When you download content from a site such as iTunes or CinemaNow, you probably recognize there are limits on how you can use that material. For example, you’re limited in the number of copies you can make and which devices the material can be moved to, and in some cases you’re not allowed to burn a DVD backup. These restrictions are managed through Digital Rights Management (DRM) technology.

ElectronicHouse.com spoke to Bill Rosenblatt, founder of GiantSteps Media Technology Strategies, editor of the DRM Watch Newsletter and a recognized authority on DRM to find out how DRM affects you as a consumer.

1. What is DRM?
“DRM is technology that controls the way the consumer can access content, meaning on what devices, for how long a period of time, at what resolution and other characteristics,” Rosenblatt says.

Content owners can use two approaches, he explains, when applying DRM: a “proactive” approach, such as encryption, to limit your ability as a consumer to use the content in ways the content owner wants to prevent. Content owners can also employ a “reactive” approach such as watermarking technologies, which won’t limit your ability to use the content, but enables the content owner to catch you if you distribute the content illegally.

2. Do All Content Owners Insist on DRM?
Rosenblatt is quick to point out that not all content owners use DRM, and it depends a great deal on the industry and the business model of the individual content owner. For instance, he says, a small independent record label looking for exposure for its artists generally wouldn’t use DRM because it could inhibit exposure.

Major record labels and movie studios, on the other hand, he reasons, don’t need the same level of exposure and are more interested in getting a return on their substantial investment. “The entire economic model of the major labels is built on making big stars,” Rosenblatt says. “They invest money in developing artists and their model requires them to sell [many] copies to break even.”

The movie industry, Rosenblatt says, is more invested in DRM than the recording companies because they have an even bigger investment model related to their film releases, and they are very interested in protecting their investment.

3. What’s Wrong with DRM Technology Today?
The trouble with DRM as it has been implemented today, says Rosenblatt, is that rather than enabling content owners to maintain control over the content (although it does do that, too), it has been used primarily to keep users on one device platform. He says a prime example of this is Apple’s FairPlay DRM, which essentially limits consumers from playing content purchased at iTunes on any device except Apple iPods (or on a network with other Apple hardware).

Rosenblatt says Windows DRM is more flexible, and non-Windows devices can communicate with the Windows DRM platform,  but Microsoft has structured it so that these device makers have to pay a higher fee, which of course gets passed on to the consumer.

4. Can Consumers Expect to Reuse Content on a Variety of Devices?
Consumers believe they should have this right, but Rosenblatt says the answer to this question is not a simple one. “That sounds good in principle, but it’s not fair to content owners.” The question he asks is, who gets the benefit of the doubt in this equation: the consumers or the content owners?

Another issue is one of copyright law, which is complex and something most consumers don’t understand. As technology enables users to do things the copyright law may (or may not) prohibit, the large content owners increasingly turn to the legal system for recourse when they feel consumers are taking unfair advantage, Rosenblatt explains.

5. Does EMI’s Decision to Go DRM-Free Help the Consumer?
EMI, Rosenblatt says, made a deal with Apple to sell DRM tracks at the current iTunes price of 99 cents and DRM-free tracks for $1.29. “They [EMI] are not eliminating DRM,” he says. “They are going to offer both. For the consumer it means more choice and more choice is always a good thing.” He adds that it’s not known if other major recording companies will go along with this, so broader implications are unclear.

Content owners recognize consumer discontent over DRM, Rosenblatt says. In response, these firms are developing ways to use material more freely, but it could be some time before major issues surrounding copyright and investment models are solved.