Major Changes Around The Corner For Music As Avid Delists

It came as no surprise last week when Avid Technology received a notification letter from NASDAQ that the company would be delisted and trading of its stock would be suspended. For many of us in the creative end of the entertainment business who have watched the company try to battle through its troubles during the last few years, the question was more of “when” than “if” this scenario would happen. The writing had been on the wall for some time.

If you’re not aware, Avid Technology is the maker of video editing tools that are used at all levels and stages of the creative process in both television and movies. In 1995 Avid acquired Digidesign, the maker of Pro Tools, which is the standard audio editing hardware and software, giving the company leadership in both the audio and video editing sectors. In fact, Pro Tools is the standard digital audio workstation used in the creation of nearly every major motion picture and television show, as well as most of the music you hear today. While there are other very capable software audio packages available, Pro Tools is truly a universal standard when it comes to any audio job on a professional level.

But leadership comes at a price, as does being publicly traded. Over the years Avid has tried to wring every dollar out of its various technologies with what some would characterize as ruthless upgrade plans, and every time their substantial customer based would wince with pain but eventually give in. After all, if the rest of the professional world was doing it, you were forced to as well.

Of course what eventually happened was that the market became saturated both on the audio and video side, and you can only force someone to upgrade every year or 18 months or so, which isn’t exactly a great recipe for sustained growth. The company tried to expand by acquiring a number of companies with markets at the neophyte or even consumer level in an effort to increase its user base. Of course, as is often the case, Avid integrated those companies into their infrastructure, which unfortunately wasn’t capable of speaking to those markets, and the investments brought little of the expected return. As a result, the company began to hemorrhage cash and the stock went from a one time high of around $67 down to less than $5 when it was finally delisted. Read more on Forbes.

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Avid And Mackie Play Nice

Recently Mackie released a new product called the Onyx-i Firewire Recording Mixer that was able to communicate with just about all DAWs, including Digidesign's (now Avid) Pro Tools. The problem for Mackie was that it appeared to reverse engineer the Pro Tools protocol rather than do the usual expensive technology license agreement with Avid, a skirting of the license that Avid had come down hard on in the past.

This lead to all sorts of speculation that Avid would soon be turning their expensive corporate attorneys loose on Mackie and we'd see one hell of a court fight as a result. Lo and behold, word on the floor at the Audio Engineering Society (AES) convention now going on in New York City is that Avid has forgone litigation in favor of an arrangement to facilitate Mackie and that an official announcement is forthcoming.

This is certainly surprising and could only mean a couple of things (putting on my speculators hat for a second). First, even though Avid's stock price of around $15 is actually doing a better of late, it's way off it's near $50 a share of 2005. Some analysts speculate that the reason why Avid absorbed the Digidesign name was to prepare itself for a sale, so the last thing Avid wants right now is more litigation, even if their the one doing it.

Secondly, this could be the beginning of a new open-source strategy for Pro Tools. Since Pro Tools has pretty much hit a saturation point in terms of both high end sales, they may believe that in order to secure the somewhat more volatile low end of the market that it's best to let other manufacturer's hardware talk to PT, giving the user one less reason to even try anything else.

Whatever the reason, I think it's probably a lot better for the industry if the Pro Tools protocol becomes more open. No matter what you think of the platform, it's still the industry standard, and until someone comes along with something a whole lot better, it looks like it will stay that way for a while.

Goodbye Digidesign?

The word on the street is that Digidesign is going to be folded into Avid over the next few quarters.  Protools or any of the Digi products won't go away, just the Digidesign name.

Why would Avid do this to the now iconic company?  Stock price, of course.  Avid's stock was in the dumper long before our current economic woes.  By folding Digi into Avid and cutting the labor costs by having just one R&D department, one sales department, one accounting department, etc., Avid immediately makes a positive, if short term impression on their bottom line.

It will be interesting to see how this plays out for Protools users though.  What will happen to service?  What will happen to product development?  Will new products be primarily focused towards video?  Will they forget about those of us making music?

I remember when Sony's 3348 digital tape machine absolutely ruled the studio world.  If you didn't have one of these $150k machines, your studio had no chance of servicing serious music clients.  Then it seemed like overnight they were gone - relegated to the scrap heap of unwanted gear too expensive for the dumpster, but no longer needed on a session. Actually it was a period of six months when the 3348 world faded into the new Protools world, but it seemed a lot quicker at the time.  

I always thought that this could happen to Protools - used everywhere until it was gone in a blink of an eye.  Although I don't this scenario happening soon as I see no viable alternative on the horizon, folding Digi into Avid just might be the crack in the door that lets a competitor or new technology through.