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Warner Music plays with digital security

In an effort to thwart Internet piracy, Time Warner's record label is partnering with secure online distributors and preparing a new DVD-audio format with anti-copying features.

In an effort to develop new digital products and thwart Internet piracy, Warner Music Group is expanding its partnerships with secure online distributors and preparing to unveil a new, high-quality DVD-audio format with anti-copying features.

Warner Music today said it will offer 100 audio tracks online through Liquid Audio in its latest digital distribution deal. The company also plans to begin distributing by Nov. 7 DVD-audio releases from artists including Stone Temple Pilots and Natalie Merchant, as well as Beethoven symphonies conducted by Daniel Barenboim. Warner Music said each DVD-audio disc would cost $24.98.

Record labels have been struggling for some time to inject a layer of security into new digital music releases. For example, all of the major labels are moving ahead with plans to offer secure downloads by the end of the year, although none have advanced beyond the experimental phase.

Record labels also hope to entice consumers to replace CD players that do not support encryption technologies with fancier gadgets that offer better sound quality and other features--including copyright security for the content owners.

Since DVD-audio is expected to offer higher audio quality than CDs and provide seven times the storage capacity of a CD, Warner Music's DVD-audio discs will also offer brief music videos, artist commentary, still pictures, artist biographies, discographies and song lyrics.

In addition, Warner Music has licensed encryption technology for its DVD-audio format from an industry group known as the 4C Entity, whose membership is made up of Toshiba, Matsushita, IBM and Intel.

The road to a secure DVD-audio format has been a rocky one. The 4C Entity has already pulled one of its DVD-audio encryption products, CSS 2, after a version for protecting digital video was cracked late last year. The hack program, DeCSS, has since become the focal point of a heated legal debate, pitting free speech advocates and open-source software programmers against the motion picture industry.

While Warner Music may be looking to DVD-audio as a potential long-term solution to the online copyright dilemma, analysts pointed to some major drawbacks that could dampen consumer enthusiasm for the product.

According to a Gartner study in March, only 4.7 percent of U.S. households own a DVD player and 11.4 percent intend to buy one.

Gartner analyst P.J. McNealy said the high cost of DVD players contributes to the small percentage of usage. But he said he is skeptical that the format will gain widespread popularity among consumers because of portability issues.

"You don't want to take your DVD player and try to mount it on your (car's) dashboard," McNealy said. "When you have music these days, people's expectation is being fostered toward portability--that's what the digital age brings. And if this doesn't have that element, it makes it more of a niche product."

Analysts say that while multiple solutions to combat music piracy will be tested in the next two or three years, it is unclear how consumers would want to pursue new formats.

"It's a nice idea," said McNealy. Warner Music "is going after another niche, but whether or not it will be widely accepted remains to be seen."