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Universal to unveil CDs with anti-piracy software
NEW YORK (Reuters) - Vivendi Universal said on Tuesday its Universal Music Group, the world's largest record company, plans to start issuing CDs in October with software that prevents music from being digitally copied into computer files.

Following a lengthy legal battle with song swapping software company Napster and the emergence of several similar services, Vivendi's vice chairman, Edgar Bronfman, said, "With the extent of piracy and the extent of CD (copying) that's going on, we have no choice but to protect our artists and our rights holders."

Universal, whose artists include U2, Eminem and Sheryl Crow, is aiming to have the protection software on all CDs toward the end of the first quarter of 2002, Bronfman said.

Record labels, already reeling from weaker sales, have been fiercely fighting Napster and other upstart companies that enable Internet users to download digital copies of music files from other users' computers.

At the same time, pirated CDs have also taken hundreds of millions of dollars out of record labels revenues, the labels say.

But an aggressive anti-piracy strategy runs the risk of alienating consumers, who often make digital copies for their personal use, similar to the way consumers make audio cassette tapes of albums.

"I think the industry has always tolerated a degree of copying and I would expect that to continue," said an executive with a rival label. "The problem is that technology has advanced to a point where you can make many copies in a short period of time that it amounts almost to mass distribution. That's the kind of thing we're trying to stop."

He envisioned protection software that placed no restrictions on conventional cassette copies of CDs and some restrictions on digital copies. He also held open the possibility of the software including interactive features for consumers.

"We're not trying to create a quid pro quo situation," he said. "But at the same time, if you're going to place restrictions on your customers, you have to offer them something of value that will make the product attractive."

Vivendi's Bronfman said he was conscious of consumers' concerns. "On the other hand, we have a situation where the music market is experiencing difficulty because of the ability for people to copy an unprotected CD, thereby depriving artists and other rights holders of their rightful due," he said.

He declined to comment on how the software would work or who Universal Music's technology partner was. The protected CDs can be played on conventional CD players and CD-ROM's, Bronfman said, but safeguards will be in place to prevent copying the music onto computers or "burning" them onto recordable CDs.

Other labels are exploring similar moves. Most notably, Sony Music Entertainment said the CD of Michael Jackson's new single "You Rock My World" was distributed to European radio stations with protection software, after the song started showing up on the Internet.

There are no plans to use similar technology on the CDs distributed in the U.S., the label said in a statement.

"As responsible copyright holders, Sony Music Entertainment has long been a strong proponent of protecting its artists and copyrights from piracy," the label said. "We continue to test available copy protection technologies, and our goal is to implement copy protection on a broader basis to deter digital piracy."

A spokesman for AOL Time Warner Inc.'s Warner Music Group said it was considering a number of technology options to stem piracy but declined to comment further.

Bertelsmann AG's BMG plans to start testing anti-piracy software on promotional CDs in the U.S., but declined to comment on a timetable for when that software would be used on CDs for sale to the public.

EMI Group Plc, which warned earlier Tuesday that its profits would slide 20 percent this year from the sharp industry-wide downturn in record sales, was not immediately available for comment.


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