By Bernhard Warner, European Internet Correspondent

LONDON (Reuters) - On the streets of Cannes and in the recording studios of Southern California, weary media bosses this week were once again asking themselves how to protect major movie and record releases from piracy.

For the music industry, sophisticated anti-piracy measures, such as the expensive deployment of copy-proof technology for compact discs, have proved a fiasco.

Pirates literally delved into their pockets to foil one of the latest defenses. They found that scribbling over the edge of a copy-proof disc with a magic marker de-activates Sony Music's proprietary technology. And efforts by music labels to clamp down on promotional advanced copies for major recording artists have also been ineffective with highly touted releases -- including those for bad boy rapper Eminem and UK rock band Oasis -- leaking into the market to the consternation of record executives.

Movie studios have not fared any better. For years, inferior quality bootleg VHS and, more recently, DVD copies have been peddled on street corners of major cities around the globe within days, or even hours, of a box office debut.

With the rise of online file-sharing sites like Morpheus MusicCity and LimeWire, the gap has closed. Fans can download major releases from the Internet before they hit the streets, as happened with this month's blockbuster "Star Wars Episode II: Attack of the Clones."

"If this is going to happen as it happened with Eminem, it will have implications for everyone because of the scale and speed of it. The Internet facilitates piracy on a scale not yet seen before," a label official lamented.

RE-ASSESSING RELEASE STRATEGY

Piracy is nothing new for the entertainment industry. But with the uptake of high-speed Internet connections, the stakes have been raised. In the wrong hands, a new movie or album can now be distributed to untold numbers in a blink.

Music executives, for example, are scratching their heads as to how to limit the impact of piracy for a major release, which, if pervasive, could hurt the crucial initial sales period. The formula around major album releases has changed little over the past few decades. Labels give preview copies to the media to generate buzz while retailers get advanced shipments to fill their shelves in time for the launch date.

Labels are increasingly viewing these outlets as potential leaks though, realizing that just one copy of an album in the wrong hands could torpedo an entire record launch. One music executive suggested artists may start recording by themselves or with a few trusted producers to protect their work from Net pirates.

"Culturally, it's become acceptable to download music and I fear the same thing will happen to movies," Rick Sands, chairman of world-wide distribution for Disney-owned Miramax Film Corp., told Reuters.

SLIM SHADY PIRATES

The problem came to the fore this week when Interscope Records, a division of French media conglomerate Vivendi Universal, made an unprecedented move.

It pushed up by a week the release of The Eminem Show, expected to be a top-seller this year, citing "an unprecedented level of Internet piracy" and "illegal bootlegging."

Universal officials said inferior quality bootlegs were spotted on the streets of New York. And the whole album is freely available on Morpheus and LimeWire, along with bogus tracks from the album that loop continuously. "In today's digital universe, where piracy and bootlegging are occurring in every city in the world, we had no choice but to respond to an enormously frustrating problem," Steve Berman, Interscope's head of sales and marketing, said in a statement explaining the new May 28 release date for Eminem.

THE DIGITAL DIVIDE

Movie studios face a similar challenge, particularly as the industry migrates to digital film-making. The benefits are numerous, including the ability to add details after the film has been shot.

Movies in digital format can also be shipped to theaters around the world with relative ease, in the same way as a large computer file is sent over an Internet connection.

But that distribution freedom is also seen as a huge gamble given the ability of pirates to intercept and circulate digital files.

In many cases, the movie industry will stick with its policy of staggering movie releases to allow for the stars to visit the city and schmooze with the media first, Sands said.

But piracy has forced the hand of studio executives in some markets, he added. "You really do have to go out early in parts of Asia because of piracy," Sands said, noting that persistent problem spots continue to be China and the Philippines.