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Perils of DRM: What Happens to Your Digital Content if the Provider Goes out of Business?

HDGiants' bankruptcy raises questions about DRM-protected downloads; even Walmart customers feel the pain
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If you purchase music or movies online, what happens if the vendor goes out of business? Will you have trouble accessing your content?

The question came up recently after HDGiants -- provider of high-quality audio and video downloads -- filed for Chapter 11. (The company hopes to emerge from bankruptcy this summer.)

A customer contacted CE Pro to say he couldn't access his purchased content:

I have been trying to access media rights to my music library and cannot link to the MusicGiants server. I am using Windows Media Player like most. If you move your songs from one computer to another (not synchronizing) the music file is moved but must confirm the rights to it. When you try to play a file that has been "moved" or "copied" the computer automatically connects to the Internet and verifies your rights to play and/or copy the file.

I did find that the media rights are carried with the file when you burn a CD and use that to rip to the new computer. But then it counts as one of the limited times you are allowed to burn that file. If you sync the file, it also carries the media rights with it, but the sync is only one way. You can't rip from a sync device, clear or overwrite.

This experience "would be odd," according to HDGiants founder Scott Bahneman. "Our servers are up and running and the licensing servers are in place. Once people purchase our content they own it. They have control of it. It's not like they're accessing it from us."

The HDGiants user now reports, "Suddenly the server is available. After constantly getting the 'unavailable' message, I just tried it and it worked!"

Perhaps this incident was just a fluke, but it still raises serious questions about downloaded content wrapped in digital rights management (DRM).

The Problem with DRM


Last year, when Walmart went to a DRM-free model, the company shut down its licensing servers, leaving customers unable to work with the protected content they purchased.

imageDigital Content is one of 6 Major Themes at EHX Spring 2010: The New Opportunities Show
Walmart told its customers, "We strongly recommend that you back up your songs by burning them to a recordable audio CD. By backing up your songs, you will be able to access them from any personal computer." (Walmart later reversed this move.)

Still, at least users had that option.

Proprietary solutions like Vudu could keep content locked up forever. If Vudu goes away (which is not unfathomable), you may be at the mercy of the company's hardware. Eventually the hard drive will fail.

That's the price you pay for Vudu's super-duper video quality. Hey, they had to give the studios something.

If you read the fine print, you'll notice that you don't even own the content you purchase from Vudu (and Vudu certainly isn't the only one).

No right, title or interest in the Content is transferred to you. All Content is licensed, not sold, transferred or assigned to you, for personal, non-commercial use only on VUDU Equipment. You may not edit, modify, copy, distribute, transmit, download, display, perform, reproduce, publish, license, translate, create derivative works from, transfer, alter, adapt, sell, rent, lease or sublicense any Content, or facilitate any of the foregoing. Without limiting the generality of the foregoing, you may not (i) show any Content to any public audience or view it in public location; (ii) duplicate, reproduce, transfer record, or create copies of Content or any portion thereof (including without limitation by "burning," P2P file-sharing, posting, uploading or downloading) onto any physical medium, memory or device, including without limitation, CDs, DVDs, VCDs, portable media devices, computers or other hardware or any other medium now owned or hereinafter devised.

Bahneman from HDGiants suggests the days of proprietary boxes like Vudu's are numbered.

"Do people really want another proprietary box?" he asks.

Success, he says, will come from "open-source, high-quality downloads that can be played across different platforms."

HDGiants is accessible via PC or Mac, and is supported by several media servers in the custom channel.

Back to Discs?


Is anything really safe if it has DRM attached to it?

"It's a big issue for all DRM content," says Peter Cholnoky, CEO of ReQuest, a manufacturer of media server products.

Vendors like ReQuest and Kaleidescape let users rip copy-protected DVDs directly to their hard drive. "We both require the original DVD and use only non-DRM music," he says. "That way the user is never locked when a service goes down."

And the obvious downside to that? The studios don't much care for it. The courts have yet to rule on the legalities of DVD archiving.

Even so, as long as downloaded content is packed with DRM restrictions, owning an old-fashioned disc may be the safest – if not the most convenient -- investment.

