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Music

Many people have fun copying music to create custom CDs, or converting tunes to a digital format like MP3 for a party playlist. But music labels see such copying as an attack on their core business, and most are starting to act to prevent it. Digitally locked CDs--even some by major artists--are already on the market.

Sony Music Entertainment, for example, distributed a promotional Michael Jackson CD single that Windows PCs could not read. And 'NSync's label, Jive Records, is selling copy-protected versions of the band's CD Celebrity. Though reluctant to talk about specific plans, BMG, Sony, and Universal all confirm they're testing copy protection on several sample and promotional CDs.

Today, about 200,000 CDs in Europe and the United States use Macrovision's SafeAudio technology, says Brian McPhail, the company's consumer software vice president. Another copy-control firm, SunnComm, reports that about 50,000 CDs in the U.S. use its MediaCloQ technology. Both companies expect those numbers to rise to the millions in 2002.

SafeAudio's protection scheme inserts small distortions that standard CD players filter out. CD-ROM and DVD-ROM drives can't block those distortions, so if you use your PC to play, rip, or burn such CDs the music will hiss and pop. Other technologies hide a CD's table of contents so your CD-ROM drive can't read it.

Some schemes may also prevent ordinary CD players from playing CDs properly: When BMG tested MidBar's secure CD technology in Germany in 2000, up to 4 percent of the 130,000 CDs sold were returned for that reason.

Legal Action

One lawsuit has been filed already by a California woman, Karen DeLise, who purchased the Charley Pride: A Tribute to Jim Reeves CD. Her suit claims copy protection constitutes an unfair business practice. She could not play or copy the CD on her PC and instead had to provide personal information in order to download encrypted song files.

Her attorney, Ira Rothken, contends in the suit that record labels should give reasonable notice to buyers about "functionally inferior CDs" to let users make an informed buying choice.

The Pride CD does carry a disclaimer stating it is for play in audio CD players only, and that licensed song copies are available for download. It does not mention PCs specifically, and does not tell users they have to divulge personal data to get the tracks. (On 'NSync's Celebrity, a disclaimer printed in a corner states, "This CD is not playable on computers.")

Fair Use?

Fair use and user expectations are at issue, says Lee Black, director of research at market research firm Webnoize. Fair use is a legal concept that basically says you aren't violating copyrights if you copy something you've bought, like a song, as long as that copy is for personal use, not for profit. Labels know users expect to be able to turn their CDs into MP3s, Black says, "but labels don't agree that is a consumer's right."

The DMCA backs the industry's view--it makes it illegal for anyone to bypass security measures to copy a disc, whether you're a pirate burning thousands of CDs for sale or a home user ripping a CD you own for a party playlist.

Plans are in the works to accommodate users' desire for digital tunes. In one scheme, CDs would come with both standard--but protected--CD music and pre-ripped tracks. The pre-ripped files would be bound by digital rights management (DRM) rules, which let the labels control which devices can play the tracks, and how often the tracks may be copied or transferred. This approach doesn't satisfy consumers who want true CD-quality (meaning uncompressed) digital music files.

The music industry is also acting online. Lawsuits forced out Napster's free music-sharing network; similar peer-to-peer services are now targets. Companies want to replace them with paid services that offer downloadable, but protected, tunes. In December, RealNetworks launched its RealOne service; AOL and Microsoft have offerings on the way, and the major labels are working on their MusicNet and PressPlay services.

"The music industry, with digital music services, is really trying to convert consumers to consume music as a service, not as a product," says P.J. McNealy, Gartner Group senior analyst. "It's a huge shift," and it's the labels' biggest challenge, he adds.

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