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Wednesday, June 15, 2005
DRM infected "CD's" on the way!

Music fans who copy CDs for all their pals, take note: It may be time to shed some friends.

Executives at EMI Group on Monday said they planned to begin rolling out CDs with technology designed to limit copying. The technology allows buyers to burn onto CDs only three full copies of a disc's songs, and the burned discs cannot be copied.

Sony BMG is heading even faster down the same road. About half the discs it releases in the United States today have the three-copy limit, and it plans to have a similar restriction on all its U.S. releases by the end of the year, said Thomas Hesse, president of the company's global digital music business.

The new CD technology still has some compatibility issues ? most notably, the songs on the discs cannot be transferred directly to Apple Computer Inc.'s popular iPods. Such limitations are one reason that the two other major record companies, Universal Music Group and Warner Music Group Corp., have yet to make the switch to "secure" CDs.

Nor is the technology foolproof. Executives at EMI and Sony BMG said the point was to rein in copying by the everyday music fan, not to stop determined bootleggers.

Nevertheless, if fans do not rebel, the companies' discs are likely to chart the rest of the industry's path into secure CDs. The goal, label executives say, is to have anti-piracy technology on every track sold, whether it is encased in plastic or downloaded from an online store.

Many music executives blame digital piracy for the prolonged slump in CD sales. That piracy comes in two main forms: free downloading from Internet file-sharing networks and using CD burners to copy entire discs.

The file-sharing issue receives more headlines, but CD burning may be more prevalent. Hesse said a survey by market research firm NPD Group found that fans acquired twice as much music through burned CDs as they did through file sharing.

The labels have been selling secure CDs overseas for several years. But they have been reluctant to bring the discs to the United States until the technology was flexible enough to allow some degree of copying to computers and to blank CDs.

Before merging with Sony Music, Bertelsmann Music Group was the label most willing to experiment with secure CDs in the United States. Its releases included two hits: Velvet Revolver's "Contraband" in 2004 and Anthony Hamilton's "Comin' From Where I'm From" in 2003.

Those CDs used technology from SunnComm International Inc. of Phoenix that blocked the discs from being copied onto a computer. Instead, the discs contained a second set of tracks in Microsoft's secure Windows Media format that could be copied onto a computer, transferred to portable players and burned onto a limited number of CDs.

The technology left several notable holes in the security, however. The burned CDs had no electronic locks to prevent them from being copied an unlimited number of times, and hackers quickly found a way to circumvent SunnComm's technology entirely to remove all the restrictions.

Since then, SunnComm and three other companies have developed a more secure approach. The new versions are designed to allow a limited number of copies that can be burned onto CDs that cannot, in turn, be copied.

EMI plans to begin selling secure CDs in the U.S. in mid-July; the artists affected include 30 Seconds to Mars and OK Go.

Both EMI and Sony BMG plan to let buyers get around the CDs' restrictions so they can get tracks onto iPods. Executives said they were willing to sacrifice security in the name of playability.

Still, the technology leaves at least one analyst skeptical.

"Here you have a product with declining sales, and for the same price you want to decrease the potential value of it," said analyst Phil Leigh of Inside Digital Media. "Basically, music companies are saying, 'We're going to lock up the front door of the store now, but the back door is still remaining wide open.'"

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