This article explains the record industry’s futile attempts to stop piracy of compact discs.

The fact that so-called digital rights management might always be a doomed experiment became painfully clear with the fiasco that erupted after Sony BMG Music Entertainment added a technology known as XCP to more than 50 popular CDs.

After it was discovered that XCP opened gaping security holes in users’ computers – as did the method Sony BMG offered for removing XCP – Sony BMG was forced to recall the discs this week. Some 4.7 million had been made and 2.1 million sold.

Factor in lawsuits that Sony BMG could face and it’s worth wondering whether the costs of XCP and its aftermath might even exceed whatever piracy losses the company would have suffered without it.

That’s not even accounting for the huge public relations backlash that hit Sony BMG, the second- largest music label, half-owned by Sony Corp. and half by Bertelsmann AG.

“I think they’ve set back audio CD protection by years,” said Richard M. Smith, an Internet privacy and security consultant. “Nobody will want to pull a ‘Sony’ now.”

It’s amazing to me that so many smart people don’t seem to get it. Maybe by getting burned this way, they will change their approach and adopt a new attitude towards the digital transfer of music. That said, here’s why they probably won’t.

[From page 32] In this counterfactual world with 30% less file sharing, the lower 75% of the distribution of sales is shifted further to the left, while the top of the distribution increases its sales. This is what should be expected given the estimates from above. Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high.