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Article Topics

News · Digital Rights · Digital Media · Digital Rights · All topics

About the Author

Julie Jacobson, Editor-at-large, CE Pro
As a co-founder of EH Publishing in 1994, Julie has edited and contributed to all of the company's publications at one time or another. An authority on home automation, networking, integration, digital convergence and the CE pro channel, Julie speaks often about these subjects at industry events. She graduated with a B.A. in Economics from the University of Michigan, and received an MBA from the University of Texas at Austin. Julie is a washed-up Ultimate Frisbee player.

32 Comments

Posted by AWT  on  06/05  at  03:32 PM

Hello!??

The fine print on VUDU is silimar to the fine print on a DVD or BD.

You aren’t allowed to copy, edit, distribute etc, any of those formats.

Posted by Julie Jacobson  on  06/05  at  03:36 PM

Yes indeed, AWT, but not the fine print on CDs, and also not the same warning for other movie download services that let you copy content for playing on other devices.

Posted by Eyal Kattan  on  06/06  at  12:31 AM

Funny, but this is one of the reasons why I’ve been avoiding purchasing online music. I actually experienced similar situation with MSN music (although MS is far from going under).

I purchased 2 albums online and recently they stoped playing and popped me a message that I need to aquire the license. Of course the link they provided to renew the DRM didn’t work

After very long, frustrating attempts to get in touch with MSN support and resolve the issue, I gave up.

As along-time advocate against DRM, I think the music industry is just digging itseld deeper and deeper in an old and obsolete business model that drives people away rather than lure them to buy more.

Posted by Julie Jacobson  on  06/06  at  06:20 AM

Eyal, Walmart is “far from going under” but when business models change as in their case, there can always be issues with DRM content

Posted by noone  on  06/06  at  08:41 AM

Hello,
The music industry is well within their rights to dictate what users can and cannot do with their product, and if a user loses product when a company goes down, it’s just too damn bad, and it’s the user’s problem, not the industry’s. Music should be pay-per-play and DRM-locked, and users should have to follow the rules set out by the music and movie publishers. If they don’t like it, they don’t have to buy. Why should the music, movie, software, or any other industry have to ‘be nice’ with users, most of whom are pirates, or would gladly give away copies for free if enabled to? Let the users pay, and if they have to pay again, so be it. The entertainment industries own the users NOTHING! It’s the users who owe the industry. after all, without the industry, no music WHATSOEVER would EVER be produced. Period!

Posted by Julie Jacobson  on  06/06  at  09:10 AM

noone, I couldn’t agree more. Content developers have the right to dictate the use of their products. But consumers can (and should) complain so that new business models will emerge to better serve us.

Posted by DRM Sucks  on  06/06  at  10:00 AM

noone, you really have no clue do you?  Music was around long before a music industry was ever invented and even now there are many people making music without any kind of involvement with the music industry.

If you bought a song and then the next day you couldn’t play it, how would that make you feel?  Ripped off?  Now imagine what people feel like after they have dumped in a bucket load of money into music expect to be able to listen to it where ever and when ever they want, only to find out that they can no long listen to it just because a company has gone out of business.

You buy a toaster, the maker of the toaster goes out of business, do you expect the toaster to suddenly stop working? No.

You buy a watch, the maker of the watch goes out of business, do you expect the toaster to suddenly stop working?  No.

Why should you even think that the music or what ever you buy from a company should stop working just because it goes out of business?  You shouldn’t.

Posted by noone  on  06/06  at  11:17 AM

Hello again,
I couldn’t care less for your poor exause for being a pirate and a thief! I hope someone reports you to the RIAA/MPAA for theft of property. Why is it their concern, or even their problem, if your music/movies/games ‘go away’? And the same poor excuse of ‘Music was around long before a music industry was ever invented and even now there are many people making music without any kind of involvement with the music industry.’ is just that, an excuse. The music industry not only creates the music we listen to, but they SHOULD have total CONTROL over what music or art is ever created, released, or even performed live. again, if you don’t like it, don’t buy it! Stop being pirates and grow a set, and pay for what you consume!

