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And now, our series on music formats comes to an end with the most popular format of the moment: the MP3.

As NPR's Joel Rose reports, consumers like these compressed digital files for their convenience, not their sound quality. And the music industry may have a hard time getting rid of them.

JOEL ROSE: The man who's credited with inventing the MP3 wasn't trying to turn the music industry on its head. Karlheinz Brandenburg was just looking for a way to compress music into smaller files.

(Soundbite of song, "Tom's Diner")

Ms. SUZANNE VEGA (Singer): (Singing) I am sitting in the morning at the diner on the corner. I am waiting...

ROSE: The year was 1988. Brandenburg and his collaborators at the Fraunhofer Institute in Germany thought they had come up with a pretty good system - until they tried it on the song "Tom's Diner" by Suzanne Vega.

(Soundbite of song, "Tom's Diner")

Ms. VEGA: (Singing) It is always nice to see you, says the man behind the counter to the woman who has come in. She is shaking her umbrella...

ROSE: Brandenburg estimates that he listened to the song more than 500 times while working on the audio technology that became the MP3.

Mr. KARLHEINZ BRANDENBURG (Audio Engineer): Everything else sounded quite OK, and Suzanne Vega's voice was destroyed. So we had some work to do.

ROSE: Karlheinz Brandenburg is a modest man, and he's quick to share credit for inventing the MP3 with his collaborators in the Moving Picture Experts Group, which gave its name to MPEG Audio Layer III - or MP3, for short. Brandenburg says he had no inkling of how popular the format would become until the mid-1990s, when he talked with an English entrepreneur.

Mr. BRANDENBURG: He asked us, do you know that you will destroy the music industry? So there was some writing in the wall.

ROSE: Writing the major record labels chose to ignore. For years, the music industry got rich on the compact disc boom, and it was in no hurry to start selling digital downloads. So for the first time, it was consumers, not the industry, who chose the new format.

Mark Mulligan, at Forrester Research, studied the rise of the MP3.

Mr. MARK MULLIGAN (Vice President and Research Director, Forrester Research): We actually found out what people wanted was access to content conveniently. What people opted for was, I want something that works, something that just does what I ask it to do.

ROSE: The MP3 played everywhere: on the computer, at the gym, in the car. It didn't hurt that MP3s were often free on file-sharing networks like Napster and its spawn. Even when you paid for them, they were cheaper than the $18 the labels used to charge for CDs. And if the sound quality of MP3s wasn't great, only a few audiophiles - like Keith Holzman - seem to care.

Holzman ran Nonesuch Records in the 1980s.

Mr. KEITH HOLZMAN: The difference between listening to an MP3 and a CD is night and day to me. It's like daylight - with a clear, crystalline sky - and a muddy, cloudy, overcast day. The MP3 is highly compressed, taking away a great deal of sonic quality.

ROSE: There are signs that some fans are drifting away from the MP3, though not because of sound quality. Instead of loading up their hard drives and iPods with MP3s, Forrester's Mark Mulligan says lots of younger fans are listening to music online at a familiar website.

Mr. MULLIGAN: The killer app for digital music - guess what it is? YouTube. It is not something which the industry has chosen as being its cheerleader for digital music. It's simply something which consumers say yes, that works.

ROSE: YouTube is free and legal. Some modest revenue even flows back to labels and artists. And fans seem happy to use the site as a virtual jukebox.

The question facing the music industry now is how to get those consumers to pay. One way is charging them a monthly fee for access to millions of tracks online that they don't have to download. That's what the subscription service Rhapsody has been doing for almost a decade. Jon Irwin is the company's CEO.

Mr. JON IRWIN (CEO, Rhapsody): For the average music fan, it just seems inefficient to me that here, you're going to have everybody with a hard drive filled up with 8 million songs. Why would you ever need to do that if you can actually listen to it and get that enjoyment out of it at any time?

ROSE: As long as you can use the Internet to access music stored on somebody else's hard drive - what tech geeks like to call the cloud. The European company Spotify is expected to launch its own cloud music service in the U.S. Google and Apple are rumored to be working on offerings of their own. And the sound quality may get better. But for now, Forrester's Mark Mulligan says the MP3 is what consumers want.

Mr. MULLIGAN: So let me tell you an ugly truth: Most people don't actually care that much about quality. It's a bitter pill to swallow, but that is the simple fact.

ROSE: More than a billion MP3s were sold in the U.S. last year, while billions more traded hands for free on peer-to-peer networks. When you mention this to Karlheinz Brandenburg, the inventor of the MP3 still seems a little surprised.

Mr. BRANDENBURG: I think in 1988, somebody asked me, what could become of this technology you're working on? And my answer was, I don't know; maybe it might be used by millions of people. And millions sounded like a very big number. So that it literally would be billions, that was beyond the dream.

ROSE: That dream has been more like a nightmare for the major record labels, and it may still be years before they wake up.

Joel Rose, NPR News, New York.

(Soundbite of song, "Tom's Diner")

ROBERT SIEGEL, host:

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