In my previous post on digital copyrights in the EU, I analyzed the landmark decision Tom Kabinet (C‑263/18) and explained some fundamental concepts related to copyrights on digital work under the InfoSoc Directive. Based on the EU Court’s ruling in Tom Kabinet (C‑263/18) it seems fairly clear that copyrights, not just on e-books but on any digital work that is communicated to the public, are not subject to the principle of exhaustion. This means that reselling or sharing with the public any type of copyrighted creative digital content, whether it be an e-book, audiobook, song, movie, or PC game, is prohibited by law.
A major policy consideration that speaks in favor of that result is the double-spending problem which I have previously explained in the context of digital valuta. The same basic problem applies with equal force in the arena of intellectual property rights. Compared to physical products such as printed books, CDs, and DVDs, digital information is much easier to double-spend which means to copy and share it with the world on a grand scale. For example, the season premiere of the 8th season of Game of Thrones was downloaded or watched illegally more than 54 million times in the 24 hours after it aired.
What is DRM-Technology?
The way that right holders protect their online work from copyright infringements and the double-spending problem is by attaching Digital Rights Management (DRM) technologies to their products. “DRM technologies” is an umbrella term that covers any technology which controls access to content on digital devices.
A DRM technology may limit who has permission to use a product. An example could be software licenses and keys (alphanumeric code that the user has to enter before the computer program can run), user authentication such as a password or security questions, a library card, and a related PIN code, a fingerprint, or a facial recognition technology.  Geo-blocking is another form of DRM, typically applied by entertainment companies, such as Netflix and HBO, because they only have the contractual right to show a movie or TV series in certain parts of the world. When you log on to their services, they will check the IP address your computer is using, and only allow you to access the content they have permission to show in your local region.
Another form of DRM technology is copy protection, such as encryption which prevents the user from making a copy of a work. This means that the digital content is written in a code that can only be read by devices or software with the proper key to unlock the code. Another way to use copy protection is by digital watermarking, where a file or a piece of computer code that users are unlikely to notice is encrypted into the digital product.
If the work should show up illegally on the internet, the content owner will be able to identify the exact copy that was uploaded. Similar to a digital watermark is a digital fingerprint that seeks to identify copies by using aspects of work such as the rhythm and tempo of a song or the colors and hues used on a picture or in a movie. Digital fingerprinting is used in YouTube’s Content ID System and in the famous Shazam App that lets you identify songs.
Another important DRM strategy is for the content producer to design its products so that it will only work on specialized hardware or software. An obvious example of specialized hardware would be video game consoles such as PlayStation and Xbox.
Steve Jobs’ Take on DRM
DRM was a hot topic in the mid to late 2000s. During that time, the music distribution industry defined by the heavy use of DRM technologies by the major players in the market. Apple, Microsoft, and Sony, all competed with their own proprietary systems. Music played on Microsoft’s Zune store would only play on Zune MP3 players, music purchased from Sony’s Connect store would only play on Sony’s MP3 players, and music purchased from Apple’s iTunes store would only play on iPods.
Music distributors, major publishers, record labels, as well as movie studios, software companies, etc. are usually strong advocates for DRM. For obvious reasons, piracy of digital media has taken a large toll on their profits. However, in early 2007, former CEO and co-founder of Apple Inc., Steve Jobs went against the common DRM-accepting atmosphere in the industry by publishing an essay called “Thoughts on Music”, where he announced that Apple would “wholeheartedly embrace” if the major music companies would license their music to Apple free of DRM. The essay was written to address calls from consumer organizations to abandon Apple’s DRM system FairPlay.
Steve Jobs explained that their DRM system was a part of a contractual condition in the agreements between Apple and namely the four big music companies at the time, Universal, Sony BMG, Warner, and EMI. Under the agreements, Apple obligated to conform to certain DRM security standards in order for Apple to attain the usage rights to the “The Big Four’s” portfolios of music. According to key provisions in the contracts, Apple had only a small number of weeks to fix the problem if their DRM system was compromised in any way and the music was played on unauthorized devices. If Apple did not fulfill this obligation, the music companies could withdraw their entire music catalogs from iTunes Store.
Steve Jobs conceded in his essay that the strict appliance of DRM technology at the time was not effective. He mentioned the ongoing “cat-and-mouse game” between systems and the “smart people in the world, (..) with a lot of time on their hands” who would always find ways to hack the codes despite frequent security updates. He also pointed out that iPods could play DRM-free content from CDs, and DRM-protected music only formed a small part (3 %) of the average iPod library. 
