Dan
Take a look at http://www.cdrinfo.com/forum/topic.asp?TOPIC_ID=3D4951
to see for yourself what the manufacturer Fuji has to say about it.
Some quotes from that page:
The "Precautions for handling the CD-R" on the Fujis say:
"DO NOT attach labels or protective sheets to either side of the
disc."
Thank you for contacting Fujifilm, USA. Please allow us to assist you.
If a label is attached to a CD-R disc off-center, it may cause the
disc to spin off-balance. This could cause damage to the disc or,
potentially, the CD player or drive. If you wish to use labels on any
CD-R disc, they must be specifically designed for CD-R or CD-RW discs
and of a type that fully and evenly covers the surface of the disc.
Some water-based markers may contain other compounds that, over time,
can damage the label and reflective layer of a CD. If this were to
occur, it would create errors in the data on the disc. Oil-based
markers do not contain such compounds and will not harm discs over
time.
So it seems the problems with using labels would be related to the
quality/type of label used and the skill of the person applying the
label.
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Regards, Evert
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