New CD copy-lock technology nears market

Several major music labels have already used a version of the British company's technology on prerelease compact discs distributed for review and other early-listening purposes, including on recent albums from Eminem and U2.

The releases for the retail market, expected early in 2005, will be the first time the Sony music label issues copy-protected CDs in the U.S. market, although the company's other divisions have done so in other regions. BMG, Sony's new corporate sibling, has been more aggressive, with a handful of protected CDs released last year.

A Sony BMG representative declined to comment on the plans. First 4 Internet Chief Executive Officer Mathew Gilliat-Smith confirmed that his company plans to release a consumer version of its technology with one major label in the United States, but he declined to identify the label.

Gilliat-Smith said his company has been waiting to improve its technology. Better-known companies Macrovision and Sunncomm have seen sporadic--and sometimes controversial--use of their products on CDs released around the world.

"We're not keen to rush," Gilliat-Smith said. "We have always focused on a high level of protection, but we've waited until there aren't any playability issues."

The new Sony BMG experiments are a further sign that copy protection on music CDs may be moving closer to the mainstream U.S. market. The practice is much more common in European and Asian markets.

For several years, the major record labels have sought a way to protect CDs against unrestricted copying and "ripping," or transforming songs into files such as MP3s that can be swapped widely online. Early experiments proved unpopular, prompting reports that the discs could not play in certain kind of stereos, or might even damage computers.

The past year has seen resurgent signs of interest from the major labels, however. A watershed moment in the United States came when the BMG-released Velvet Revolver album reached the top of the industry's sales charts, despite being clearly marked as copy-protected. Industry insiders said that helped assuage some boardroom concerns about potential consumer backlash.

Questions remain about the appropriate technology to use, however. The copy protection from Sunncomm, used by BMG in the United States, could be fairly easily disabled simply by pressing a computer's Shift key while the CD was loading, for example. That issue has been fixed in the company's most recent

It also may be a tricky job to make rules associated with copy-protected discs match those associated with songs purchased from online stores such as Napster or Apple Computer's iTunes. Those stores allow their customers to burn CDs that can then be copied without restriction; by contrast some labels want to limit the number of times a copied CD can be duplicated again--a technology called "secure burning."

First 4 Internet's entry into the market marks a potentially new twist on the basic technology, however. The company got its start by offering a tool to identify pornographic images in Web sites and e-mails, and selling the technology to Web-filtering companies for their own products.

The company has been working on the disc-protection technology since 2001, following conversations with the EMI record label, Gilliat-Smith said. The technology wraps ordinary song files in strong encryption, but in a way that still allows regular CD players to read them. Another part of the disc contains data files that help improve protection.

The company has worked particularly closely on prereleases in the U.S. market with Universal Music. First 4 Internet's U.S. representative said the copy-protection technology has been included on a number of extremely high-profile CDs while in the review and demo stage, without being broken.

"Could it be broken? I'm sure that somebody must be able to do it," said Graham Oakes, the head of Los Angeles-based Ezee Studios, which represents First 4 Internet. "But is there a generally known hack that has been put on the Net, or have any of the record label IT people found a hack yet? No."

Analysts remain skeptical that labels will ultimately launch copy-protected discs on a widespread level in the United States, citing continued consumer opposition and the delicate technological balancing act between strong protection and universal compatibility with CD players.

"If there's something that isn't going to play in every CD player that's out there, it's going to create a backlash," said Jupiter Research analyst Michael Gartenberg. "If it's easy to defeat, then that doesn't bode well for why you released it in the first place."