Digital Rights Management:
The Current Situation
The problem of digital-goods piracy is real. In some parts of the world, for example, less than 10% of software is legitimately purchased. So, almost all content owners are using technology designed to prevent piracy.
Most of this technology is not really DRM - it's just Copy Protection in one form or another. Consumers don't like copy protection. Further, most copy protection schemes have either been cracked or are vulnerable to future cracks. Uncrackable copy protection is probably not possible - and certainly not accepted - in mass-market scenarios - especially if the content is renderable on Internet-connected PCs.
As is argued elsewhere on this site, the fact that a copy-protection or DRM system may be "crackable" is not necessarily a huge problem. However, some content owners have not come around to this view and are still devoting much of their in-line content efforts to eliminating cracks altogether.
One approach to eliminating cracking is "trade secret security": the closed-box, Consumer Electronics approach. This approach is typified by modern video gaming consoles, the latest audio formats such as Super Audio CD, DVD video (with its CSS encryption) and Conditional Access in satellite TV systems. A special case of interest is the attempt to retroactively apply copy protection to the long-established Red Book audio CD format.
The reality is that even secret, closed-box content protection schemes are usually cracked. And the instrument of choice for the cracking is usually the Personal Computer, even if the content in question was never intended to be on PCs.
In the PC arena, tactics considered in the late 1990s were streaming and thin clients. With these technologies, the content was supposedly never really present on the users PC - and you can't steal what you don't have. However it turned out that both technologies had huge practical problems and they never caught on except for small niches.
Because of these difficulties in protecting content technically, some content owners - notably Hollywood movie and record labels - are advancing a three-pronged legal attack on piracy. The first prong is simply to sue or otherwise use existing laws to intimidate companies or individuals they feel are engaging in, or supporting, piracy. The second is to pass more restrictive laws, such as the DMCA, so that, for example, the mere act of attempting to crack content becomes illegal. The third is to get new anti-copy hardware and software technology effectively "legislated in" to PCs and Consumer Electronics. All of these tactics are the subject of considerable debate and opposition. Only the movie industry, as embodied in the MPAA, is still publicly advocating legislated-in technology. Who will prevail in Washington is unclear, but public sympathy for the agendas of the large content owners is very limited, and it's fairly clear that technology companies understand that Hollywood, while a powerful force, is not their ultimate master.
Some content owners, notably PC Game Manufacturers and ebook publishers, have been successfully selling online with DRM for years, and even online music has had attractive on-lne stores for some time. The best of the DRM systems they use emphasize marketing, ease of access, secondary distribution, spontaneous try-and-buy, subscription models, and so forth. They still restrict, in some sense, what can be done with the content - but they have enough offsetting advantages that consumers still find them attractive. These systems are mostly crackable too.. but they still work, both technically and commercially !
There are other non-technical limiting factors, such as the demographic pressure for piracy. For instance, content which appeals to 14 year old males (who have great technical knowledge and powerful Net-connected PCs but low disposable income and no credit cards), is a lot more likely to be pirated than content targeting, say, middle-aged professionals.
The technical "art of the possible" is important as well. Content is either active executable software, such as a computer game, or passive media such as MP3 using a Player/Asset model. Since everyone already has a media player (such as Windows Media Player) on their PC, it is very difficult for a DRM vendor to succeed with a media solution that demands a different player. For this reason most media DRM companies are forced to "choose sides" (e.g. WMP, Real, QuickTime) and work within one player framework. This lowers technology risk, but also makes market differentiation harder.
Regarding security, it turns out that executables can be protected more robustly than media assets.
As for DRM Technology Vendors, they are caught between the copy-protection priority of content owners and the convenience/value priority of consumers. Of the independent DRM vendors who have gone out of business , some did so by building the technology content owners asked them for, only to find that consumers didn't accept it.
Clearly this is a transitional situation. DRM-enabled music, software and ebooks - at least, the instances deployed with sensible business propositions - are generating revenue now, and can reasonably anticipate strong growth. The software DRM technologies from companies such as Trymedia are both robust and user friendly, and Apple's iTunes, launched May 2003, displays a careful balance between content protection and consumer convenience, as has been extremely successful so far.
For now, Web sites with DRM-enabled content targeting PCs are in open competition. Some of them are good and some of them aren't. Most of them don't need Big Brother in your PC to run. As consumers, we should try them once in a while, reward the good ones by doing business with them, and stay away from the bad ones.
It's called free enterprise... let's help it work ;-).