Feature: Copyright crackdown

The record industry has been targeting online music sharing for years, but now it has undertaken a new war -- against "casual piracy."

Sony BMG and EMI have begun shipping compact discs using technology that limits the number of copies you can make of any disc to three. And you can't port songs from affected CDs to Apple IPod players unless you request a workaround from Sony.

The move, along with other recent developments in copyright protection such as the Supreme Court's ruling this summer in MGM v. Grokster, a copyright infringement case pitting Hollywood against the Grokster peer-to-peer network, could have a lasting impact on your entertainment choices. And you may not like the remix.

Sony BMG's copy-protected CDs incorporate First 4 Internet's XCP2 (extended copy protection) technology. The company is the first major label to offer XCP2-protected CDs to consumers, although Sony BMG already ships some CDs using MediaMax copy protection from SunnComm. The new effort uses different technology, but with the same end result for consumers: a limited ability to copy. By the end of this year, Sony BMG says, most of its CDs sold in the United States will incorporate one of these technologies.

EMI is employing a similar strategy with its CDs, using technology from Macrovision that lets you make just three copies; the first titles using the technology should be on sale in stores by the time you read this.

'Speed bumps'

"Our goal is to create a series of speed bumps that make it clear to users that there are limits [to copying]," says Thomas Hesse, president of Sony BMG's Global Digital Business Group. "If you attempt to burn 20 copies and distribute them to all of your friends, that's not appropriate."

Sony BMG labels discs that use the technology as copy-protected. The company says that its customers find a limit of three copies to be fair.

When you insert the CD into your Windows-based computer, the disc launches its own audio player software, which warns you that you'll be allowed to make only three copies of the disc. You can make those copies from within the Sony BMG audio player, or you can use that software to rip the files to your music library. (For this purpose you must use a music player that supports secure Windows Media Audio files, like Musicmatch, RealPlayer, or Windows Media Player, but not Apple's ITunes.)

The copy protections are not iron-clad, however: You can make three copies of the CD on each PC on which you load it. You can also make three additional copies of the CD from the tracks that you have ripped to your Windows Media Player library. Once you have burned CDs using Windows Media Player, the tracks cease to be protected, and you can upload this audio CD into another media player, such as ITunes. And once the tracks are uploaded, you can burn them as often as you like.

One potential problem for consumers is that the protected CDs prevent PC users from moving songs to Apple IPods. That's because Apple refuses to license its FairPlay digital rights management technology so that other companies can accommodate it. If you inquire, though, Sony BMG will e-mail you a workaround.

This raises a key point about XCP2: It's not meant to be unbreakable, according to First 4 Internet's chief executive Mathew Gilliat-Smith. "We have achieved a good balance of protection and playability."

In fact, XCP2 is not as strict as XCP, the company's original product. Sony BMG and the other major labels have been using XCP since 2002 on prerelease CDs sent to radio stations and internal employees, Gilliat-Smith says. XCP not only prevents copying, but in some cases prevents discs from playing in certain devices, he says. Sony chose XCP2, not XCP, for consumer CDs because discs with that encryption play well in most devices.

XCP2 may affect more than just CDs: The company is currently working on versions for DVDs and online music files, Gilliat-Smith says. Sony BMG will ship the DVD technology to U.S. movie studios for use in prerelease copies of movies by late 2005, he hopes, and will introduce a version for commercial DVDs later. He declines to say which movie studios have expressed interest in using the technology.

What's fair use?

Not everybody thinks that record companies' focus on "casual piracy" is smart. Some copyright law reform advocates say that sharing copies of music with family members and friends and making "mix" compilations have long been social norms -- it's the sharing with strangers that costs record companies significant revenue. If record companies insist otherwise, they'll make people ignore copyright rules wholesale, says Ernest Miller, a Yale Law School fellow who works on copyright reform issues.

The term "casual piracy" is "really a bit of propaganda," according to Miller. "It's an effort to use language to frame the legal arguments," he says.

The record companies want to chip away at the existing standard for fair use and move casual copying into the realm of copyright infringement, he says. Someday, the definition of "casual piracy" could be important in a lawsuit.

