Anti-piracy features making their way onto CDs promise to dramatically alter the online music landscape, potentially handing Microsoft a potent weapon against the leading MP3 format and other rivals in the high-stakes battle over digital-audio standards. The record industry is experimenting with a new strategy for protecting CDs from being copied in CD burners or on computers. Unlike previous anti-copying measures, this plan will place two versions of an album on a single disc: one in standard CD form, modified so that it can't be transferred to a computer hard drive, and another in Microsoft's Windows Media Audio digital format, rigged so that files can be copied to a PC, but with some restrictions on how they can be used. Although only a first step, the strategy could reset the parameters of the music industry's campaign against online piracy and determine the future of "ripping," the popular practice used by consumers to convert CD tracks into computer files that can be traded freely on the Internet over services such as Napster. Record labels have long sought technology to curb the practice of ripping, and they are on the verge of success with some new copy-protected releases. Tens of thousands of CDs loaded with anti-copying protections have been quietly released in US retail stores over the past few months, with hundreds of thousands more landing on shelves overseas. Those moves have provoked bitter criticism from consumers fearful of losing their ability to make digital record collections on their computers, a right they believe should accompany their purchase of the music. The new technology being tested offers a compromise aimed at pleasing most consumers while holding the line on mass underground distribution. "The purpose of these releases is to test consumer satisfaction," said Macrovision president Bill Krepick. The labels "obviously don't want to do anything to turn off consumers...There's a lot of risk aversion right now." The technology's potential carries important ramifications for the computer and music industries, as well as for the consumer -- namely, a significant power shift toward Microsoft. The software giant is trying to turn its Windows Media technology into the basic infrastructure for future digital music and video, but rival efforts from RealNetworks, Sony and an assortment of smaller companies have thus far kept the market from settling on a single winner. The record labels, for their part, have avoided exclusive support of any format, fearing that dominance by Microsoft or any other software company could threaten their control of the music industry. Some senior executives say they harbor these concerns even as Microsoft's technology moves onto their CDs. Most of the major record labels are experimenting with the basic copy-protection technology created by Macrovision, SunnComm or Midbar Tech, or with some combination of these software companies' techniques. Sony also has its own copy-protection technology, which it is using in at least one upcoming promotional release. Macrovision and SunnComm are upping the ante with their latest releases -- each due out within 90 days, and perhaps as early as next month -- by adding the ability to bundle the Windows Media-encoded files on a CD along with the protected standard audio files. Most of the big record labels already have their own explicit relationships with Microsoft to test the giant's anti-piracy software. SunnComm has been working with Microsoft itself, while Macrovision says it is relying more on its label partners for access to Microsoft technology. Bertelsmann's BMG Entertainment has taken a lead in testing new technologies, in both Europe and the United States, and will release some promotional copies with the new protection this year. Vivendi Universal said Tuesday that it hopes to have all its new releases protected by mid-2002 but has not specified which technology it will use. Still, analysts say all copy protection must overcome powerful skepticism from consumers unaccustomed to controls on what they can do with their retail CDs. "I think the reality here is that none of these [CD copy-protection] techniques is going to be successful in the long term," said Jupiter Research analyst Aram Sinnreich. "They're fraught with technical difficulties, and if they did surmount those, they would meet with a severe consumer backlash." Some record executives acknowledge that the new strategy is an interim, imperfect solution. Adding enticements such as videos or extra tracks onto copy-protected CDs might help counter consumer criticism, but the real goal is to move the market to a more secure format with greater options, such as DVD audio. "A lot of copy protection around [CD] audio is really a stopgap solution," said an executive of one major label. "I don't think we know enough about how consumers react." Lucking into the lead?