Posted by Dustmaker  on  06/06  at  01:23 PM

I have little sympathy for people who buy DRM-encumbered music (or, more accurately, pay for a licence to listen to it) and then lose access to it. I’ve been warning people about this for years.

However - most of these companies selling digital downloads do not tell their customers that their computer has to ask permission for them to be allowed to use what they have purchased. They market it as if the product were free and unencumbered, and then treat those legitimate, paying customers, as potential criminals.

Once upon a time, music was simple. We paid our money and got a product that would still work 20 years down the line. Now we have to hand over money to some big corperate machine and hope that the company will still be in business and let me use what I have paid for next year. Maybe, just maybe, some of that money will make it to the actual creators of the music.

Posted by Steve  on  06/06  at  01:25 PM

This is why you should always burn any DRM music to an audio CD and re-rip it to MP3 or AAC. The only safety is an open file format, and the slight (and, to most people, inaudible) loss in quality caused by re-encoding is worth it for the peace of mind.

Posted by zn3t  on  06/06  at  01:31 PM

noone, I would truely like to know what you are smoking/snorting, because it really mucks with your perception of reality. The “industry” does not create the music, the artists do. And what is with the “pay-per-play”? Music that is legally purchased by someone should be DRM-free and be able to be played at any time, with no paying involved. And really, with DRM, the industry is digging their own grave.

Posted by Moof  on  06/06  at  01:34 PM
Posted by Julie Jacobson  on  06/06  at  01:52 PM

This is why you should always burn any DRM music to an audio CD and re-rip it to MP3 or AAC. The only safety is an open file format, and the slight (and, to most people, inaudible) loss in quality caused by re-encoding is worth it for the peace of mind.

And that’s the great irony: Kind of defeats the “convenience” of digital downloads.

I’m just amazed that studios think their DRM schemes will be good for business in the long run.

Posted by Ray Casey  on  06/06  at  04:15 PM

re DRM and PKI… It really is really a straight forward concept EXCEPT when you “pierce the vail”, meaning when you go from one system to the next (or body to body).  In the distributed computing world it is the equivalent of crossing machine boundaries (machine A to machine B to Machine C).  that is what kerberos is all about re networking sessions.  Re DRM the PKI, the architecture for authentication, authorization and encruption exists to deal with this and that is independent of specific servers/platforms.  However it does become a challenge across form factors, clients and players.  that is what OMA DRM 2.0 (http://en.wikipedia.org/wiki/OMA_DRM) and later are SUPPOSED to deal with but that is more “standard” and less an actual deliverable/product.  The fact is that people just don’t get PKI and that includes users, developers and IT support people.  I mean come on… I used PKI for email and files, but who else does?  So the problem is adoption, usage, education and WORST OF ALL, the VENDORS that are doing NON STANDARD DRM and sticking it to us all!  So caveat emptor.  This problem is 1. by design and 2. because of ignorance/lack of knowledge

Posted by Jeremy  on  06/06  at  09:10 PM

“owning an old-fashioned disc may be the safest – if not the most convenient—investment”

Well, until the disc itself is scratched or just degrades over time.

The only reliable way to save music you’ve bought is to rip it and back it up on a second hard drive.

Of course, the crooks in the music industry call that “piracy” and would like to sue you for it - if governments let them.

Posted by bob archer  on  06/07  at  04:57 AM

Noone the music industry doesn’t create music, the musicians that write, record and perform the songs create the music.

the music industry signs the artists and backs their recording and touring efforts for the exclusive rights to distribute their recordings and to receive royalties on their properties.

If someone legally pays for a recording they should have the right to play it back in whatever manner they like.

at this point the music industry is probably get what it deserves for its decades of abuse of the artists that make the music and consumers.

the music industry in its greed was also blinded to the potential of the digital market and a business model that it was given by apple.

It’s hardball tactics have also forced the musician community to find new ways to reach consumers and they have done so by embracing the web and the gaming markets. these are two areas in which the music industry never invested in and now they are paying for it.

the riaa’s own data also indicates that downloads are up, which means that’s people are legally downloading music.

If the music industry was more creative maybe it could excite consumers to buy music instead of recycling britney spears and green day wannabe acts as something fresh.

