Philips Burning on Protection

Electronics manufacturer Philips has been fanning the flames in the fight over copy-protected music CDs, threatening to undermine the record industry's attempts to tinker with disc formats in order to thwart music pirates.

Could Philips take on the major labels and win? Yes, it could -- but the company may only be hastening the death of the 20-year-old compact disc format.

The skirmish began in early January when officials for Netherlands-based Philips, which licenses the compact disc logo for both discs and players, went on a tirade against the recording industry for shipping discs with deliberate errors burned into them.

The errors not only make it harder to burn copies of the music, but also render the discs unplayable on many computers -- and a few stereos -- by violating the "Red Book" standard for CD-Audio established by Philips and Sony in 1980.

"Those are silver discs with music data that resemble CDs, but aren't," Philips representative Klaus Petri told Financial Times Deutschland.

Gerry Wirtz, general manager of the Philips copyright office that administers the CD logo, told Reuters that not only would Philips yank the logo from copy-protected discs, it would force the major labels to add warning stickers for consumers. Most controversially, he claimed future models of Philips players would both read and burn the copy-protected discs.

That's no small threat, given the popularity of Philips' current $399 twin-tray CD-ROM recorder, sold on Amazon under the slogan "CD Burning: Simpler than Ever."

Both Philips and the big five record labels have declined to comment further on the matter, but independent label owners and industry veterans say the silence means neither side plans to shift course away from their inevitable collision.

"We're definitely going to keep putting out discs with copy protection," said Peter Trimarco, CEO of Fahrenheit Entertainment, which released an early test of the technology last year with Charley Pride's Tribute to Jim Reeves.

Leaving off the compact disc logo wouldn't bother him much, he says. "Look around at independent music - a lot of them don't put that logo on anyway."

Same goes for warning labels: Universal's most recent copy-protected release, The Fast and the Furious -- More Music, already ships with a warning sticker on its backside, a pamphlet about copy protection inside, and an offer to return the disk if it doesn't play.

But Jeff Joseph, vice president of communication for the Consumer Electronics Association -- a consortium of manufacturers -- says the standoff could require "a huge education campaign" that could force retailers to segregate copy-protected CDs from those with the logo, something Amazon has already begun doing.

"Consumers expect to walk into a store and buy a CD that will play anywhere - a computer, a boombox, wherever," he said. "There are a hell of a lot of ramifications."

No doubt one of the ramifications will be more lawsuits. Fahrenheit has already been sued by one consumer, and activists opposed to copy protection are hoping for a clash of the titans: Philips v. Universal.

"Suing Philips is not something that should be done lightly," says Fred von Lohmann, an attorney with the Electronic Frontier Foundation. "Copyright owners have been winning in part because they've been choosing opponents that are wildly overmatched. If a label like Universal were to sue Philips, that would be a fight between equals."

Philips' annual revenue of over $6 billion worldwide is about one-third of what the entire record industry makes.

"The last time Universal and Disney squared off against a major consumer electronics company was the Sony Betamax case," von Lohmann said. "They lost."

But industry veterans don't expect the record companies to give up on copy protection just because Philips won't play along. "I think instead we're going to evolve (from the compact disc format) to a different standard," says Bob Doris, CEO of Sonic Solutions, a longtime maker of CD and DVD authoring tools in Novato, California.

Philips' patents on much of the technology for CD audio begins expiring this year and next.

And newer audio formats such as DVD-Audio already boast far superior sound quality than CDs. Doris thinks the compact disc will be replaced by "something like what was tried with DVD-Audio, but with better copy protection."

Some of that protection may come from legislation: Senator Fritz Hollings has yet to introduce the Security Systems Standards and Certification Act (SSSCA) into Congress, but drafts in circulation would require all devices sold in the U.S. for playing audio and/or video to include copyright protection mechanisms dictated by the entertainment industry.

If such a law were passed, it's unlikely the proposed standard would be as simple as adding errors to the aging Red Book format. "My understanding of the current protection schemes is they're very easy to defeat," Doris says. "If there are millions of CDs out there, there'll be lots of code posted to the Net -- whether it's legal or not.",1283,50101,00.html