For Microsoft, the new compromise strategy could mean a windfall. The software company has spent considerable time wooing record labels and movie studios over the last few years as it has tried to develop Windows Media and associated anti-piracy technology into an industry media standard, but it has focused more on Internet sources than on delivery via old-fashioned CDs. Although the company is making some small gains, the vast majority of digital music online and in personal collections remains in MP3 format, analysts say. The specialised computer program compresses standard audio tracks into smaller sizes without significantly compromising sound quality -- and without carrying the anti-piracy controls used by Windows Media. MP3's lead could change quickly, however, if CDs are routinely released with easily accessible Windows Media versions of songs onboard. "I think you're going to see [Windows Media] really come out in the marketplace now," said SunnComm chief technology officer John Aquilino. "But not by design." Along those lines, Microsoft itself seems less than absolutely bullish on the efficacy of copy-protected CDs. Committed pirates will eventually find a way around any digital protections, even if it is simply "holding a microphone up to the speakers," said Jonathan Usher, group product manager for Microsoft's Digital Media Division. Indeed, reports of being able to break almost all forms of CD copy protection have already appeared in various forms around the Net. On his CD-R information site, a popular resource for recordable CD technology, software engineer Andy McFadden tells his own story of how he was able to get a digital copy of a SunnComm-protected CD. In his discussion of how the various types of CD protection work, McFadden also takes note of a fear that is beginning to ripple through free-speech and computer-engineering circles: Creating tools to evade copy-protection measures, or even discussing their weaknesses online, may well be illegal under the Digital Millennium Copyright Act (DMCA). That's the same law movie studios have used to keep DVD-decoding tool DeCSS offline and to prosecute people who have posted it on the Net. "It's possible that any software specializing in defeating the copy protection would run afoul of the DMCA...and the authors [would be] subject to fines and criminal prosecution," McFadden writes. "Come to think of it, the preceding discussion might be illegal." Playing with fire
Macrovision is a veteran of fights involving copyrights and copying, having introduced technology that prevented the duplication of VCR tapes almost 15 years ago. The technique worked on 80 percent to 85 percent of VCRs at first, until manufacturers began designing recording circuits that circumvented the company's signals, Macrovision's Krepick said. The company and Hollywood studios remonstrated with the VCR manufacturers to stop counteracting the copy protection. But it took Congress, which in 1998 forbade VCR companies from deliberately circumventing technology such as Macrovision's, to make the system function universally. CD anti-copying protections are in only the earliest stages of that process, though a bill to force hardware manufacturers to include anti-piracy technology is circulating on Capitol Hill. Many consumers are already up in arms over those plans alone. In the past few months, online mailing lists and chat boards have been filled with calls for class-action suits, boycotts of record companies and even coordinated cracking campaigns to prove that copy protection will always be broken. "I have a right to make personal copies and refuse to buy protected CDs," reader Steve Groen wrote in an email. "If Hollywood had invented the toilet, it would be five times as expensive and you'd pay $1 every time you flush." Offline, the reaction has been less bilious. A small sampling of shoppers at a Virgin Megastore in San Francisco found nobody who was even aware that CDs were likely to be guarded against computer piracy. And when people were informed of the technologies, their reactions were mixed. "That would bug me," shopper Rob Sorino said, noting that DJs need to be able to take individual songs off of CDs. "There should at least be a warning label." Emily Dubray, a French tourist, was less concerned. "It's not something that bothers me," she said. Regardless of how they feel, consumers have little recourse other than to vote with their shopping dollars, lawyers say. Federal law allows people to make personal copies of songs but does not require record companies to stand aside so consumers can do so. Label executives note that music CDs are the only mainstream entertainment medium that does not have some kind of copy protection built in. A guessing game
To date, few record labels have disclosed which of their CDs are copy protected, saying they don't want to bias consumer response. Macrovision says its technology has been released on more than 100,000 discs in the US market but will not say which ones. The most prominent title to be identified with the technology so far has been country singer Charley Pride's recent "Tribute to Jim Reeves" -- a release by a tiny Nashville independent label that has sold only about 8,000 copies. As the sole release in the public eye, Pride's album has already drawn a lawsuit on the issue. The uncertainties over which titles actually hold the technology have prompted a rash of Elvis-like sightings, almost none of which have been verified. "Finding discs with copy protection has been a bit of a challenge," software engineer McFadden said. People online have long reported difficulties ripping their CDs, he noted, but "now the first conclusion they come to is that it's a copy-protected CD." Some in the industry say the backlash is the product of mistakes by the technology companies. Early versions of copy-proof discs did not work in computer CD drives at all. The new versions will prevent conventional ripping but provide a separate set of Windows Media files that can be easily transferred to a computer. "Some of these are technology companies, and (they) didn't really think about the consumer," SunnComm's Aquilino said. "Now we're all taking a more aggressive stance to make sure the consumer isn't left out in the cold." See the MP3 News Section for the latest headlines. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Napster Debate. Let the editors know what you think in the Mailroom. And read other letters.