The Day The (Pirated) Music Died
By Warren Cohen

(FORTUNE Magazine) – "Copy-written so don't copy me," warns rapper Missy Elliott on her "Get Ur Freak On" single. And now music executives are backing up Missy's words with technology; they are trying to freeze piracy by creating copy-proof compact disks.

The CDs will function just fine on most home stereos and Walkmen, but when placed in a computer's CD-ROM drive, they'll be virtually unlistenable--and unswappable over file-trading networks. In Europe, 'N Sync released its latest album on copy-proof CD and Michael Jackson's new promotional single uses the technology. In September, Edgar Bronfman, vice chairman of Vivendi Universal, the world's largest music company, vowed that all the firm's future releases would adopt a Napster-proof format.

That burns the ears of many music fans and digital-music entrepreneurs. Dave Arland, director of government and public relations for MP3-player manufacturer Thomson, argues that most digital-music fans don't do anything illegal: They simply like to copy their own CDs onto their computers and MP3 players. "Millions of people around the country will be absolutely infuriated when they can no longer engage in the harmless practice of home recording," says Representative Rick Boucher (D-Virginia), who is considering introducing legislation to stop the technology.

None of the major labels would publicly discuss their plans, but executives at SunnComm in Phoenix--one of the four companies vying to supply the labels with the prophylactic format--explain that the technology can be adapted to fit the needs of consumers. For instance, every CD could include a version of the album that is playable on computer drives but that contains rules preventing it from being swapped over the Internet. "You'd still have the computer experience," says SunnComm Chairman John Aquilino, "but you'd get there differently."

There are still plenty of bugs to work out. Car stereos, for instance, usually contain CD-ROM drives, since they are less prone to skipping. The new CDs would not be playable on these systems. And even some normal CD drives are sure to be confused by the copy-protected disks: The world's 2.2 billion CD players boast a bewildering variety of technical specifications. Aquilino says that SunnComm's product will work in at least 90% of those systems, but that number must increase before the technology becomes widespread. If it doesn't, the rollout of the new CDs may actually backfire. Says Dennis Mudd, president of software firm Musicmatch: "If consumers no longer buy CDs, and then go to the underground peer-to-peer sites to download music, piracy would be accelerated."

What's more, with hackers and hardware manufacturers allied against the labels' plans, it might only be a matter of time before they find a way to beat the new copy-protection schemes. That's why some labels' heads confide that they would like to phase out CDs altogether in favor of newer formats like DVD-Audio or Super Audio CDs, which offer higher sound quality, longer playing time, and strong copy protections built in from the start. Sure, that might satisfy Missy Elliott and others, but will the recording industry be able to tempt consumers away from their old CDs?