The world’s second largest record company has recalled compact discs with hidden XCP copyright-protection software.

Sony BMG Music Entertainment is the second largest record company in the world, so obviously they are concerned about copyright infringement. Sony BMG Chief Executive Officer Andrew Lack has championed copyright protection software for years, complaining about the way consumers are able to freely download from the Internet music that they should have to buy on CDs. So Sony BMG, a joint venture created by Sony Corporation and Bertelsmann AG, decided to do something about copyright infringement without telling consumers what they were up to.

Last year Sony BMG produced just under 5 million special music CDs of about 50 different artists, and sold just over 2 million of them. These special CDs didn’t just contain music; they also included a little something extra—XCP copyright protection software. XCP was designed to prevent illegal duplication of music by limiting the number of copies that could be made after a CD is installed on a personal computer. A U.K. technology business, First4Internet Ltd., provided the XCP software to Sony BMG. The company says they didn’t intend any harm; they only wanted to protect their copyright by preventing consumers from being able to copy discs.

Unfortunately, once XCP software is installed on a computer, it can enable the monitoring of any type of user activity and make the machine vulnerable to viruses and other attacks. Although adding XCP software to the discs wasn't intended to harm customer's computers or to enable monitoring of customer activities, when Sony BMG began receiving complaints they decided to recall the discs. The recall comes at a bad time for the record company, since this is the strongest sales period of the year. But the company had no choice if it is to hold its #2 position among record companies.

Leigh, an analyst at Digital Media In., in Tampa, FL, said, "It’s a big mistake. They shouldn’t have done it. They were so concerned about piracy that they were not careful about how they would control it. They shot themselves in the foot." Music fans who buy CDs often install them on their computer in order to transfer them to iPods or other digital music players. Leigh believes that it’s wrong for a company to insert hidden technology that prevents buyers from doing that freely. "The continued chasing of copyright protection is like chasing a white whale," Leigh said. "It’s an obsession that destroys the people obsessed by it." The only other music company to sell discs with copyright protection is London-based EMI Group Plc. EMI has sold more than 175 million content-protected discs containing copyright protection software from Microvision Corp. But the two other major music companies, Universal Music Group and Warner Music Group, don’t sell discs with content protection.

Of the 50 titles being recalled by Sony BMG, 24 are new releases and the rest are from the company’s catalog. On its website, the company said customers can exchange any disc with the copyright protection software for a replacement copy without it. In a statement, spokesman John McKay said, "We deeply regret any inconvenience this may cause our customers." Leigh estimates that the recall will cost the company about $10 million. McKay declined to comment on the cost.