In what actually appears to be a decent middle ground, Microsoft has patented a method for digitally watermarking audio files with information that uniquely identifies the content creators and original purchasers.
If implemented correctly (i.e. unobtrusively) this could be a good step in separating full-fledged pirates from honest consumers who are fed up with how infuriating it is to try to get their music from one device to the next.
“Forensic digital watermarking technology like the technology Microsoft has patented doesn’t encrypt files the way DRM technology does or prevent people from unauthorized use. However, it can be used to prove who owns the content of the digital file by encoding a file with a unique digital signature. That means illegally traded songs could be tracked back to the original purchaser, allowing authorities to identify illegal sharers and serving as a deterrent.
The technology could also be used to track files for royalty distribution.
In fact, Apple has been inserting simple watermarks into digital audio files that include personal information about the purchaser on some files sold over iTunes so those files can be traced back to their purchaser in the case of unauthorized distribution.”
Microsoft’s watermarking technology is apparently much harder to strip out than Apple’s but, again, if implemented correctly, most people won’t need to manipulate the files anyway.
If it can be done in a way that alleviates the need to check licenses and tie files to people’s accounts, it could work well. Basically, let me do what I want with my downloaded music and if thousands of my files show up on the Pirate Bay, then you can come after me.