To curb music piracy, several major record companies have been testing anti-theft technology designed to prevent consumers from copying music CDs onto their PCs. More than 200,000 CDs have been sold with the embedded anti-piracy technology said Matthew Cohen, chief financial officer of TTR Technologies in New York.
“The test was a success,” Cohen said. “The return rates for the CD was minimal. They were the same as if it didn't have this technology.”
TTR, with headquarters in Israel, developed SAFEAUDIO®, a digital anti-piracy CD technology currently being tested by the music industry. The company will not disclose which titles have been loaded with the technology because it might alter the test results, Cohen said.
“We are working with all the major record labels,” Cohen said, declining to name them specifically.
The company is also working with Macrovision, based in Sunnyvale, Calif. (www.macrovision.com) to market the technology. TTR competes with several other anti-piracy technologies being developed by Midbar Technologies and Sony. Through the new anti-piracy technology, major record companies such as Vivendi, Universal, Sony EMI, Warner Music, and BMG hope to protect new releases, which comprise most of their annual sales.
The TTR technology, which inserts audible clicks and pops into music files that are copied from a CD onto a PC, is a big part of the music industry's efforts to stem digital piracy.
SAFEAUDIO® would have prevented what's been called the Imbruglia imbroglio in Europe, Cohen said. In that case, the latest CD from Natalie Imbruglia with anti-piracy technology caused a major uproar among some consumers who wanted to copy or “burn” the CD to make illegal copies. The disc does not play in some CD and DVD players because of copy protection technology being tested by music giant BMG.
While all five of the major recording companies are currently testing anti-piracy technologies -- more than 4 million copy-protected CDs have been released mostly in Europe -- none are formally using anti-piracy technology on all its CDs.
Meanwhile, the International Federation of Phonographic Industry, a trade organization, projects that the number of CDs burned worldwide in 2001 will approximately match those sold in stores. By not adapting an illegal copying technology the music industry continues to hemorrhage money, Cohen said.
Ripping or digitally copying CDs and burning or making hard copies of them has become more common as consumers buy PCs equipped with technology that allows them to copy CDs.
To get a scope of the problem, the Recording Industry Association of America points to a survey by Magex, a digital commerce services company, which estimates that online piracy will cost the music industry $10 billion by 2003.
For several years, record companies have tried protecting CDs against copying but the technology has always failed. That is because many consumers and audiophiles complain when anything is added to a CD that it degrades the sound.
One of the biggest disappointments has been the cross-industry Secure Digital Music Initiative. It wanted to add digital “watermarks” to recorded music, but it has largely scraped its plans because of disagreements between labels, consumer device manufacturers, and technology companies.
Universal Music is one record company that has been evaluating various technologies in the United States and Europe to protect CDs from theft. “This is obviously an issue that is important,” a spokesman with Universal Music said in a written statement. “We are working rigorously towards a solution that protects our artists' works while maximizing the consumer experience.”