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Record company prepares to sell copy-protected CDs

Country music record company Fahrenheit Entertainment says it will begin selling copy-protected CDs by early next year using encryption technology from SunnComm.

Country music record company Fahrenheit Entertainment said it will begin selling copy-protected CDs by early next year using encryption technology from SunnComm, a little-known company based in Phoenix.

If successfully employed, SunnComm's technology could become the first to hamper the copying of CDs onto the Internet--a practice described as one of the music industry's greatest obstacles in its war against piracy. Nearly all of the music shared on the Internet through programs such as Napster comes from CDs, which can easily be copied, or "ripped," as MP3 files.

SunnComm said that the technology will also prevent people from copying, or "burning," albums onto other CDs but would not block them from recording songs onto cassette tapes.

Record labels have long sought a method of preventing CDs from being directly copied into digital formats, but techniques to date have run into compatibility problems with some CD players that were not built with security in mind.

Few industry analysts have heard of SunnComm or feel confident about the ability of any technology to produce copy-protected CDs. Other companies such as Liquid Audio have developed technology to prevent the duplication of music bought in digital, downloadable format, but none are known to have successfully applied the technology to CDs sold in stores.

Earlier this year, BMG Germany failed in a similar attempt to create protected CDs using technology from Israeli security firm Midbar. After shipping 130,000 copy-protected CDs, BMG abandoned its project in January as complaints piled up from customers, who said the discs wouldn't work on their players.

John Aquilino, chairman of SunnComm, said he was familiar with BMG Germany's attempt and feels confident that his company's technology will not suffer the same fate.

"Everyone else has done hardware-based solutions," Aquilino said. "We've altered data at multiple points in the disc to render it incapable of being copied or recognized from the standpoint of data."

Aquilino said his company's solution differs from past technologies in that it does not alter a CD's audio component; it only acts upon other data written to the disc.

"There's a whole lot of data aside from the audio such as the table of contents, and that's the kind of data you're altering," Aquilino said. Those types of data typically need to be read only when copying a disc, not when simply playing it.

Still, Aquilino admits, protected CDs could run into trouble on some players made before 1995.

"I've only had one machine fail, an old, early 1990 Pioneer machine," he said. "But we're not going to pull the project based on that because there's always further development and refinement."

Wooing the record labels
Aquilino said he has been in preliminary discussions with the larger record companies and has received a wait-and-see interest.

"This will be more or less our field test; then we'll be able to show Universal and Warner and the others," Aquilino said. "The industry needs this type of protection desperately."

So far, the Big Five record labels--EMI Recorded Music, Sony Music Group, Bertelsmann's BMG Entertainment, Universal Music Group and Warner Music Group--have taken steps to protect downloadable music. Through involvement with a multi-industry forum, the Secure Digital Music Initiative, the major labels are working to install digital "watermarks" on CD tracks that would enable copyright holders to trace illegal copies and create devices that would refuse to play clones.

Their proposal, however, would not prevent the copying and posting of music taken from store-bought CDs.

"There's nothing like that out there," said Mario Iacoviello, a spokesman for SunnComm. "Whether you purchase it in the store or download it off the Internet, you will not be able to copy it onto another CD if it is manufactured through our encryption software."

If SunnComm's technology is successful and adopted on a wide scale, it could be a huge coup for the recording industry, which has waged a bitter war against copyright violators from numerous fronts.

Still, analysts remain skeptical about any technology's ability to definitively block the copying of audio files.

"Even if they do produce a major-label CD with this format, I can probably guarantee within 24 hours some version of that CD will be on some sort of public forum," said P.J. McNealy, an analyst with Gartner. "This is what hackers like to do."

There's also the issue of a consumer backlash. When consumers pay $17 for an audio CD, they expect to be able to rip the music into MP3 files and place them on their desktop, said McNealy.

Fahrenheit Entertainment, the parent company of Fahrenheit Records, Finer Arts Records and Celsius Records, said it plans to begin releasing protected CDs in the first quarter of 2001, which begins Jan. 1. The labels have released music from country music artists including Willie Nelson and Roy Clark.