What's next? Like it or not, copy protection on CDs will only increase, in the opinion of IDC senior analyst Susan Kevorkian. She expects that more companies will follow Sony BMG's lead. "There's a very narrow line between casual copying and proliferation of content online," she says.

As for the war against casual piracy, you should understand that Sony BMG is not looking to prosecute you for making more than three copies, Miller says. The company is really attempting to shape future legal battles.

"They're looking for ways to extend their control over music and charge for the various ways we use music," he says. Whether companies can do so and avoid a consumer backlash remains to be seen.

Court sets file-sharing limits

The long-brewing court case of MGM v. Grokster finally came to a head in late June, when the U.S. Supreme Court ruled in favor of the recording industry. Movie and recording companies had sued Grokster and StreamCast Networks (owners of the Morpheus peer-to-peer service) for encouraging users of their peer-to-peer services to download and trade copyrighted songs without paying for them. Grokster argued that it wasn't liable for the actions of consumers using the service, but the Supreme Court disagreed.

Why should you care about this decision? For starters, the Grokster ruling will change the way courts interpret the precedent set by the famous Sony v. Universal (or Betamax) case of the mid-1980s. Movie companies had sued Sony, claiming that the VCR could help consumers break copyright laws; but the Supreme Court ruled in Sony's favor, declaring that if a product had significant legal uses, the creator was not responsible if some people used it illegally.

The Grokster ruling could affect the way companies design their products in the future, discouraging innovation.

It will probably be some time before the ruling's exact impact becomes clear. U.S. appellate courts must apply this Supreme Court opinion to cases before them.

What the Grokster decision won't do is shut down online piracy, says Forrester Research vice president Josh Bernoff. And record companies are still free to sue individuals for piracy.

Copy controls may be stalling mobile music

Users of Rhapsody 3, RealNetworks' newest version of its music service, weren't singing a sweet tune when the upgrade was released in May. When the software debuted, many users -- including some PC World editors -- had trouble transferring songs to music players. Yahoo's new Music Unlimited service (still in beta) has been serving up some similar glitches. Is the culprit Microsoft Windows Digital Rights Management 10 technology, which both Real and Yahoo are using?

Though some of the problems have now been fixed, Rhapsody's troubled debut illustrates how copy-control technology can alienate music customers. Real, in an effort to make its music portable, offered users the ability to copy songs to a music player for an additional US$5 a month. To do so, Real relied on Microsoft's DRM, which is designed to allow users to play back music from a subscription service such as Rhapsody or Yahoo Music Unlimited on a portable player. The software makes the song unavailable as soon as your subscription ends.

Finding a fix

With so many companies involved -- Microsoft, Real, Yahoo, and the various device makers -- it's hard to determine exactly what's causing the problem. "There are too many moving parts," says Mike McGuire, research director for GartnerG2.

Real and Yahoo both say that they are working on the problems and that reliability has improved since we first reviewed the services. Yahoo released an upgrade in late June that corrects some bugs, notes Ian Rogers, a developer for Yahoo Music Unlimited, but he admits that it doesn't solve every problem. "The top customer service issues are related to DRM," Rogers says. "The biggest issue is, customers get into a state where the Microsoft DRM doesn't work anymore and they can't play protected tracks," he says.

Microsoft has developed a workaround, which Yahoo passes on to customers, Rogers says. The hitch has affected only about 1 percent of the service's users, he points out, but "for them, it's a show-stopper."

Real has released several updates for Rhapsody 3, including one in mid-June that addresses the top complaints, according to spokesperson Matt Graves. As for Microsoft DRM 10 failing occasionally, "it's something we've heard," Graves acknowledges. But he says that he doesn't know it to be a "significant" problem for Rhapsody users.

Working together

Microsoft says that it is collaborating with music player makers to improve the devices' firmware and eliminate troubles. "Microsoft continues to work with our device partners to offer 'out of the box' support for the growing number of subscription music services, and we're making great progress," says Kevin Unangst, director of marketing for the Windows Digital Media Division. "We're working closely with our partners to ensure the best possible consumer experience," he says.

Even if you buy a player now, you may need a firmware upgrade from the vendor, says GartnerG2's McGuire. These companies have not done as well for consumers as Apple has with ITunes and the IPod, he says. "You have to make this appear seamless and easy the way Apple does," he says.

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