BMG TO DROP CD COPY PROTECTION AS JAPAN LABELS ADD IT

Latest instance of confusion involved BMG title Five: Greatest Hits sold with and without Cactus Data Shield copy protection for Tel Aviv-based Midbar Tech (CED Jan 4 p1). That followed controversy in Nov. over BMG’s White Lilies Island disc by Natalie Imbruglia. In each case, disc packaging gave no warning discs were copy-protected to prevent copying on PCs. Also in each case, discs offered only low-fi playback on PCs from compressed music file and were found to have unforeseen playback incompatibilities with wide variety of audio CD players, DVD players, Sony PlayStation 2 videogame consoles.

Earlier this month, we found 3 different versions of Five disc in circulation. Of 2 from European replicator Sonopress, one had Cactus protection and small-print copyright notice for Midbar’s Cactus; other had no copy protection or notice. Version from Australia had no copy protection but packaging showed Cactus logo and copyright notice.

BMG spokesmen said Five CD was in production with Cactus before problems were encountered with copy-protected Imbruglia disc. First run of Five disc -- 130,000 of 400,000 shipped to date -- had Cactus and its logo. Spokesman in N.Y. told us logo carried over to unprotected discs because “after BMG Europe decided to put all of the copy-protection implementations on halt, in an effort to get the non-copy-protected product out as soon as possible, Sonopress/BMG used some existing covers.” Australian version of Five never had copy protection, spokesman told us.

BMG spokesman in U.K. told us no more Cactus-protected CDs from Five or Imbruglia were being shipped and label had no plans yet for other copy-protected titles. He said label made attempt to put stickers on copy-protected discs already shipped to stores, but retailers wouldn’t permit it. “There’s no other copy-protected title planned,” spokesman said. “We want to use copy protection as soon as possible. But everything has to be correct technology-wise.”

Issue has caught attention of House Internet Caucus Co-Chmn. Boucher (D-Va.), who wrote to RIAA Pres. Hilary Rosen and IFPI (CED Jan 7 p1) suggesting copy protection being placed on CDs might be illegal under 1992 Audio Home Recording Act (AHRA). CEA last week praised congressman’s involvement in issue.

In letter, Boucher asked for “prompt reply” to 5 questions posed to record industry. It wasn’t known when RIAA planned to reply. Pres. Hilary Rosen gave us following statement: “People have said that record companies brought the MP3 problem on themselves by putting ‘naked CDs’ into the marketplace. No one then can blame them for looking to correct that problem for the future. Copy protection is certainly not new to the entertainment industry -- most movies and videogames sold today have some form of protection. It is not surprising therefore that companies in the recording industry are taking steps to get ‘in tune’ with the rest of the entertainment field. In fact, many music and technology companies are already testing alternative forms of copy protection that they hope will offer the right balance between preventing wholesale copying and uploading to the Internet while still allowing some copying onto hard drives or CD-Rs for personal use. Fans may rest assured that these companies’ first priority will remain the listening experience. As an industry, we are fully committed to ensuring the same, if not higher, audio quality and providing consumers with the same conveniences they've enjoyed in the past.”

CD copy protection isn’t only issue Boucher is monitoring. He told us he still was gathering support for his proposed bill to expand fair use rights for digital content (CED Nov 15 p5), and hoped to introduce it soon. He said he continued to be disturbed by Sec. 1201(a)(1) of Digital Millennium Copyright Act (DMCA), which criminalizes any attempt to evade technology used to protect copyrighted material.

CEA’s Home Recording Rights Coalition (HRRC) is mounting campaign to make Congress and Administration aware of record industry’s attempts to impose copy protection and preempt consumers’ rights under AHRA. HRRC statement said: “HRRC believes that any encoding of CDs that interferes with consumer recording rights preserved by the AHRA would constitute a violation of that law. Moreover, technologies that make signals nonstandard should not be considered protected by the Digital Millenium Copyright Act of 1998, and manufacturers should be understood to have a right to design products that ignore these nonstandard signals.”

HRRC statement advised consumers to pay royalties for making single digital copy of music they owned. In petition it’s circulating for delivery to govt., HRRC said: “Royalty provisions of that Act should be repealed and record companies should be held accountable for their violations of the Act.” But record companies aren’t getting rich on AHRA royalties. Since enactment through first quarter of 2001, fund had tallied $14,991,491 in royalties. They're assessed on basis of 3% of landed cost of blank media, 2% on digital recording hardware with $8 cap for single-transport recorder, $12 for dual-transport dubbing decks. Caps also apply to combination products such as shelftop stereos with CD recorder.

What copy protection system or systems Japanese labels will use could not be learned at our deadline. Press report from Tokyo said technology would prevent musical exchange among PC users.