Posted by Lee Distad  on  06/07  at  09:20 AM

Bob Archer is right on with his comments. With regard to “noone,” Obvious Troll Is Being Obvious.

Sadly, he’s right about the music industry’s perception that their customers are thieves and pirates. That adversarial attitude has alienated an entire generation of what would have been paying customers. Surcharges on blank media, DRM, and every other shackle they’ve dreamed up only encourage unauthorized duplication. If you’ve already been punished before you’ve even commited the crime, why wouldn’t you just go and do it anyways then?

Most of what motivates the traditional music labels is fear of change.  Digital technology, and the Internet mean that artists no longer need the record companies in order to distribute their work and reach new fans around the world. That means that labels have less leverage to sign artists to onerous contracts where the label earns the lion’s share of the money. Piracy is one thing, but losing control of the artists is worse.

Posted by Ray Casey  on  06/07  at  10:11 AM

I am no DRM expert for Media content but I know a good deal about PKI and DRM on documents, email and files, and all that u require is a certificate (public/private), a certificate server, a trusted 3rd party and client api’s/local store. It’s pretty straight forward and works across platforms, languages, clients, OS’s, etc… From what I just read if the DRM’d media content is using OMA DRM 2.0 then it should NOT be an issue related to the content provider, just as the case for standard DRM/PKI (But again, i am not an expert and just learned about OMA). there are newer standards, so I would think as long as players comply with the standards (even across platforms) this should be a non issue… Honestly, users and even IT people/developers are NOT very informed/aware as to PKI and DRM works. Most people simply see it as an inconvenience or complexity. This is NOT a technical issue nor one that should be hard coded to specific servers/services as long as they comply with “standards”

And re all talk about the music industry and content providers, look at companies like corbis.com and getty images.  These people have been distributing digital artifacts for YEARS.  there is NO REASON why the music/video industry cannot do the same while at the same time making sure everyone get’s their piece of the pie (consumer - product, content distributor- their cut and artist - their cut).  That is how it works today for companies like corbis.com (Oh, btw, it is all technology centric BTW)  AND making sure that technology is implemented to enforce usage/license/royality policies and agreements.  Look just find the money trail.  this is NOT about the end user or piracy, it’s about reducing cost/complexity for the content providers and maximizing their profits and controls.  This is NOT a problem with the artist or a problem with the technology.

Posted by 39 Cent Stamp  on  06/07  at  07:12 PM

Copyright shmoppyright. DRM is a joke, all it does is anger paying customers. I do not need to be an evil genius hacker to have my friend pay $1 for a song, burn it to a disc so that i can rip it and use it on my PC and then pass it to my neighbor.

But.. the reality is that i don’t borrow or share music with people. Paying customers are to busy with their lives to play pirate. Paying customers will always be paying customers. Those who are going to steal.. will steal. They will never be paying customers.

I suggest that the music industry invest their time & money into making music easier to obtain and use for their paying customers. Stop wasting money on people who were not and will never be paying customers.

Its like a shoe store with 300 security guards and 1 cashier.

I owned 3 CD’s before itunes showed up for PC. That’s because i don’t have time/interest in collecting CD’s. I have over 3000 songs, movies, tv shows now. I purchased them all thru itunes. Wouldn’t it be nice to be able to listen or watch with whatever device i choose? Wouldnt it be nice to not have to worry about passwords & licenses & rights?

The whole thing is ridiculous. DRM has caused me to slow down my purchases. Im afraid of ending up with an expensive and worthless collection of music and movies. Im worried that if i get a blackberry i wont be able to watch movies on the plane. What is wrong with these morons? Its 2009!

Posted by Joel DeGray  on  06/08  at  12:59 PM

When you see a movie in the theater
or go to a live performance you purchased a ticket for a the right to see that single, analog persistant event. When you buy a book, Painting, cd or dvd you buy the right to perpetually access the content. DRM and CSS are technological extortion.

That’s why we sell all original CDs and DVDs, in any format, no DRM and fully legal, loaded to the server of your choice. If you have a crash, a format changes or the original company goes out of business, you still own the orignal and all of your fair use rights are still in tact.

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