Commentary—Macworld 2008: The Week That Copy-Protection DRM Dies?

Editor's Note: This article was written before Steve Jobs' keynote at Macworld on Tuesday. Better luck next year, Tim.This year, those of us who attend trade shows to write about "the next big" thing (or look for the next big startup, as I do in my consulting work) were spared the requirement of being two places at one time. Last year's Consumer Electronics Show (CES) and Macworld San Francisco (MWSF) were the same week; those who picked Steve Jobs’ keynote over the 150,000 attendee confab were rewarded with the announcement of a product recently named Time magazine’s Gadget of the Year: the iPhone.

This year's MWSF falls a week after CES, with the keynote later this morning (January 15). As is common in the Mac rumor mill, predictions abound as to what will be revealed: a new 3G iPhone, a touch-screen portable computer that's a cross between the Newton uber-PDA of old and the current MacBook, or a new AppleTV.

All of these are of interest for those involved in streaming, as they move forward Apple's vision of the portable—yet connected—digital hub of rich media that the company has so consistently capitalized on. But I've yet to see one conjecture about the demise of copy-protection DRM for audio and, more specifically, for iTunes.

But I’ll go out on a limb and suggest that might be coming. What would lead to this potential freeing of content? Several factors seem to be in play here.

The move by record labels to sell unprotected MP3 files.
Sony became the last of the Big 4 labels last week to sell MP3 files with no DRM, following the lead set by Warner Music Group, Vivendi's Universal, and EMI. Initially, Sony was only going to offer DRM-free tracks from its own site, and consumers would have to go to a brick-and-mortar store and pay $12.99 for a card with a scratch-off code, then download one of only 37 albums available. Needless to say, pundits were not impressed.

"A paltry selection of inconveniently available DRM-free music is not progress," said the Motley Fool's Alyce Lomax in an article titled "Sony's Non-DRM Dud." Written just after the announcement, when it appeared as if the only way to access"It's just a creative new way of annoying consumers."

Within days of the original announcement, Sony announced that DRM-free tracks would, indeed, be available for direct purchase from Amazon.com.

The rise of watermarking.
In mid-2007, Microsoft received a patent for a random, inaudible watermark that could be used in audio files. Several companies have licensed the technology or are considering doing so. While Microsoft won't comment on how it plans to use the technology, it could be used to track both specific and anonymous/disaggregated content on P2P networks to see if content is being moved about the web in a manner that connotes organized piracy instead of random user piracy. Watermarking seems to be catching on with the labels as well.