DRM, as it’s known, is encoded onto downloadable digital content so that copyright owners can prevent piracy. But it also prevents people from transferring downloaded content as they might like. Since different companies use different DRM technologies, an iTunes-bought song can’t be moved to a Zune, Microsoft’s new answer to the iPod, or even e-mailed to a friend. Since the vast majority of online music is sold on iTunes, “Apple has a stranglehold,” says Benenson, 23, a graduate student at New York University’s interactive telecommunications program. “There are some musicians who I like who will only offer music on the iTunes store.”

Pricing any product is difficult; pricing software particularly so, because the cost of goods isn’t a significant factor: it’s all just ones and zeroes. Of course you can set too high a price — but far more budding indie developers fail because their prices are too low than too high. Aim for high quality and set your price accordingly. If you want users to treat your software like it’s valuable, you, the developer, need to market it as though it’s valuable.

But content providers claim DRM is essential to protect the work of artists, labels and studios. A spokesman for Apple would only say that “we don’t generally talk about FairPlay,” the name of Apple’s DRM. In a statement to NEWSWEEK, the Recording Industry Association of America called DRM technologies “no silver bullet, nor were they ever intended to be. They are one component of a larger effort to protect our works and give fans the experience they expect and deserve.”

Many of the subscription-based online music stores, such as Napster and Yahoo, for example, work on the basis not of counting playbacks, but of a Blade Runner-esque time-to-live feature, usually a month. You pays your monthly fee, you links up your MP3 player to re-validate your account, and you keeps playing your music for another month. Stop paying your fee, stop linking up with the mothership, and your music sighs, "Time to die," and you can't play it no more. But this means you get to freely download anything you want from the store as long as you keep paying your money. This method doesn't track your listening habits, though it certainly could be so used without the consumer's knowing; and as for restricting your enjoyment of music, it's true that it makes you keep paying the rental fee, but the tradeoff is that you get unlimited access to the whole library, which some music lovers might think is just grand. As for prevention of piracy, though, Napster-style DRM definitely has its glaring and unaddressable weaknesses.

But the form of DRM used by Apple, and by most of the WMA-based online music stores, doesn't work like that. You buy your music, you don't rent it—and this means you pay your dollar for each song at the time you download it, so a would-be pirate would have to actually buy the songs before even getting access to them to transcode them. But the price is so low, and the access and quality are so good, that pirates to date have been disinclined to even try to abuse the system the way they would with a booby-trapped CD they had to slog home from the record store. This system doesn't track any playback, because you never have to phone home—the only transaction you make with the mothership for any song is at the time you buy it. To unlock the downloaded music for your computer (and up to four others that you might own), you just make a one-time transaction with the server that is entirely unrelated to any of the music you own—it just authorizes your computer on the basis of its unique hardware ID, incrementing a number-of-authorized-computers counter they've got stored with your account, and once you've unlocked your download account on that computer through the iTunes/QuickTime architecture, you can play any and all music you've ever downloaded using that account, forever. You can then drop off the face of the earth and go live in a Unabomber cabin—the music store never has to hear another word about what music you're listening to or what hot new artists or albums to try to sell you. The transaction's over and done with. You own your song, they have your dollar. That's the end of it.

What's more, Apple—more than the other companies in its position—has actively negotiated with the music industry to win more flexibility for its customers and less onerous DRM intrusiveness. In a deal struck with the labels in 2004, Steve Jobs managed to raise the number of computers that could be authorized to play downloaded iTunes music from the original three (desktop, laptop, work machine) to five. The tradeoff? iTunes was modified to make it so you could only burn seven identical copies of a playlist of downloaded music to CDs, down from the original ten. Now, I ask you, who but a pirate needs to burn more than seven copies of a purchased CD or playlist? And that feature has never been more than a speed-bump in the way of piracy anyway: if you really want to burn more copies of that CD, you just modify or re-create the playlist and keep on truckin'. As "intrusive DRM" goes, that's pretty tiny potatoes.

The upshot is that if you're getting your music from iTunes, you never run up against the DRM in your daily listening life. Never. You just don't. You don't even have to think about "phoning home". Apple never hears a word about your listening habits. And if you're a pirate, well—Steve has this to say:

He confirmed his belief that illegal digital sharing of movies is taking place, but stressed: "There is some evidence that shows people downloading movies illegally wouldn't have bought them anyway."

Jobs believes the best strategy to deal with such problems is to create better legal alternatives to help keep honest consumers honest, and prevent them getting into the habit of stealing: "Hollywood has some time to put in place legal alternatives," he said.

Trust your customers, in other words—just don't make them want to take advantage of you. That'll make fewer otherwise law-abiding listeners into disgruntled pirates in the first place. And by gum, it seems to be working. Besides, hell, you can't pirate an iPod.

But does DRM give fans the experience they expect? Fans who buy a CD can assume that it will play on their Sony car stereos as well as their Panasonic sound systems at home. They cannot expect that a song that they purchase from iTunes will play on anything other than their computers or iPods, nor can they store it on an unlimited number of hard drives.

Music lovers can burn the iTunes track onto a CD--but unless they’re techno-savvy, the resulting file will be of inferior quality.

Lawrence Lessig, founder of both Creative Commons and Stanford Law School’s Center for Internet and Society, points out that DRMs don’t expire even after copyright does.

And he argues that DRM hampers amateur artists who would remix pre-existing content or even try to put a song into a home video.

“DRM is the content industry trying to replicate the business model for the 20th century in the 21st century,” he says.

Music industry observers agree that once the public catches on to the limits of DRM, it will either be abandoned or a dominant technology will emerge across all players; this is what happened when VHS beat out Betamax. “Give consumers a file that will play in any device and consumers will be willing to pay for it,” says Steve Gordon, author of “The Future of the Music Business.” Until then, they’ll just have to settle for DRM-encoded music. No hazmat suit required.

UPDATE: Dave points out a similarly germane argument written back in 2000, on the subject of book piracy, but making similar points about how to price a market for a non-tangible good whose only real value is its intellectual property.