FEATURE-CD-creator Philips blasts labels over protected discs

NEW YORK, Jan 17 (Reuters) As major record labels roll out a new breed of compact disc designed to prevent Napster-style piracy, Dutch consumer electronics

NEW YORK, Jan 17 (Reuters) As major record labels roll out a new breed of compact disc designed to prevent Napster-style piracy, Dutch consumer electronics maker Philips, the co-creator of the CD, is refusing to play along. The new discs now making their way into record stores in the United States and Europe contain countermeasures that prevent playback on computers and, in some unintended cases, normal CD players as well.

"What we've seen so far is troublesome and cumbersome," said Gerry Wirtz, general manager of the Philips copyright office that governs the compact disc trademark. "We worry (the labels) don't know what they're doing." The five major record labels -- Bertelsmann AG's BMG, Vivendi Universal, Sony, EMI Group, and AOL Time Warner's Warner Music -- hope that by preventing the use of audio CDs in computers, users will be unable to "rip" or copy the music into the easily traded MP3 music format.

In the wake of Napster, the popular music-trading service that allowed consumers to rip and trade MP3s with a minimum of effort, the music industry was forced to investigate ways to limit rampant CD copying. The controversial new anti-copying technology introduces minute errors to the CDs, or changes the location of data on the discs to prevent them from being played back on computers. In theory, most consumer CD players can correct the errors and decipher the structure, unlike the more finicky computer CD drives.

None of the companies have publicly committed to a full-scale introduction of the discs, yet "it sounds like the record labels are still very much behind the idea and are in the process of rolling out an unannounced number" of discs, said Jupiter analyst Aram Sinnreich.


Philips, because of conformity issues, has warned the record labels that the discs are actually not compact discs at all, and must bear warning labels to inform consumers. "We've made sure they would put a very clear warning that you're not buying a compact disc, but something different," Wirtz told Reuters. "We've been warning some labels to begin with, and they've adjusted their behavior." That means labels would also be barred from using the familiar "compact disc" logo that has been stamped on every CD since Philips and Sony jointly developed the technology in 1978. The five major labels declined to comment.


The attempts to graft protective measures onto the 20-year-old CD technology have had mixed results. Because there are hundreds and perhaps thousands of different CD players on the market, it's likely that some will be unable to read the new discs. "It's extremely difficult to retrofit the system with copy protection without losing the ability for all CDs to play on all players," Wirtz said.

In one of the first protected CD releases from BMG, Natalie Imbruglia's "White Lillies" prompted numerous returns in the United Kingdom. Universal's "More Fast and the Furious" disc release in the United States featured a label warning that the CD would not play on a small number of CD players. Even when the protection technology works as intended, Wirtz said that normal wear and tear could eventually overwhelm the error correction for the altered discs, causing them to become unreadable within a few years. "We fear some of these so-called copy-protected CDs will play at first, but will eventually show problems and break down," he said.


Aside from its ownership of the compact disc trademark, Philips is a major manufacturer of CD burners, and Wirtz said future Philips machines will likely be able to both read and burn the protected CDs -- a proposition that may land the company in the crosshairs of the U.S. Digital Millennium Copyright Act, or DMCA.

The far-reaching DMCA, enacted in 1998, bans any attempt to circumvent copyright protections. Critics complain that the law puts too much power in the hands of media publishers, denying consumers the right to use products bought for personal consumption in whatever ways they see fit.

Philips contends that the protected discs do not fall under the DMCA, since they restrict the playback of music, not copying itself. "It is not a copy-protection system, it is not doing anything to recorders or copy devices," Wirtz said. "It would not qualify as copy-protection under the DMCA, or the new European laws."

However, the broadly worded DMCA bars the circumvention of any method used to protect the property of a copyright holder, and experts on the law said Philips may be treading on dangerous legal ground.

"The record companies would contend that the protection is encryption within the meaning of the DMCA, because it is designed to protect copyrighted material, and originates with the owner of the copyright," intellectual property attorney Leonard Rubin of Gordon & Glickson said. Attempts to circumvent encryption are explicitly barred by the DMCA.

"The way that statute has been interpreted, it's illegal to bypass those types of digital access controls," said Robin Gross of the Electronic Frontier Foundation, a public advocacy group which opposes the law. "All you have to do is attempt to put some kind of technological protection system that controls access to the work --it doesn't matter how effective it is."