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Labels look to put digital files on CDs

Macrovision is helping record labels defend copyrights while giving consumers versatility: CDs could carry songs that are transferable to MP3 players but can't be file-swapped.

Copy protection company Macrovision said Wednesday that it is working with record labels to enable them to bolster their CDs with digital audio files that can be copied onto computers and MP3 players.

But don't expect unprotected MP3 files to be distributed with the next Madonna album. The new CDs will include Windows Media Audio files alongside the ordinary CD songs. Those new files can be loaded onto a computer, but consumers won't be able to burn them onto other discs or trade the files online.

However, by enabling the record labels to include files that can be easily transferred to an MP3 player or PC, Macrovision hopes to help assuage consumers' fears that anti-copying technology on CDs is taking away their ability to use the music they've purchased in different ways.

"The record labels are trying to stop the CD copying problem but don't want to restrict consumers' enjoyment," said Brian McPhail, vice president of Macrovision's consumer software division. "We think?this is the big breakthrough that will make labels comfortable copy protecting their tracks."

Since early 2001, Macrovision and several rivals, including Suncomm and Midbar Technologies, have been offering the ability to prevent ordinary compact discs from being copied, or "ripped," and converted into MP3 files. But after an initial flurry of interest, labels in the United States have backed away from the technology, citing instances of incompatibilities with some CD players and a wave of consumer backlash.

Most of the big labels say they are still looking with great interest at the technology, but they say it hasn't progressed far enough to be released on a wide scale in the United States. Labels have been releasing protected discs with more frequency in Europe and Asia.

The move to put a so-called second session of digital audio files on copy-protected CDs has been in the works at least since last summer, when Macrovision and Suncomm each said they were working with Microsoft to add Windows Media-encoded tracks alongside the copy-protected CD songs.

Because Windows Media is the most commonly supported audio player on computers, the labels usually request that technology, McPhail said. However, Macrovision plans to release technology that will also let the discs be played on Apple computers in upcoming months.

Putting compressed audio files on CDs is part of a broader trend by record labels to add exclusive content to CDs in hopes of making them more attractive to consumers tempted by free file-sharing networks like Kazaa or Morpheus. Increasingly, music videos, Web links, bonus songs or even bundled DVDs are included with CDs distributed in retail stores.

The "second session" is more than simple add-on goodies, however. The addition of computer-readable files such as Windows Media tracks will ultimately give the record labels potential new ways to hook consumers on such things as subscription services or fan clubs. Consumers who buy a CD could get encrypted digital keys to a fan club site that provides live concert footage or merchandise, for example.

"This is a step in the right direction," said P.J. McNealy, research director for GartnerG2, a division of the Gartner research firm. "This gives the music industry an alternate business model."

For that model to take hold, labels must be willing to brave consumer backlash against changes in the traditional copyable CD, however. Record companies are eager to see the copying issue diminish--indeed, they routinely cite CD copying and Internet file-swapping as the primary factors behind falling revenue--but they remain wary of consumers' potential wrath.

CDs containing the Windows Media Files alongside Macrovision's copy-protection technology are expected to trickle into the European marketplace as soon as November, McPhail said. Release dates in the United States remain uncertain, however.