Burn, Baby, Burn

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Case in point: Linkin Park's Hybrid Theory, the biggest-selling album of 2001. About 4.8 million people bought it, and the same number, it is estimated, got hold of it free — either from a friend or online — and burned it themselves.

The scale of the home-burning business, however, does not by itself prove that sales are being leached away. A report released last month from research giant Jupiter Media Metrix says the picture is more complex: many burners buy more recorded CDs than they used to. After all, if you really love listening to an album, you're going to want the real thing — lyrics, liner notes and all. Chances are it is the so-so albums — the ones from which you want only one or two tracks — that are suffering.

The Big Five labels are taking no chances. They are pressing ahead with the technology they feel is best placed to combat piracy in the short term — copy-protected CDs, which have built-in encryption that is supposed to prevent you from copying the tunes more than a set number of times (usually once, which is the labels' nod to the concept of "fair use" copying in copyright law). "Our goal is a level of protection that will keep honest people honest," says Paul Vidich, an executive vice president of Warner Music (like TIME, part of AOL Time Warner).

The market has been seeded with dozens of copy-protected CDs, often without the consumer's knowledge. Most, like Natalie Imbruglia's White Lilies Island, on Bertelsmann's BMG, were released in Europe, but in the U.S., if you bought a copy of Universal Music's More Fast and Furious, the second volume of the sound track from the movie, or Enter the Life of Suella by an artist named Pretty Willie, then congratulations!--you're a copy-protection guinea pig. Critics of copy protection say its side effects are potentially disastrous: the discs may not work at all in car stereos, portable CD players, some older CD components or Macintosh computers and may cause some computers to crash.

That doesn't seem to worry EMI chairman and CEO Alain Levy, whose Latin America and Asia divisions are testing the technology. "If some kids who try to do 10 copies for their friends get their computers to crash and hate the record companies, well, too bad," he says. Early results from the field indicate that problems from copy-protected discs are rare. Universal Music says it has seeded 2 million copy-protected CDs (mostly outside the U.S.) among the 500 million it distributed last year and has received only about 200 complaints — a percentage roughly comparable to store returns on regular CDs.

On the other hand, independent Music City Records released a copy-protected CD by Charley Pride with no sticker to warn users of possible problems. That led to a lawsuit by a Marin County, Calif., woman who discovered the disc wouldn't work on her PC. Music City settled the case without paying damages and agreed to label copy-protected CDs. More significant, Philips — the company that co-owns patents on the CD and licenses that ubiquitous "CD audio" logo — says it is considering yanking the logo from all copy-protected CDs.

The very idea makes Rosen go ballistic: "It's the height of arrogance for Philips to worry about its patent royalties when we're worrying about the health of the industry," she says. But if an industry giant like Philips distances itself from copy protection, the whole enterprise could be counterproductive. A logoless, warning-labeled CD is not going to look as attractive to customers as its unprotected counterparts. Besides, who wants to run even a slight risk that a disc might not work in all machines? "We're hearing that kids have slowed down their purchases of music CDs because they're not sure which ones will crash their machines," says analyst Rob Enderle of the Giga Information Group. "The fear may exist even if the problem doesn't."

In Silicon Valley, copy protection is seen as folly. Not only do geeks treat code cracking as a contact sport, but the software industry has been trying — and failing — to combat piracy for years. "Copy protection is theoretically impossible," says Marc Andreessen, lead inventor of the Netscape browser and currently chairman of the Web-services firm Loudcloud. "All you need is a piece of software that ignores the restrictions. These things are trivial to break."

When the industry came up with a supposedly secure format called sdmi, it took Princeton computer-science professor Edward Felten only two weeks to crack it. For several months he was prevented from presenting his paper on the subject by a legal challenge under the controversial Digital Millennium Copyright Act. However, the recording industry relented, and he published his paper in August.