Bottom line:
What's new:
Record labels say CD sales have plummeted as a result of copies--and copies of copies. Now the labels are testing technology that would limit the number of times a CD, or its copy, could be burned.
Such anticopying efforts have met with consumer resistance in the past, but if the labels have their way, it may be that not only CDs, but also iTunes-style digital downloads, will be restricted.
Tools under review by the major labels would limit the number of backups that could be made from ordinary compact discs and prevent copied, or "burned," versions from being used to create further copies, according to Macrovision and SunnComm International, rivals that are developing competing versions of the digital rights management (DRM) software.
SunnComm said a version of its new "secure burning" technology is already being tested by BMG Music Group, the world's fifth-largest record label and the most aggressive to date in pushing CD copy protection schemes in the United States. Macrovision's version is expected to be ready in the next few months.
If implemented widely, the new technology would mark a substantial change in the way ordinary people can use purchased music, possibly alienating some customers, analysts said. Given the costs of piracy, however, the labels are moving ahead cautiously in the hope of striking on a formula that works.
"There is a fine (DRM) balance that nobody has struck, especially with physical CDs," said Mike McGuire, an analyst with the GartnerG2 research group. "If there's somebody who's making 25 copies for the world and finds they can't do that, then few people will probably complain. But if someone finds they can't make a copy for their kid so he can play it in the car, you're going to have a lot of people returning broken CDs."
The trials come as record labels seek to tighten copying restrictions on CDs, a market worth more than $11.2 billion in the United States in 2003. The labels have attributed recent, significant slides in retail CD sales in part to competition from home copying, as well as online file swapping.
Consumer concerns
Record labels are seeking a way to let consumers make a limited number of copies of their music--enough for a car, a vacation home and a friend, for example--without allowing for uncontrolled duplication. Under the current system, each copied CD can itself lead to an unlimited number of additional copies, cutting substantially into sales, they say.
Consumer advocates, meanwhile, have protested against abridgments of today's unlimited freedom to copy, remix or sample from music CDs.
Record labels in the United States have been sensitive to these consumer concerns, worrying particularly about earlier versions of copy-protection technology that had difficulty playing in nontraditional CD players such as game consoles or car stereos. They've released many protected CDs overseas, but only a small number in the United States and United Kingdom, where perceived opposition has been the highest.
The new plan to lock down burns could reignite a controversy that's smoldered in the United States since the independent release of country artist Charley Pride's album in 2002 incorporated SunnComm's early copyproofing technology, prompting at least one consumer lawsuit.
In addition to adding a new layer of copy protection on CDs, SunnComm and Macrovision each say their CD burning limitations could be applied to digital download businesses such as Napster or Apple Computer's iTunes, which do not put any restriction on burned CDs. That potentially could set off a new round of skirmishes between such digital download businesses and the record labels over how consumers can use the music they buy online.
"What labels have told us is that their agreements (with the download services) are relatively short term, a year or under, and so they believe that they have the capability to require (the burning tools to be added) next time around," Macrovision Chief Executive Officer Bill Krepick said.
Record label executives, although they take very different individual approaches to the market, say they ultimately want to see the rules for CDs and digital downloads converge.
"I would say that similar values should apply," said Jordan Katz, executive vice president and general manager of BMG's distribution arm.
Digital download services say they aren't yet feeling pressure to add the "secure burning" feature, however. Some said the labels had spent more time discussing the issue as much as six months ago but that it hadn't been a priority recently.
"I think the labels have been relaxing a little in terms of usage rules," said Liz Brooks, vice president of business development at Buy.com's music division.
A checkered history
To date, the history of CD copy protection in the United States has been spotty. Though Macrovision and SunnComm each say their technology is used widely overseas, only a few albums have been publicly released using their technology here.
BMG, which has taken a lead in this area, used SunnComm's anticopying tools on last year's Anthony Hamilton disc. The release gained some prominence after a Princeton student demonstrated that the protections could be easily evaded simply by pushing a computer's Shift key while loading the CD.
Executives at SunnComm and BMG said they were aware of the issue and that they had been satisfied with the technology as a deterrent to casual copiers, rather than trying to create an unhackable protection.
BMG announced last week that it would release three more albums using the technology over the next two months, including recordings by Velvet Revolver, Angie Stone and Yung Wun.
Other labels say they are still very interested, but not quite as far along as BMG.
"EMI does use Macrovision's technology in just about every country in the world," EMI spokeswoman Jeanne Meyers said. "We're testing other forms of technology from a lot of different companies before launching in the U.S. and the U.K."
