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Labels' Online Hope: New Enhanced CDs

In a new strategy for fighting piracy, music firms offer songs, contests and other Web extras that can be accessed only with the discs. But will consumers buy?

November 17, 2002|Jon Healey | Times Staff Writer

Recording artists may moan about consumers grabbing free music off the Internet and burning their own CDs, but that's exactly what punk band Sum 41 is inviting fans to do.

Before downloading the free live recordings, though, fans will need to buy something: the band's new CD, "Does This Look Infected?" It's their plastic pass to the virtual concert hall.

The forthcoming release from Sum 41 typifies what a growing number of bands and record labels are doing to combat piracy on the Net. To persuade consumers to buy the CD instead of downloading free unauthorized copies online, they're offering an assortment of songs, contests and other goodies that can be obtained only with the disc.

This new generation of enhanced CDs tries to tap consumers' enthusiasm for playing music on their computers, rather than trying to squelch it like some of the labels' anti-piracy efforts. Enhanced CDs also aim to help labels and artists establish a direct, continuing connection with fans. It's a bit like the extra features on a DVD movie, but the bonuses are stored online where they can be updated and personalized.

Some enhanced CDs can even track which songs from the album consumers are playing and give companies instant feedback on where the CD is selling. This kind of monitoring may unnerve some consumers, but the companies involved insist that there's no threat to privacy.

When it comes to fighting piracy, the technology has some notable shortcomings. With a few exceptions, consumers with homemade or pirated copies of the original disc can still obtain the online bonuses. And in most cases, the extras are appealing only to the band's biggest fans -- the ones most likely to buy the CD anyway.

So far, the public's response to enhanced CDs has been lukewarm at best. Industry executives say that only 5% to 10% of people who buy the average enhanced CD use the special features.

Analyst Phil Leigh at Raymond James & Associates, an investment bank, said the main thing consumers want is a disc full of songs they like. If an enhanced CD "still has only three tracks out of 12 they want," Leigh said, the online extras aren't going to be enough.

Despite all this, enhanced CDs are gaining momentum across the music industry. Artists releasing enhanced CDs this fall include such leading names as Santana -- whose enhanced CD "Shaman" debuted at the top of the Billboard charts -- Bon Jovi, Tori Amos and Jennifer Lopez.

"If we can enhance, we will," said Jordan Katz, senior vice president of sales at Arista Records, a subsidiary of Bertelsmann-owned BMG. "You will see a lot of our artists with enhanced CDs."

Several label executives said enhanced CDs aren't just about fighting piracy; they also provide an outlet for more of an artist's material. And the extras they provide aren't the only ones the labels are stuffing into CD packages. For example, rapper Eminem included a bonus DVD in the first 2 million copies of his latest album.

A recent informal poll by Billboard magazine's Web site suggests that Internet-savvy music fans may be warming to enhanced CDs. Nearly 60% of the 5,000 Web surfers who took part in the poll responded favorably to the extra features, while the rest said the bonuses played no role in their decision whether to buy a disc, reported.

Enhanced CDs have been on the market at least since the mid-1990s, but the technology has changed significantly over the years. The early versions offered text and graphics that were pressed onto the disc and couldn't be updated. Some also included a link to a special Web site, but those sites were accessible to anyone who knew their Web addresses, not just those who bought the CD.

The latest versions are more sophisticated. Rather than having bonus features on the disc, as DVD movies do, the latest enhanced CDs typically include only the electronic keys needed to gain access to extra benefits online. Another approach is to include a customized Web browser and online chat software that launches automatically when the disc is played on an Net-connected computer.

Island Def Jam Music Group, a subsidiary of Vivendi Universal, goes one step further on the latest Bon Jovi and Sum 41 releases. Users not only must possess the disc, they also must enter a unique code from the CD package to get the extras.

To executives at Sony Corp., which has been issuing enhanced CDs since 1995, the most important difference is that most music fans now have computers and Internet connections.


Making Old New Again

In the old days, the limited initial audience made it harder to persuade artists and label executives to make online extras part of the marketing plan, said Fred Ehrlich, president of new technology and business development at Sony Music Entertainment. "Now, in label meetings, the marketing people, the people who are creating the music and the video, they're looking at how their creations could be used" to enhance CDs, he said.

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