy of Windows, putting it on virtually every PC in the world and giving the WMA format a shot at unseating MP3.

"We've seen in multiple instances the attempt to make their solution the standard solution," Linde says. "I think as soon as the big company in Redmond is interested in a market, everybody should take that seriously."

Though Thomson essentially owns the audio playback niche at the moment, Microsoft has also shown an increasingly strong interest in the device market. Most recently, Microsoft announced that it would hardware giant Creative Labs would be releasing a personal media player running MS's "Media2Go" software platform. Media2Go, built on top of Windows CE .NET, can run video and audio files, as well as displaying still images.

Devices are also the next frontier Xiph.Org wants to crack. "We want Vorbis in hardware, so that people can take their music with them," Moffitt says. "This has been a big weakness for us for some time."

Ultimately, despite its being free, open source software, Ogg Vorbis faces major obstacles in gaining mainstream acceptance. While Ogg files may be comparatively simple to use, they don't play automatically in every player, and in the consumer business, adding even a single extra step can be fatal.

After all, while Xiph has signed a deal with Real Networks under which the Real player automatically downloads an Ogg audio reader if needed, don't expect MS to do that kind of deal anytime soon. And Moffitt hasn't got any unrealistic expectations there: "Microsoft is not going to give us the time of day, much less sign a deal to make the user experience for Ogg [files] better."

Anne Zieger is a technology and business writer whose work has appeared in Information Week, Byte, Business Week, Forbes and CNNfn.

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