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Sony BMG outfits CDs to deter music copying
By Jeff Leeds The New York Times

WEDNESDAY, JUNE 15, 2005
NEW YORK The world's second-biggest music corporation is unveiling its latest answer to digital piracy.

The company, Sony BMG Music Entertainment, which is owned by Sony and Bertelsmann, is outfitting a broad selection of its latest CDs with software that restricts copying. Its use of the software, designed to allow consumers to make no more than three copies of a CD, reflects an effort to alter a format that is two decades old and contains music that can be readily copied and digitally distributed.

With the release of more than two dozen copy-restricted titles so far this year, including albums on sale Tuesday from the Backstreet Boys, the Foo Fighters and George Jones, Sony BMG is placing a bigger bet on the technology than other companies have, particularly in the United States, the world's biggest market. Sony BMG, which is second to the Vivendi Universal-owned Universal Music Group, and the two other major record companies have been releasing CDs with anticopying software in other countries. But executives at Sony BMG's rivals have been reluctant to release titles with the restrictive software in the United States. They said the software was too easily defeated and that working versions did not allow consumers to transfer music to portable devices and music players as freely as the industry would like.

The companies have been pressing Apple Computer to amend its software to make it compatible with the tools used to restrict copying.

The restrictive software that Sony BMG is using on CDs, as it did this year with "Stand Up" by the Dave Matthews Band, is not compatible with Apple's popular iPod. Owners of Apple computers using iPods are able to copy and transfer music on the restricted compact discs freely; the restrictions block PC owners from transferring music to their iPods. But it does work with computers using Microsoft's Windows software.

Thomas Hesse, president for digital business at Sony BMG, said Apple could "flick a switch" to amend its programming to work with the restrictive software. "It's just a proprietary decision by Apple to decide whether to play along or not," he said. "I don't know what more waiting we have to do. We think we need to move this forward. Time is ticking, infringement of intellectual property is happening all over, and we've got to put a stop to it, I think."

Apple declined to comment.

Mike McGuire, an analyst at Gartner G2, said the move by Sony BMG "looks to me like a very interesting public negotiation."

In fact, consumers requesting help through a Web site set up by Sony BMG to explain the technology receive an e-mail message telling how PC users can work around the CD's software to unlock the music files and make them available for unlimited copying and transferring.

Music executives say the restricted CDs released so far - like BMG's sale of Velvet Revolver's "Contraband," last year - have resulted in virtually no complaints. But analysts say that may be because consumers still have such an easy time breaking the restrictions or acquiring the music for on unrestricted online file-sharing networks.

Still, Hesse said the introduction of limits on CDs would set the stage for record companies to establish new business models. For instance, Hesse said, a record company using restrictive software might be able to charge a premium for early online release of an album. Hesse said the restricted CDs were "a strong educational tool to communicate to consumers that there is a limit on what they're really allowed to do with the intellectual property that they have just acquired."


http://www.iht.com/articles/2005/06/14/business/sony.php