DRM Confusion Delays Digital Future
By Jon Iverson June 20, 2005 — Forget SACD vs DVD-Audio or even DualDisc. DRM, or digital rights management, has become the biggest audio format issue this year, and will likely continue to be for the next several years. At stake is the future of all consumer interactions with, and uses of, copyrighted digital media.

The folks who control content (record labels, movie studios) continue to struggle with hardware and technology companies (Intel, Microsoft, Sony, Apple, etc) over which form of DRM must be included in next-generation products before content will be licensed for new services.

For now, consumers are faced with several incompatible DRM software standards. For example, the DRM that controls a song purchased from Napster is incompatible with the millions of Apple iPods running around. The DRM that comes with each iTunes download purchase is incompatible with portable devices other than the iPod—and also restricts how you can use those files on your computer.

These DRM restrictions are included with a "wrapper" that comes with each download, and are enabled by the playback software used by the computer or standalone player. This software approach makes it relatively easy for hackers to find ways to strip the DRM from protected files and then use those files wherever or however they please.

As a result, content companies (much to the dismay of consumer rights advocates) are increasingly demanding that DRM be implemented directly in hardware at the chip and circuit board level of new products. There's only one problem: Nobody can yet agree on what that DRM standard should be, and building multiple and incompatible standards into hardware would be a disaster for the long-term success of the market.

A recent study from Strategy Analytics called "Connected Home Rollouts Await Direction From Content Owners" notes that "The market's true potential will not be fully realized until inter-device content sharing is fully supported by major content rights holders such as Disney, Fox, Sony, and Warner. While these companies are warming to the connected device concept, and concur with many of its potential benefits, they remain undecided and disunited on critical business model issues.

"Technology developers and providers hoping to generate revenues from the connected home market should now work on persuading content providers to agree on a common framework of device interoperability requirements in order that key technology standards and compatibility issues can be resolved and the market allowed to reach its true potential."

Easier said than done. The report's author, David Mercer, also says that while consumers increasingly want to share media between different digital devices, "incompatible DRM solutions mean that they cannot know whether a particular piece of music or video content will play on a particular device. The process of establishing widely accepted interoperable and open standards is likely to prove lengthy and arduous. Apple's iTunes/iPod model demonstrates that proprietary and incompatible solutions can be successful, in the short term at least."

But in the long run, multiple and incompatible DRM standards will mean that the digital media future will remain, well, in the future. "Wider adoption of media-sharing devices will be delayed as long as content owners disagree between themselves on how they wish to benefit from DRM technologies. Technology providers, in turn, cannot develop a horizontal market for connected devices until major content providers have agreed on a common framework of DRM interoperability."