Music for nothing, rips for free

Sony tried to copy-protect CDs by Celine Dion and Shakira - yet hundreds of 'ripped' copies are available online. The music industry has just won a legal battle in the US but, asks Charles Arthur, can it regain control of its product?

The music business is hurting. Its industry body, the International Federation of Phonographic Industries (IFPI), will announce later this month that worldwide music sales have shown their biggest fall ever. Yet there's more music around than ever – in the form of MP3s, mobile ringtones, advertising backing, internet radio and CDs. So what's going wrong? "One could argue that the demand for music was greater in 2001 than ever before," says one music executive. "The problem is that a lot of that listening was for free."

Now the industry wants to target at least two areas: internet radio and MP3s. But be prepared for a battle because, as any marketer knows, "free" is a tough price to beat. Remember the dot.coms that crashed trying to charge for initially-free products?

First, CDs. Labels have been keen to talk up the benefits of copy protection for CDs, but few have done it. Sony Music thought it had a hit in its Key2Audio's copy protection system, which should prevent people "ripping" music. The technology (which adds extra data that confuses CD-Rom drives, but not standard CD players) was used to encode Laundry Service, the first European CD from the singer-songwriter Shakira, and the new CD from Celine Dion.

Unfortunately, a side-effect is that if you ignore the label that says "This CD will not play on PC/Mac" and stick it into your machine, the CD might not eject and your machine may crash. Some claim it could corrupt the "firmware" (a combination of hardware and software) that controls CD-Rom or DVD-Rom drives, though Sony says its tests on 400 drives never showed that problem.Whatever, it seems like a good idea not to put them in your computer.

So far, 10 million discs using Key2Audio protection have been produced and sold, mostly in Europe. They should be fine in standard CD players – although the Campaign for Digital Rights (http://uk.eurorights.org) reports many cases of older players failing to play protected discs.

That's not the end of the story, though. Log on to any file-sharing network such as Gnutella or Audiogalaxy, do a search on Shakira or Dion, and what turns up? Hundreds of results. Someone somewhere has been able to "rip" the tracks. One mailing list discussing the topic notes: "There are already hundreds of copies [of Dion's record] available through file-sharing networks – most at high sampling rates that listeners couldn't tell weren't original recordings. This may become the most ripped CD in history, if only out of spite."

But Jonathan Morrish, spokesman for Sony Music Europe, is unmoved. "We have to do something. We have to put a marker down, and this is our marker. We're using technology to recover what technology has taken away from us."

To Martin Lambert, chief technology officer of the British company Sealed Media, the case is open and shut: the music industry is about as safe as Edward Scissorhands in a hot-air balloon. Sealed Media makes DRM – digital rights management – software, which "wraps" files of any sort in an encryption system that controls access to its contents according to rules set by the file's owners. The important thing is that access to the file can be revoked, manually or automatically.

Sounds perfect? Yes, except that, as Dr Lambert points out, users hate jumping through hoops to get at products. If you've been used to putting a CD into your CD player or CD-Rom drive and clicking "Play", you're not going to welcome a system where you put the CD in and punch in a long code that has to be validated before you can listen – and find the CD then won't play in any other machine.

"We figured out a long time ago that DRM is almost impossible to sell, because there's nothing in it that benefits the user," says Dr Lambert. And that leads on to the problems the record industry faces.

"CDs are in effect golden masters of the music, the one you press every other one from, and the technology for ripping is kindergarten," he says. "We did actually flirt with Bertelsmann and Napster last year. Our technology could protect it; users would pay a subscription of, say, £100 a year. Once you stopped your subscription, you wouldn't be able to get access to the music you'd downloaded. But we knew people would just turn to Gnutella and other peer-to-peer networks. The only way for the music industry to stop them is to stop distributing CDs."

That radical step would require a new generation of playing devices with content protection built in. Or one might design a system that would play on a computer, but encrypt the digital data and only decompress it to an audio signal at the PC's sound card. That should work, shouldn't it? No, says Dr Lambert, that's already been hacked: there's a German program that masquerades as a sound card to the rest of the PC, but simply passes the clear digital signal on to be saved as a file. Result, one cracked DRM system. And it only takes one copy to spread around the internet.

"Those are two killer problems in the whole thing, which is why we refused to get involved," he says. "No value to the user; and you can't trust stuff that says it's a device. The other thing is that the record companies want to have it at no cost to themselves. It's a graveyard." Which is why Sealed Media is concentrating on the publishing industry for the moment.

However, the music industry does seem to have won one small battle. It looks like US internet radio stations will have to pay fees. And that could force many to close.

In the US, internet radio is a phenomenon, for two reasons: standard FM stations are playlist-bound and advert-ridden, and more people have net connections. Listeners prefer ad-free music, and so hundreds of non-commercial internet stations have sprung up.

However, the Recording Industry Association of America has persuaded the US government that streaming songs constitutes digital copying, so it is owed fees each time a song goes out. The amount agreed presently is 0.14 cents per listener per song. That might not sound much – but for a one-man operation done for fun, it's far too much, especially as the fees will be retrospective to 1998. Commercial broadcasters will be able to afford it, but not ordinary folk doing it for fun. "We'll be turning over the entire internet radio space to the people who are doing such a wonderful job running [regular] radio," says Bill Goldsmith, who runs the engaging (and popular) Radio Paradise (www.radioparadise.com). "We'll be left with a bunch of carefully crafted corporate sludge."

But internet radio will not die without a fight: the case for webcasters is being made at www.saveinternetradio.org/ and www.save-the-music.org/. The US Copyright Office has to decide by 22 May whether web radio should pay those charges. If it does – well, one can almost hear the sound of coding in the back room. Peer-to-peer web radio, anyone?