When an investment site picks up on how bad DRM is for business, things are looking up:
Sony Music Entertainment [announced] the advent of its new "Label Gate" digital rights management (DRM) package. Beginning in 2003, all CDs released from Sony Japan will carry this protection.
Label Gate is a one-two punch: Every track on a protected CD will be encoded, and the customer must use Sony's proprietary software to play back the tracks on a computer. This prevents people from converting the music tracks ("ripping") into other formats, such as MP3 or WAV, and sharing them over the Internet. Sounds pretty good, right? Wrong. Not for consumers, and, ultimately, not for Sony.
Unfortunately, this sort of action on Sony's part only hurts consumers --those that legitimately buy their products -- by making listening to music a hassle. Further, it violates the doctrine of Fair Use -- the ability to use a product you have legally purchased in any legal way you see fit. Sony has effectively made it impossible for a user with a couple of computers and an MP3 player to make copies of songs he has legitimately purchased. Further, DRM software actually encourages people to search for "unrestricted" copies of tracks online, through peer-to-peer networks. Unrestricted tracks would allow you to listen to the songs wherever and whenever you please.
If the record companies want to compete with peer-to-peer networks, they're going to have to find a way to give customers fast, inexpensive access to music. Restricting access and hassling customers is bad business, no matter how you look at it.