CD Venture Hits a Sour Note With Execs : Music: Miffed at being excluded, record companies declare their opposition to an IBM-Blockbuster plan to create compact discs on demand.

Three major music companies--concerned about such issues as licensing, piracy and quality control--will oppose a plan by IBM and Blockbuster Entertainment to develop a system for in-store, instant duplication of compact discs.

MCA Music, Warner Music and Sony Music all separately declared opposition to the venture, which was announced Tuesday by IBM and Blockbuster. “We will unequivocally not support this system,” MCA Music Entertainment Group Chairman Al Teller said.

Warner Music Group issued a statement saying the proposal “does not have the support of the Warner Music Group,” and that Warner “questions whether the proposed system would benefit music consumers in any material way.” Sony’s comments were similar.

The system would use digital technology to produce CDs in minutes from information stored in a database.

But music executives are clearly miffed that they were not briefed on the venture before the splashy public announcement this week. Only top officials of Polygram--controlled by the Dutch electronics giant Philips, which also is an investor in Florida-based Blockbuster--confirmed that they had been filled in on it.

And even Polygram officials were reserving judgment.

“The IBM announcement was premature, without the support and cooperation of the music industry,” said Jim Caparro, president of Polygram Group Distribution. “Without that, they have nothing.”

Music industry cooperation is critical because any successful system will need permission from record companies to reproduce their copyrighted works.

Music companies often license older music out of their catalogues, but usually are loath to grant rights to music by their current hot-selling artists, preferring to retain tight control for financial and creative reasons.

Although music executives such as Teller believe that digital delivery of CDs to stores will occur eventually--and will benefit the industry by making music more easily available to consumers--they insist on being part of the development. They also insist that any system be available to all retailers.

David Lundeen, who heads the new venture, called NewLeaf Entertainment Corp., downplayed the dispute, saying music executives need more information about IBM and Blockbuster’s plans. According to Lundeen, the system would be available to all retailers and would offer protection against piracy.

Some believe that the executives may eventually support the project if their concerns are addressed.

“The fact of the matter is technology is here and coming at us in waves,” said Al Cafaro, chief executive of A&M; Records. “Things like this are going to have to be dealt with and experimented with to see if they can work.”