Copy-Protected CDs a Nightmare for BMG Germany

Blaming a falloff in CD sales on the popularity of CD burners, BMG Germany recently issued approximately 100,000 copy-protected discs in an attempt to thwart the problem—and had to take a substantial portion of them back because consumers said the discs wouldn't perform in car players and in some home audio systems.

The discs were put out for sale in German music stores the last week of January, and about 4% of them bounced back almost immediately, with complaints from customers. "The consumers started getting back saying it doesn't play on car CD players and several types of normal players," said BMG Germany's head of new media Matthias Immel. "We were really shocked."

The Cactus Data Shield copy-protection technology from Israeli software company Midbar was intended to prevent computer users from making copies on CD burners—inexpensive devices that can be easily installed in most computers, and which can "write" an entire CD's worth of music in about 15 minutes for less than the cost of a cassette tape. The copy-protected discs were tested on approximately 1000 different players before being approved for shipment, according to BMG executives. The discs were limited to the German market and consisted of two new rock releases, one by the Finnish group Him, currently at the top of the German pop charts.

When customers started complaining, BMG released non-protected versions of the titles instead. "We wouldn't have done it if it had been clear to us that we would have problems," Immel said. "We don't want consumers to be upset."

The International Federation of the Phonographic Industry claims that a worldwide decline of 9.8% in music sales occurred in the first six months of 1999, compared to the same period in 1998. Both BMG and Midbar plan to try again with an improved copy-protection scheme.