Sony Attempts New Copy-Protection Strategy

Electronics and music giant Sony (NYSE: SNE) is rolling out a new CD copy-protection technology that will let the company sell music on multiformat CDs with additional content that can be accessed through PCs.

The company said that in response to the digital piracy caused by copying or "ripping" CDs into digital form for Internet redistribution, it is introducing the new copy-protection approach with a release in Germany that will be followed by wider use of the technology elsewhere around the world.

Analysts said the extra content incentives offered through the copy-protected CDs could help Sony advance the new format, but they noted that Sony might be making a mistake by limiting where the extra content on these CDs can be played. Initially, it will be limited to Sony players alone.

"It's using assets of one [part of the company] to help in another area," Gartner (NYSE: IT) research director Mike McGuire told TechNewsWorld. "It's going to be very hard to overcome -- no matter how much cool stuff they're offering -- the reality of the fact that they're locking content to a portable device."

Protection Through Pluses

Sony cited digital piracy along with consumer desire to listen to music on computers as reasons for its "copy-protected albums."

A Sony representative told TechNewsWorld that the CDs, first released in Germany this week, will in fact be playable on nearly all CD players but cannot be ripped on a computer into an unprotected format, such as MP3, which many digital players use.

However, those who buy the CDs can still copy the CDs on a computer and then play the extra content from those copied CDs on Sony portable players -- which means the company is protecting only against one layer of piracy.

The new discs, labeled as having the new copy-protection software that is built into the CD, also will have an accompanying key to special bonuses, such as pictures, bonus songs and access to Web sites and concert tickets, Sony said.

The Good, the Bad and the DRM

Yankee Group senior analyst Mike Goodman -- who said current digital rights management (DRM) technology provides for both consumer flexibility and seller security -- told TechNewsWorld that the offer of bonus content does not outweigh the limitations associated with Sony's new technology.

"I think the negatives -- the inability to rip songs, remix and have a choice of players -- outweigh the positives," Goodman said. "There are much more powerful incentives than having some artwork, music liners or even videos."

Gartner's McGuire said the bonus features of Sony's approach might add value in consumers' minds, but he added that Sony faces a challenge because of the linkage between content and device.

"I think they may be pushing a couple of the wrong buttons," he said. "Copy protection is one thing; DRM is not a bad thing as long as it doesn't interfere. Linking the content with the same manufacturer's device is going to mean some very serious issues."

Format Frustration

Goodman said the proprietary format for portable players is indicative of a trend among the various download services vying for licensed song and album sales online. Although the Windows Media Audio (WMA) format is emerging as the de facto standard among many of the services and devices, there is still frustration from users who want compatibility.

"Ultimately, there's going to have to be standardization," Goodman said. "Groups that can do that will have a leg up on other players."

He said that although Apple (Nasdaq: AAPL) has achieved success with a proprietary format on its iTunes Music Store and corresponding iPod player, the proprietary approach will not stand the test of time.

"Clearly, Apple got early traction," he said. "The question is whether they can remain where they are in the long run with a proprietary format."