CD-DVD combo has glitches -- and converts

(Correction: Because of incorrect information from the state Department of Revenue, the Consumer Beat column in Sunday's Business & Money section misstated the tax rate for interest earned at Massachusetts banks. Although interest earned at Massachusetts banks used to be taxed at a lower rate than interest earned at out-of-state banks, since 1999 all bank interest is taxed at the same rate of 5.3 percent, although the first $100 of Massachusetts bank interest is exempt ($200 for married couples filing jointly).)

DualDisc, the hot-selling new music product that combines a CD and a DVD on one disc, carries some ominous fine print.

On each DualDisc package comes the disclaimer that the audio side of the disc does not conform to CD specifications and may not play on all DVD and CD players.

Even more troubling are the disclaimers from the manufacturers of CD and DVD playback devices. Most warn that DualDiscs may not play on their equipment, particularly slot-in devices where you insert a disc and the machine grabs and pulls it in. Some warn that the DualDiscs could get stuck or scratched. JVC and Onkyo flatly tell their customers not to use DualDisc products until further testing can be done.

Yet consumers appear to be ignoring the dire warnings and to date have reported relatively few problems to retailers and DualDisc manufacturers. Music industry officials say more than 2 million DualDiscs have already been purchased, and predict sales will accelerate in the wake of successful DualDisc-only releases by such big-name artists as Bruce Springsteen and Rob Thomas.

''We've seen almost no problems at all. It's an infinitesimally small number of complaints compared to the million discs we've sold," said Thomas Hesse, president of global digital business for Sony BMG Music Entertainment, which makes and distributes DualDiscs.

As for all the warnings about playback problems, including those from his own corporate parent, Sony, Hesse said: ''It's a red herring in my mind."

Top officials at music retailers like Newbury Comics and Trans World Entertainment, which operates more than 800 stores under the Strawberries, Coconuts, and FYE names, said DualDiscs have been strong sellers and generated few complaints.

''We have not received a single complaint at our corporate offices," said Fred Fox, executive vice president of merchandising and marketing for Trans World. ''It's clearly not a significant issue," adds Mike Dreese, co-owner of Newbury Comics.

The music industry desperately wants everything to go smoothly with DualDiscs. Many in the industry believe DualDiscs will eventually replace CDs and coax music buyers back into stores by offering them more value for their money.

For roughly the same price as a CD ($12.88 last week at Newbury Comics on Newbury Street and $14.99 to $15.99 at the Virgin Megastore down the street), a DualDisc offers far more content and greater flexibility for users.

The content of the audio side of the DualDisc is identical to a CD. Flip the DualDisc over and you have a DVD. The content of the DVD side is still evolving, but it typically features the same album mixed in surround sound so it can be played through home theater systems, interviews with the artist, and studio footage. Some DualDiscs offer extra features if played through a computer.

To make sure the DualDisc met DVD specifications, manufacturers had to make the CD side slightly thinner than a standard CD. Because of the difference, Paul Bishow, vice president of marketing for Universal Music Group, said the lasers inside some CD and DVD-ROM drivers may not be able to read the data.

The two-sided DualDiscs are also near the maximum thickness allowed for a DVD, which can cause problems when used in a slot-in playback device. Manufacturers say the loading mechanism on slot-in machines may scratch the DVD side of the disc as it is pulled in.

Reports of actual problems have been few. There have been scattered postings on websites about playback problems and a very small industry survey last year of 145 users found 6 percent were not satisfied, in part because of playback problems.

Tina Wright of Quincy said she has had a lot of problems playing her Rob Thomas DualDisc on her home and car CD players and her computer. She said it often takes three to five tries before the disc plays. ''Technology is great, but not when you can't enjoy your new purchases," she said. ''It makes me not want to purchase another DualDisc."

A colleague here at the Globe said he couldn't play the new Ben Folds DualDisc ''Songs for Silverman" on his six-year-old Denon CD player, but could play it on his 10-year-old Sony boombox and his Honda Civic CD player.

With one small glitch, I had no problem playing six different DualDiscs on my TEAC CD player, my GPX portable CD player, my Toyota car CD player, and my Toshiba DVD player. The one glitch was that it took four tries to get Rob Thomas's ''Something to Be" to play in my portable CD player.

Equipment manufacturers for now are advising caution. ''Even though it seems that there have been few customer complaints, the DualDisc does not comply with the Compact Disc Digital Audio specification," said Terry Shea, a spokesman for JVC. ''We feel compelled to advise consumers that there's the possibility that these discs will not play in their JVC players."

Amy Friend, a spokeswoman for Pioneer, said her company hasn't heard many complaints from customers but felt the firm's website warning was still warranted.

''We want to make sure they know, so it's not a surprise to them if they have a problem with it," she said.

Hesse at Sony BMG Music Entertainment scoffs at the disclaimers on manufacturer websites. ''That's what the lawyers advised them to do. There's a lot of disclaimers on a lot of products these days," he said.

Hesse said customer unfamiliarity with the DualDisc has caused the most complaints about the product. ''A lot of people forget they've got to flip the disc," he said. ''They don't play it on the CD side in the CD player and the DVD side in the DVD player."

Countrywide is Mass. bank

Last week's column about the CD and money market rates at Countrywide Bank left one question unanswered: Does Countrywide qualify as a Massachusetts bank for state income tax purposes?

Dan Andon of Boxford was one of several readers who said he suspected the Virginia-based bank might not qualify, so any interest earned on accounts with it would be taxed at the out-of-state rate of 12 percent instead of the in-state rate of 5.3 percent.

''That would certainly lessen Countrywide's appeal," he said.

Tim Connolly, a spokesman for the state Revenue Department, said Countrywide would be considered a Massachusetts bank for tax purposes because its financial centers give it a physical presence in this state. He said strict Internet banks with no physical presence here and a headquarters elsewhere would not qualify.

Bruce Mohl can be reached at mohl@globe.com.