June 14, 2005
Sony BMG Tries to Limit Copying of Latest CD's By JEFF LEEDS
The world's second-biggest music corporation is rolling out 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 CD's with software that restricts copying.
The company's use of the software, which is designed to limit consumers to making 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 today 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 in size to Vivendi Universal-owned Universal Music Group, and the two other major record companies have been releasing CD's with anti-copying 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 Sony BMG is using on CD's, like it did earlier 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 allows transfers to music players using Microsoft's Windows software.
Thomas Hesse, president for global digital business at Sony BMG, said Apple could "flick a switch" to amend its programming to work with the restrictive software.
"Its just a proprietary decision by Apple to decide whether to play along or not," Mr. Hesse 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 CD's the music industry has released so far - most prominently BMG's sale of Velvet Revolver's "Contraband," last year - have resulted in virtually no consumer complaints. But analysts say that may be because consumers still have such an easy time breaking the restrictions or acquiring the music for free on unrestricted online file-sharing networks.
Still, Mr. Hesse said the introduction of limits on CD's would set the stage for record companies establish new business models. For instance, Mr. Hesse said, a record company using restrictive software might be able to charge a premium for the early online release of a forthcoming album. Mr. Hesse said the restricted CDs are "a strong educational tool to communicate to consumers that there is a limit of what they're really allowed to do with the intellectual property that they have just acquired."
http://www.nytimes.com/2005/06/14/business/media/14music.html
