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100 million copyproof CDs sold?

Macrovision says more than 100 million CDs bearing its copy-protection technology have been shipped worldwide, in a slapback to analysts' claims that its business is floundering.

Copy-resistant CDs may still be scarce in the United States, but signs are growing that the technology is becoming increasingly mainstream elsewhere and may finally break into the American market this year.

Silicon Valley company Macrovision said Wednesday that its anticopying technology had now been applied to more than 100 million CDs worldwide, the bulk of them released in Europe and Japan. Over the last six months, the company has seen shipments of 10 million discs a month distributed across those markets, it said.

"People are getting used to the idea (in those areas,)" Macrovision CEO Bill Krepick said. "I think the sense is that consumers in those countries tend to be a little less vocal than American consumers."

Technology companies touting copy-protection wares--and, to a lesser extent, record labels themselves--have been promising for two years the impending release of CDs shielded against unauthorized computer copying. But the progress of the technology to market, particularly in the United States, has been slow and bumpy, and the technology companies themselves have repeatedly been forced to retrench and rethink their techniques.

Early versions of the technology rendered albums unplayable in many CD players or computers, even breaking some machines. Several versions of copy-protection technology proved to be easily broken, some using tools as low-tech as a felt-tip pen. In addition, record label concerns about universal playability and consumer reaction have helped slow the CDs' pace to market substantially.

The development of so-called second session technology, which allows two versions of the same album to be stored on the same CD, has helped win label support, however. When this technique is used, the ordinary CD music files are accompanied by a music file--typically an encrypted MP3 or Windows Media Audio file--meant to be copied to and stored on a computer hard drive. Most, if not all, future copy-protected discs are expected to contain this type of computer-ready file.

Macrovision's announcement appeared to come at least partially in response to a research note from J.P. Morgan analyst Sterling Auty, who predicted that the first big shipment of copy-protected CDs in the United States could come from Arista Records as soon as May or June. The CDs would be protected using a product from Macrovision rival SunnComm Technologies.

In that note, Auty downgraded Macrovision's stock, saying that SunnComm's potential relationship with Arista didn't bode well for its rival.

"We believe the initial copy-protection contract in the music industry will fall out of Macrovision's hands, which we believe will be a huge blow to investor sentiment," Auty wrote. "Our concern also lies with the chance that other labels at (Arista parent) BMG Music will rapidly follow Arista's lead."

A BMG spokesman said that the company's policy--which would affect Arista--had not changed, however. BMG is "conducting trials only," and has not announced any plans to go to market in the United States, the spokesman said.

Macrovision said Wednesday that it hoped to begin seeing sales in the Unites States by late this year, but that it had learned to be patient in its home market.

"There's only so much we can do to show the record labels what's going on in the rest of the world," Krepick said. "At some point they have to take a bit of risk and step out and do something."