In-Stat: DRM To Grow Rather than Decline

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Lately, a good deal of the buzz surrounding digital rights management technologies (DRM) has been about removing DRM from media, particularly from music. In a now-famous pronouncement, Apple CEO Steve Jobs claimed his company would abandon music DRM technology “in a heartbeat” if only it weren’t demanded by record labels. In additional to creating the well-known compatibility gulf between iTunes and iPods on one side and virtually every other portable music player on the other, DRM is seen as a burden and an impediment to consumers: it has been argued digital music fans would by more music if only DRM didn’t make it so awkward to use. Still others slam DRM for restricting consumers’ fair use rights. Even Bill Gates has lamented the state of DRM technology.

All this controversy led to a surprising move in April of this year, when the EM Group—one of the four major record labels—announced plans to distribute music with DRM protection, first through Apple’s iTunes store and then through other partners like Amazon.com and MusicNet. Steve Jobs predicted that by the end of 2007, as much as half the music available via iTunes would be available in DRM-free formats, and the move was viewed as a possible sign DRM technology might not be long for this world.

But according to market research firm In-Stat, that’s not so: while the industry continues to watch EMI’s DRM-free experiment with iTunes, Amazon, and others with interest, In-Stat believes DRM technologies will continue to grow.

“The amount of digital content flowing over telecommunications networks is enormous and growing,” said In-Stat analyst Mike Paxton. “Much of this content is already protected by some type of DRM or content protection scheme. As the creation of digital content expands, it is, in turn, fueling demand for more DRM solutions and content protection technologies.”

In a new report, In-Stat found that while some 40 percent of U.S. consumers were not familiar with the term “digital rights management,” 45 percent of those same consumers said they have either purchased or used DRM-protected media or other rights-managed content. In-Stat also forecasts that DRM technologies will increasingly include data useful in forensic analysis, so that the legitimate end-user (or buyer) of digital content can be identified. (Much as Apple now includes customer information in the DRM-free files it sells via iTunes.) This forensic information potentially enables companies to identify sources of piracy and, potentially, bring legal action against users to illegally distribute protected content.

In the meantime, no other major music distributors have joined EMI in offering DRM free music tracks for sale.

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