CD BLANKS BREAK THE BANK

It used to be that the phrase "burn one" referred to the recreational activities of your average trade-rag editor. These days, burning CDs is more popular than sparking blunts. CD-R sales are expected to hit 1.5 billion this year, thanks to the fact that more than 75% of all computers sold in America now come with built-in CD burners.

Mike Dreese, CEO of Newbury Comics, asserts that the sales growth of CD-Rs is a two-and-a-half-year trend, thanks in part to Napster. "The big change in the last year is that PC companies are using disc burners as a primary selling point for hardware," Dreese adds, noting Apple’s recent "Rip.Mix.Burn." iMac campaign.

Prerecorded CD sales are down so far this year, while blank media sales are growing. Maybe there’s no direct correlation, but a lot of people see one, including Jordan Katz, Senior VP Sales at Arista: "The second-week drop-off for virtually every hit record, regardless of genre—not just rock and hip-hop—is now 40-60%, and the increased traffic from new releases isn’t translating into increased sales for the rest of the market."

BMG President/CEO Pete Jones points to a number of factors: "There are a lot of things that we have to fight all at the same time, but the CD-R situation seems to be the most explosive. It’s hard to know how extensively it cuts into first-week sales or things in the Top 10 or 20, but anecdotally, I get the feeling that some air has been let out of the market."

Labels are starting to fight back. Initial subscribers to both MusicNet and Pressplay won’t be able to burn tracks to CDs. Additionally, several labels have been slipping new technology into discs. One is Macrovision software, which inserts clicks and pops into music files that are copied from a CD onto PCs. Discs with the Macrovision system are not marked, and the company won’t divulge which labels have used the technology.

According to BMG SVP New Media Sami Valkonen, BMG’s system, expected in the fourth quarter and dubbed Digital Access, will include pre-ripped digital music files in a second section of the disc. Like enhanced CDs, the extra tracks will be seamless, launching and uploading the tracks when a consumer first puts the disc in a computer. "To a user, it will be like they just put the CD into the player—they won’t even notice," says Valkonen.

The pre-ripped tracks will be downloadable to portable players. It will be left up to the individual BMG labels to choose which releases will employ Digital Access, though Valkonen says that copy protection of promos is a "no-brainer." EMI VP New Media Ted Cohen recently stated that EMI is looking into a similar solution.

Though some advanced-level users may find ways around anti-piracy measures, the labels hope to discourage the great mass of consumers who burn CDs for their friends because it’s so easy to do. Even the most basic obstacles to wholesale copying could make a difference to the bottom line.