Steve Jobs suggested three alternatives for the future of DRM. The first approach was to continue on the current ineffective course “with each manufacturer competing freely with their own ‘top to bottom’ proprietary systems for selling, playing, and protecting music.“
The second approach was for Apple to license out FairPlay to its competitors. And thus achieve interoperability between the different company’s players and music stores. However, that would require Apple to share vital trade secrets. Due to the risk of such secrets being leaked. Apple had concluded that it could no longer guarantee to protect the music licensed. From the four big music companies if it was to share its DRM system.
The third approach favored by Steve Jobs on behalf of Apple was to completely abolish DRM on music. And create a truly interoperable music marketplace to the benefit of the consumers. Steve Jobs also argued that if the DRM requirements removed “the music industry might experience an influx of new companies willing to invest in innovative new stores and players.”
Since 2009, music from iTunes Store has been free of DRM.
Arguments Against DRM
Fast forward to 2020, suppliers of digital work such as Spotify, Netflix, Apple Music, and Amazon. Make use of authentication and encryption technologies to prevent subscribers from downloading and spreading their content illegally. Since the advent and prevalence of streaming platforms, online stores, and other digital services, the debate concerning DRM has subsided. However, a case against DRM can still be made.
The age of MP3 players long gone. But some of the arguments put forward by Steven Jobs in 2007 still hold weight today. DRM is costly and complex. And not every right owner is ready to apply it for every work and administer it. Even if a company decides to invest substantial resources in developing a DRM system. Hackers may still find ways to circumvent it. Established multinational technology enterprises such as Apple Inc. are unlikely to license out their DRM technology to newcomers in the market. Due to the risk of leaks when disclosing confidential information to competitors. Additionally, DRM may not protect against all unauthorized use even aside from incidents of hacking. Just think how common it is for a whole chain of people to freeride on one legal subscriber’s streaming account.
One major concern from the end-users perspective is ownership rights when the buyer purchases a DRM-protected product. To illustrate, when Microsoft’s eBook store closed down in July 2019, all books bought through their service deleted. The customers received full refunds from their purchases, but not all E-book stores may do that if they close down. So, did the buyers of the e-books in Microsoft’s eBook store ever retain ownership of their purchases? The answer is no.
In line with the European Court of Justice reasoning in Tom Kabinet (C‑263/18), Microsoft’s eBook store made the e-books available to the customers, but there was no sale involved, i.e. no transfer of ownership. Technically, Microsoft’s eBook store only offered a platform, where the users could access the work. If the e-books were free of DRM, the customers would own their copies outside of the e-book supplier’s control and the copies could not just vanish. However, if the e-book store could not assert any control over the e-books they sold. The buyers could sell them over and over again while retaining their own copies as well (the double-spending problem).
Another concern is privacy issues as DRM can potentially intrude on the consumer’s privacy. As an example, Adobe’s Digital Editions keeps track of what books a user has downloaded. And how long a user has read a particular book. How far in a book the user has progressed, and where the user is reading that book. DRM may also give rise to inconveniences for the end-users in other regards. For example, DRM may discriminate users by regions, cause vulnerabilities in consumer software, and even prevent legal users to exercise their common-law granted right of fair use, such as reverse engineering a software program to conduct scientific research.
Most people would agree that content creators should be compensated for their work. Most people would also agree that someone who has copied another person’s work to pass it off as their own, has committed “intellectual theft” which should be penalized. DRM serves as a way of safeguarding digital goods, much like locks on house doors secure homes against burglary. Abandoning DRM systems altogether may not be a realistic option. However, more efficient DRM solutions would benefit the right holders as well as the end-consumers. In an upcoming post, I will examine an alternative and radical way to manage digital rights.
 Dingledy, Frederick W. and Matamoros, Alex Berrio, “What is Digital Rights Management?” (2016). Library Staff Publications, pg. 1.
 Ibid. pg. 4.
 Ibid. pg. 5.
 The Ibid. pg. 6
 The Ibid. pg 7.
 Steve Jobs (2007), Thoughts on Music.
 Dingledy & Berrio, pg. 11.
 Jobs (2007).
 The Ibid.
 https://www.macworld.com/article/1137946/itunestore.html (25-11-2020).
 Savelyev (2017), pg. 6.
 Dingledy & Berrio, pg. 19.
 Savelyev (2017), pg. 6.
 Ibid. pg. 14.