CD Copyguard Failure...again.
LLange10
by Chris Oakes
Wired News
BMG Germany says it has a major piracy problem on its hands, blaming
rampant copying of audio CDs for a drop in music sales. That's why the
German division of the U.S. record label decided to give copy-protection
technology a try.
The company debuted the first copy-protected audio CDs last week in German
music stores.
No go.
By week's end, the company was faced with a backlash from consumers
complaining that some of the copy-protected CDs were unplayable.
"The consumers started getting back saying it doesn't play on car CD
players and several types of normal players," said Matthias Immel, head of
product coordination and new media at BMG Germany. "We were really shocked."
Approximately 100,000 protected CDs were sold, and 3 to 4 percent were
returned, Immel said.
Copy-protection technology is meant to prevent computer users from copying
music CDs, but it has yet to see widespread deployment in commercial CDs.
The BMG test was limited to the German market.
Immel said the company's CD supplier felt confident that the copy
protection technology, Cactus Data Shield, developed by Israeli software
firm Midbar would not cause problems with players.
After testing the copy-locked CDs on 1,000 different players, BMG Germany
issued two new rock titles on 24 January. One was from the popular German
band Him, whose CD immediately became the No. 1 seller in Germany.
Just as quickly, the company got the word from frustrated consumers. BMG
stopped the trial late last week and shipped additional orders of the CDs
without copy-protection.
"We wouldn't have done it if it had been clear to us that we would have
problems," Immel said. "We don't want consumers to be upset."
Immel said music piracy caused a 9.8 percent slump in sales during the
first six months of 1999 over the same period in 1998, citing figures from
the International Federation of the Phonographic Industry.
"The more or less obvious reason for the shrinking market is the CD burner
issue here," he said.
BMG Germany plans to give copy protection another go. Immel said the
company will work with Midbar to develop an alternative CD protection
scheme.
Gene Hoffman, founder and CEO digital music distributor EMusic questioned
whether piracy was really to blame for the sales decline.
"The ability to copy CDs has been around for at least a year," Hoffman
said. "What is the true underlying cause of that decrease in sales? Is it
really piracy?"
A critic of copy protection, he said BMG's failed effort was a harbinger
for digital music copy-protection schemes such as SDMI.
"With copy protection you drive up the failure rate," Hoffman said. "And I
don't think that's going to be acceptable to real customers who are putting
out money to buy content."
If piracy is the problem, enforcement of anti-piracy laws -- and fairer
pricing of music in the first place -- are better solutions, according to
Hoffman.
He further predicted that other copy-protection schemes -- most notably the
still-missing Secure Digital Music Initiative -- would suffer a similar
fate in the market.
SDMI representatives were not immediately available for comment.
"It's a cost-benefit to the company. If copy protection can drive 50
percent more sales, then maybe it's worth it," Hoffman said.