Wall Street Journal reported that

When options began to include Internet and general purpose computers, the music industry found themselves in scary territory: they lost control of the channel of distribution. They panicked. They tried to learn the technologies, but lacked the foundation to understand. They stumbled upon DRM (Digital Right Management) and thought, "Eureka." They yet learned the rules of secrecty, that DRM is based.

Secrecy is always a compromise. Choose, at best, two of: time, population, and value. You cannot keep a secret for long time, have it held by many people, and for it to be very valuable. History proves, over and over again, that someone, somehow, would either leak the secret or crack the protection.

The media industry has tried the impossibility for decades; they failed every time. Decades ago, the cable TV industry scrambled the contents and gave only paying customers the unscrambling device — the secret. An industry spawned up to extract it and made a fortune. They still are.

The record industry lamented, too late, that audio CDs have no copy protection scheme. Probably only less than a quarter of the music young people listen to are legitimate, by the definition of the RIAA (Recording Industry Association of America). To recouperate their losses, RIAA sued young people for illegally downloading music. With a scheme that epitomizes mean legal maneuvers, they acquired their targets and sent nasty letters to thousands of youngsters demanding about US$4,000 each. (RIAA claims each illegal download cost them 1000 CD sales.) Most of those kids complied; they could not afford the legal proceedings. They probably would also hate the record companies for the rest of their lives.

The movie industry meagerly protected DVDs with the deficient CSS (Content-Scrambling System) algorithm. Supposedly, only those devices licensed with CSS descrambling algorithm and matched region code can access the contents. The outcome was a pitiable total failure. Today, you can buy a US$45 DVD player from Sears that plays DVDs from all regions. People rip and share perfect copies of DVDs routinely.

With HD-DVD or BlueRay DVD format, the movie industry came up with a control mechanism that works. Now, they can extract every penny they rightfully earned: this is the end of piracy. They forgot the rules of secrecy. When lots of people are involved, and lots of money is at stake, one cannot keep the secret for long time. Read the series by Ed Felten and J. Alex Halderman on the demise of this protection scheme. This battle was over, before it started.

The bigger question is: why do this at all? Would the perfect scheme pay? The music industry tried copy-protected CDs: playable by CD player but not by computer. Consumers revolted by flocking to the file-sharing sites and downloading unprotected MP3 files. It takes only one person to crack the scheme to break the entire economic model.

Apple's Steve Jobs wrote :

Finally, EMI — one of the majors (Sony BMG, EMI, Universal and Warner) — saw the light. They now offer unprotected MP3 files on iTune at slightly higher price of $1.29 per song. Rumors say Amazon.com is working on a similar deal. The majors are large companies that employ many smart MBAs. They must've computed, strategized, and concluded this being the right thing to do.

I say it is much better than angering your future customers.