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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

Julie Jacobson · June 5, 2009

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.

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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.

HDGiants Still Banking on Market for HD Music/Movie Downloads
HDGiants Files Chapter 11 Bankruptcy
RealDVD Goes to Court Over DVD Ripping Software
Studios Would Rather We Buy DVD Ripping Products Offshore?
DVD Ripping: The Latest on the Legal Front
Is Your DVD Server Legal? Manufacturers Say Yes!
Industry Insider: DVD CCA Is an Innovation-Stifling Cartel
After Cutbacks, Vudu Accelerates Plan to OEM its Video-on-Demand Software

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  About the Author

Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at julie.jacobson@emeraldexpo.com

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  Article Topics

News · Digital Rights · All Topics
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