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Digital Watermarks Track Illegal Files

The Hollywood Reporter- First, the major label groups attempted to thwart online music piracy by going after such file-swapping companies as Napster and Scour. Now, they've turned their attention to what they believe is one source for leaking their products — journalists.

Universal Music Group's Universal Records and Warner Music Group's Reprise Records are experimenting with digital watermarking technology to track pre-release albums sent months before their commercial street dates to thousands of music journalists and radio stations for review purposes.

Through watermarking, codes embedded in album tracks correlate to a number the label has assigned a CD. If the recipient of that CD converts the tracks into MP3 files and posts them on the Web, the watermark allows label watchdogs to ascertain the origin of the illegal file.

Additionally, Universal and Reprise have begun to stamp journalists' names on selected pre-releases. A code embedded in Universal CDs corresponds to the recipient's name. This method was used recently for the pre-release of the label's Godsmack album "Awake," which was sent to journalists with their name stamped on the CD and a blunt letter of explanation.

"Unfortunately, we have been forced to take this action due to the fact that some of our advance promotional product is at times being used in an unauthorized manner, such as being encoded into MP3 format and made available for downloads via the Internet," the letter says. The letter, on UMG letterhead, warns that if the recipient uses the album in an "unauthorized manner," the label will use the watermark "to match the misappropriated sound records to the record they were originally embodied on, identify the recipient of that particular record and take the appropriate action."

"The problem is the lead time on these has to be long, especially for monthlies, and we were finding the first source of online trading of the albums coming off of these review copies," said Larry Kenswil, president of UMG's eLabs technology division. "So we started looking at what can we do to help people realize this is not a good thing. ... Watermarking presented itself as one way."

Now in a trial period, UMG has watermarked albums from such high-profile groups as Godsmack, 3 Doors Down, Boyz II Men and 98¼.

Advance copies of Reprise's Green Day CD "Warning" had journalists' names stamped on them, but Reprise's watermarking is in an earlier trial phase than the UMG initiative and cannot trace MP3 files to a specific journalist. The watermark number correlates only to the label department — promotions, corporate, radio or A&R — to which the advance copy was issued, a WMG spokesman said.

Although UMG's letter says the label group will take "appropriate action," Kenswil said no penalties have been set. In fact, the Godsmack album was available for download on Napster well before its commercial release date.

"If the (album) shows up on Napster, it's easy to detect the number, and we just might give a call to the person and say, 'Your copy got on Napster. How did that happen?'" Kenswil said. "It's not necessarily that the person is doing it themselves, but if they review it, they might give it to a friend or sell it to a used-CD store."

Journalists have been known to make as much as $10,000 a year in cash by selling product labeled clearly as promotional to retail outlets, said one music writer who requested anonymity. Record stores that accept the CDs illegally are turning a healthy profit.

As for the other majors, BMG Entertainment and Sony Music said they are exploring watermarking as an anti-piracy option. EMI said it has no watermarking plans for pre-releases.

It is likely that the type of watermarking used by Universal and Reprise will become systematic when applied to all music products per specifications of the Secure Digital Music Initiative. Under SDMI, all CDs will be watermarked and playable only in music players programmed to verify the watermark.

"Journalists who receive review copies of music or books or software should be using that material for journalistic purposes," said Robert Steele, director of ethics at the Poynter Institute. "They should not be using it in a fashion for profit-making, nor should they be in some way passing it on to other individuals for their personal use.

"I can understand the concern over journalists who are selling material legitimately, but the reality is these companies are doing their best to use journalism to promote their own commercial products — that's part of the equation. ... The record companies are not without a stake in the promotional process."

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