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Sony BMG makes CD software settlement

Buyers can trade copy-protected discs for new versions

Sony BMG has tentatively settled at least 15 consumer class actions brought against the music company over its use of copy-protection software on CDs.

Under the terms of the settlement, consumers would be able to exchange compact discs that included the copy-protection software for a new, unencumbered copy of the album either on CD or via digital download, plus various other forms of compensation, depending on which kind of software was included on their CD purchases. The settlement agreement has been submitted to a judge in U.S. District Court in Manhattan and is scheduled for review by the court in a hearing early next month.

“We think it’s a good settlement for people who bought the discs,” said Cindy Cohn, legal director of the Electronic Frontier Foundation, which brought three of the lawsuits involved in the tentative settlement.

The settlement covers consumers who bought discs using a copy-protection technology known as XCP — which can leave personal computers vulnerable to viruses and other problems when the CDs are played on them — as well as less-controversial copy-protection software known as MediaMax.

Neither the plaintiffs nor Sony BMG put a definitive dollar value on the settlement, because that will depend on how many consumers participate. Cohn speculated it could be valued at $50 million or more. A lawyer for Sony BMG, Jeffrey Jacobson, said it could be valued at much less.

The controversy over the software erupted nearly two months ago after a computer-security researcher revealed that a Sony BMG CD had installed a “rootkit” on his PC. Rootkits are generally used by hackers to gain control of victims’ computers for various malicious purposes.

Sony BMG, a joint venture of Japan’s Sony Corp. and Bertelsmann of Germany, has said the XCP software was on about 2.9 million CDs that have been sold, including titles by Neil Diamond and Rosanne Cash. The company estimates that around 7 million discs containing the MediaMax software were sold to the public.

The settlement doesn’t cover a lawsuit brought by Texas attorney general Greg Abbott. The office of New York attorney general Eliot Spitzer has said it is looking into the matter, too, although it hasn’t pursued a formal investigation.

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