Microsoft licenses DRM technology to Nokia
Yesterday, mobile phone giant Nokia announced it would license PlayReady, a new digital rights management (DRM) technology developed by Microsoft. This is the first win for PlayReady, and represents a pretty major shift for Microsoft.
Until about two years ago, Microsoft's DRM strategy was tied up with the Windows Media platform. Microsoft invested considerable research and development into improving Windows Media DRM. For example, in 2004, Microsoft rolled out a new version of Windows Media DRM that made it viable for content owners to allow music from subscription-based services to be transferred to portable devices. With Windows Media DRM 10, if users stop paying their subscription, the content is disabled from playing on the portable device the next time users connect it to their PC. Prior to this DRM advance, content owners simply wouldn't allow subscription-based content onto portable services, rightly reasoning that users would download to their device's capacity, cancel their subscription, and end up with a huge library of very cheap music.
The point was: for content owners to take advantage of Microsoft's DRM technology, they had to offer content in the Windows Media file format. However, for the last couple of years, Microsoft's slowly been divorcing its DRM technology from the Windows Media platform. First, in Vista, Microsoft included video copy protection technology that had no requirement for nor dependency on any Windows Media technology. Now, it's created a DRM technology for mobile devices that, once again, has nothing to do with Windows Media. Rather, PlayReady lets mobile device manufacturers and carriers protect nearly any type of content--AAC audio, H.264 video, even games. Microsoft promises that it'll be forward-compatible with content that's already been protected using Windows Media 10 DRM, but other than that, there's no connection between the two technologies.
What does this all mean? It means that Microsoft's efforts to make Windows Media the de facto format for compressing and protecting digital media content have failed. Subtly, the company is acknowledging that Windows Media will coexist alongside other formats that, for whatever reason, are favored by end-users and content owners. (A lot of this has to do with Apple's runaway success with the iPod, which has popularized AAC audio.)
Leaving aside the format wars, can DRM succeed at all? Microsoft certainly continues to push ahead, but there are many in the technology community (including some Microsoft researchers) who argue that DRM is doomed--it's technically flawed from because the system eventually has to allow the "attacker" (the end-user) to access the protected content, and it's flawed from a business perspective because it asks consumers to bear the extra cost (in terms of processing requirements, hardware and software incompatibility, and higher prices for DRM-protected content) of something that does not benefit them. Those two problems lead to a large amount of readily available pirated content.
The Nokia deal's also interesting because Nokia's using PlayReady in a line of Symbian-based phones. Symbian is a mobile OS that competes directly against Microsoft's Windows Mobile platform. This is typical Microsoft: the company often plays multiple sides of a market, occasionally even competing against itself, until a clear winner emerges.
Matt Rosoff is an analyst with Directions on Microsoft, where he covers Microsoft's consumer products and corporate news. He's written about the technology industry since 1995, and reviewed the first Rio MP3 player for CNET.com in 1998. He is a member of the CNET Blog Network. Disclosure. You can follow Matt on Twitter @mattrosoff. 
