April 23, 2007
When people think about the giants of the music industry, the name Karlheinz Brandenburg doesn’t often come quickly to mind for most of us. Brandenburg, however, will undoubtedly march into the history books as the man who completely changed the music industry. He is widely heralded as the inventor of the MP3 format. He does not make that claim for himself [“How MP3 Was Born,” by Jack Ewing, BusinessWeek, 5 March 2007].
“Karlheinz Brandenburg doesn’t like being labeled the ‘inventor’ of MP3. He points out that the most popular format for digital music on the Internet is the work of at least a half-dozen core developers and many others who made important contributions. Even folk-rock singer Suzanne Vega inadvertently played a walk-on role in the creation of MP3. ‘I know on whose shoulders I stand and who else contributed a lot,’ says Brandenburg, now director of the Fraunhofer Institute for Digital Media Technology in Ilmenau, Germany. Still, there’s no doubt Brandenburg was one of the crucial contributors to the technology that upended the music business and paved the way for Apple’s immensely popular iPod media players and iTunes download service. … Brandenburg’s involvement in digital music compression began in the early 1980s when he was a doctoral student at Germany’s University of Erlangen-Nuremberg. A professor urged Brandenburg to work on the problem of how to transmit music over a digital ISDN phone line. It wasn’t just a computer coding problem. Brandenburg had to immerse himself in the science behind how people perceive music.”
Just like Steve Jobs understood the importance of what he saw during a visit to Xerox’s Palo Alto Research Center early in the PC age (computer mouse, graphic user interface, etc.) and turned it into the Macintosh computer, Jobs also understood the power of MP3 and turned it into the iPod. That makes Brandenburg an inventor and Jobs an innovator. Brandenburg is now trying to make the Society he heads into an incubator of innovation — not just ideas. [“An Idea Incubator Tries to Grow Cash,” by Jack Ewing, BusinessWeek, 12 March 2007]
“Germany’s Fraunhofer Society, a sprawling collection of 56 scientific research institutes, has played a big role in developing technologies ranging from medical scanners to solar energy to car air bags. But its biggest invention … [MP3, the] standard for digital music led to Napster, iPods, and a massive disruption of the recording industry. … For Germans, the invention of MP3 is a source of pride—and chagrin. MP3 patents generate tens of millions of dollars in licensing fees for the nonprofit Fraunhofer. But the really big money went to non-German companies that make MP3 players, such as Microsoft, Sony, and, of course, Apple, which uses MP3 technology in its iPods and iTunes software.”
Brandenburg indicates that people at the Fraunhofer Society tried to interest European firms in the technology, but European companies were very slow on the uptake. MP3 isn’t the only information age technology invented in Europe and exploited first elsewhere:
“Along with the World Wide Web (the Internet browsing interface invented in Geneva but appropriated by Silicon Valley), MP3 has come to symbolize Europe’s knack for missing tech opportunities.”
Brandenburg is trying to change that:
“At Fraunhofer, at least, the soul-searching had an effect. The society, founded by the German government in 1949 to conduct research for industry and defense, began to focus on profiting from its inventions. For example, Fraunhofer began giving seed money to startups using its technology. One is Iosono, a spinoff 25% owned by Fraunhofer, which makes equipment to produce super-realistic sound in theaters. Perhaps most important, MP3 has been an inspiration to Fraunhofer’s 12,500 researchers. Many of them work in relatively unglamorous fields such as power-plant technology or auto electronics, with most of the credit for their work going to companies such as Siemens and DaimlerChrysler that provide financing. ‘Whenever you have a real champion, that increases motivation for the whole organization,’ says Ulrich Buller, a member of the Fraunhofer executive board. Fraunhofer could use a boost. The outfit gets only 20% of its budget from the German government and needs to earn the rest from contract research. MP3 royalties, meanwhile, fell 45% last year, to $78 million, as the initial surge of companies buying licenses has subsided. Still, the nonprofit is forging ahead with work that builds on its MP3 expertise. In January, Fraunhofer unveiled the latest version of MP3 Surround, which creates the illusion of surround-sound with standard stereo speakers. Not bad for something that started out as a grad school project.”
The Fraunhofer Society is trying to do what so many U.S. universities have been trying to do, turn ideas into profitable products and businesses (see my recent post Southern Cal Gets Innovative). With 12,500 researchers, Fraunhofer has at its fingertips the perfect framework for generating cross-disciplinary ideas (i.e., the Medici Effect). Such intersections of ideas, as I have pointed out before, can produce some spectacular results. I don’t know the internal structure of the Fraunhofer Society, but if it doesn’t actively foster such cross-disciplinary exchanges it is missing a huge opportunity — and maybe they should get in touch with the University of Southern California! Brandenburg seems to have his organization moving in the right direction and he should keep it marching to Brandenburg’s Gait.