LOS ANGELES - Recording companies are cautiously eyeing a new generation of smart CDs that promise to stifle music fans' ability to use file-swapping networks while still allowing them some freedom to make copies and share music.
Recent advancements in copy-protection technology have made such a strategy more palatable to music companies reluctant to make any drastic changes to the 20-year-old CD format, particularly in the United States.
Next week, BMG Entertainment's new album by hip-hop singer Anthony Hamilton will be the first commercial release to use a technology that restricts copying yet lets buyers play protected CDs on computers and burn copies onto blank CDs. Fans can even send copies to friends on the Internet.
The music industry blames a three-year decline in CD sales on burners and peer-to-peer file-swapping networks such as Kazaa. The new technology could complement the recording companies' legal efforts against file-swapping networks and their users.
So far, the top five recording companies, concerned about the technology's effectiveness and a backlash from fans, have largely released copy-protected CDs commercially only outside the United States.
Early copy-proofing efforts prompted complaints that in some cases users could no longer play legally bought CDs on computers, a way of listening the companies now recognize that many fans have come to prefer.
BMG is seizing on the new copy-protection advancements by embedding Comin' From Where I'm From with MediaMax CD-3 technology from SunnComm Technologies Inc. of Phoenix.
With MediaMax CD-3, each song is written onto the CD twice - once in a format readable by standard CD players and the other as a Windows media file playable on a computer. BMG has set up the CD so fans can burn each track three times per computer. Songs can also be e-mailed to a limited number of people, who can then listen to the song up to 10 times apiece.
SunnComm says that most people, unless they are hackers or truly determined, won't be able to circumvent the limits, including one that keeps songs locked so they can't be played even if they circulate over file-sharing networks.
Peter Jacobs, SunnComm's chief executive, considered his technology a moderate alternative to suing fans, as the industry did this month with nearly 300 federal lawsuits against users of file-sharing networks.
BMG, which signed a one-year deal with SunnComm in June, was still evaluating future releases with copy protection.
"We are quite hopeful that the technology that they've developed is a step in the right direction and is a step which we will hopefully start using more extensively commercially," said Thomas Heffe, chief strategy officer for BMG in New York.
Meanwhile, SunnComm rival Macrovision Inc., of Santa Clara, Calif., has developed technology that also allows CD burning and listening on computers. The CDS-300, however, blocks other attempts to make copies or share music online.
Several labels have collectively shipped in overseas markets more than 150-million CDs with an earlier version of Macrovision's copy protection system, said Adam Sexton, a Macrovision spokesman.
Macrovision is talking with several major labels about using the new technology in the United States.
"We want to be comfortable with a technology that does allow for some personal use and does respect the work and the copyright," EMI spokeswoman Jeanne Meyer said.
Privately, some recording industry executives say they don't think the latest copy-protection technology is good enough and could be easily thwarted. One past effort faltered when someone defeated it simply by blotting out part of the CD with a marker.
Technology that respects fans' desire to copy, share and hear songs in different ways is good in principle, but consumers' legal rights could be curbed by limits on copies permitted, said Cindy Cohn, legal director of the Electronic Frontier Foundation.
"There is a conceptual problem with that approach," Cohn said. "It is inconsistent with how fair use has always been applied."
For now, recording labels will watch for fans' reaction.
"What if they put copy protection in the disc and it doesn't ... reverse the decline of CD sales?" asked Phil Leigh, of Inside Digital Media, a Tampa company. "If it doesn't help it's likely to hurt by just annoying people."
Who uses copy-protected CDs
Use of copy-protected CDs by the five major recording labels:
BMG ENTERTAINMENT: Releasing Comin' From Where I'm From, by hip-hop singer Anthony Hamilton, with technology that lets buyers play protected CDs on computers, burn copies onto blank CDs and share songs over the Internet on a limited basis. Evaluating future releases.
UNIVERSAL MUSIC GROUP: Released four albums last year in the United States on copy-protected CDs, compared with about 6.5-million copies of dozens of albums in Europe.
WARNER MUSIC GROUP: Equipped a handful of releases in Europe and Japan with copy protection. No plans to release any in the United States.
EMI: Began releasing CDs with an older version of Macrovision's system about 18 months ago. Now uses some form of CD protection for all commercial releases outside the United Kingdom and the United States.