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Monday, January 20, 2003
Microsoft introduces CD copy-protection 'fix'


Microsoft Corp. (NasdaqNM:MSFT) announced on Saturday the introduction of new digital rights software aimed at helping music labels control unauthorized copying of CDs, one of the biggest thorns in the ailing industry's side.

Stung by the common practice of consumers copying, or "burning," new versions of a store-bought CD onto recordable CDs, music companies have invested heavily in copy-protection technologies that have mainly backfired or annoyed customers.

For example, most copy-proof CDs are designed so that they cannot be played on a PC, but often this prevents playback on portable devices and car stereos too.

Last year, some resourceful software enthusiasts cracked Sony Music's (6758.T) proprietary technology simply by scribbling a magic marker pen around the edges of the disc, thus enabling playback on any device.

Microsoft believes it may have come up with a solution. The new software is called the Windows Media Data Session Toolkit. It enables music labels to lay songs onto a copy-controlled CD in multiple layers, one that would permit normal playback on a stereo and a PC.

$500 MILLION INVESTMENT

The PC layer, laid digitally on the same disc, can be modified by the content provider, so that they could prevent, for example, burning songs onto another CD, said David Fester, general manager, digital media entertainment for Microsoft.

Universal Music (EAUG.PA) and EMI (EMI.L), two of the biggest record labels in the world, "are very excited about this because it enables the industry to build a CD with their own protections built in," he said, speaking at the Midem music conference in southern France.

Microsoft has invested $500 million in digital rights management, or DRM, for music, Fester said. The Toolkit was co-developed with technology partners Phoenix-based SunnComm Technologies and France's MPO International Group, he added.

Microsoft is making a concerted push into DRM, a hotly contested new field.

Technology and media companies, such as Microsoft, Sony, Philips (PHG.AS) and Real Networks (NasdaqNM:RNWK - news), are looking to build a business out of securing copyright protections across the Internet and other digital media.

Microsoft has discussed plans for an upcoming operating system, code-named "Palladium," that will seek to put user controls on all bits of information they store on a computer document, from medical records to billing information.


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