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Sales of copy-protected CD may signal fan acceptance

By Alex Veiga
AP Business Writer
Wednesday, June 23, 2004
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LOS ANGELES (AP) - A music CD wrapped in copy-protection technology has become a best seller, fueling speculation that U.S. music fans might be ready to accept such restrictions on a wider scale.
Velvet Revolver's "Contraband" has sold 380,000 copies since its release last week, when it grabbed the top sales spot with 256,000 units sold, according to Nielsen SoundScan.

It's one of a few CDs issued in the United States equipped with such copy-protection measures, which the recording industry has been cautious to implement.

"Obviously, this is our highest-profile release to date with copy-management technology, so there's a sense that the technology has matured and our research shows us that consumers are receptive," said Nathaniel Brown, a spokesman for Bertelsmann Music Group.

Fans bought the CD despite clear warnings on the case about the copy restrictions, suggesting many anticipated the release of "Contraband," the first record by the group formed by ex-members of Guns N' Roses and the frontman of Stone Temple Pilots.

The technology on the CD is supposed to help reduce music piracy by preventing buyers from burning more than three copies, among other restrictions.

But it remains a work in progress - songs ripped from the CD don't play on Apple Computer Inc.'s popular iPod digital music player. And users loading the CD on a PC running Microsoft Corp.'s Windows operating system can easily bypass the protection features by pressing the "shift" key.

Phoenix-based SunnComm Technologies Inc., the company behind the copy protection features on "Contraband," says its technology is not supposed to be hacker-proof, just effective enough to reduce overall piracy.

Record companies "wouldn't pay a penny for this technology if it didn't work," CEO Peter Jacobs said, adding that the shift key issue is not a flaw in SunnComm's technology but a feature in the Windows program.

"It's not a bug," he said.

Jacobs said SunnComm is waiting for Apple to assist in adapting the next generation of SunnComm CD protection so song files can be ripped from its CDs and played on the iPod. Currently, SunnComm's technology converts files into the Windows Media Player format.



ABOUT SUNNCOMM:

SunnComm International’s (OTC:SCMI) copy-management technology was commercially released by Music City records in 2001 and became the first copy managed commercial CD in America. Following that landmark even, it has become a leader in digital content enhancement and security technology for optical media with its MediaMax M4 suite of products and became the first company to commercially release a content-protected audio CD utilizing an early version of the Windows Media Data Session Toolkit..

SunnComm’s MediaMax M4 Suite of Digital Content Enhancement technologies are built using Microsoft (NASDAQ:MSFT) Windows Media 9 Series but operate on both Apple (NASDAQ:AAPL) and Windows-based systems. For more detailed information about the company, its vision or philosophy, personnel, partners, and customers, please visit the company’s Web site at http://www.sunncomm.com, or call the Company directly at [phone], and ask for shareholder relations.

For additional information or investor relations please contact:
Company contact:
Kimberly Faulkner
602.267.7500
[e-mail] Investor contact:
Investor Comm. Consulting
602-231-0681
[e-mail]
MediaMax Digital Content Cloaking Technology, DC2, PromoPlay, TuneShare, MusicMail, Secure-Burn and SunnComm are registered and/or trademarks of SunnComm International, Inc., in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.