Sony Blunders With DRM Again

It appears that Sony's (NYSE: SNE  ) zeal to prevent pirates from copying its media products has backfired again. Consumers are now up in arms because copyright protection included on the discs prevents several of the company's DVDs from working in some players.

According to techie sites like Wired, Engadget, and ZDNet, DVDs of the movies Casino Royale and Stranger Than Fiction -- which utilize ArccOs DRM (digital rights management) technology -- won't play in some DVD players from RCA, Toshiba, Phillips, Harman Kardon and, you guessed it, Sony. Worse, some reports claim that the discs lock up the affected players and jam them shut. According to Wired's blog, Sony has shrugged over this, blaming the manufacturers for not updating their firmware. (Although how that fits into a scenario of its own players allegedly exhibiting the same error is beyond me.)

I don't think it matters who's at fault here, though -- playing the blame game isn't going to make consumers feel any more sympathetic toward Sony and its brand.  

This brings to mind a similar debacle in late 2005, when some of Sony's music CDs planted rootkits on users' computers for the sake of copyright protection. That ended up embroiling Sony in quite a bit of negative PR, since not only were the rootkits planted without users' knowledge, the DRM technology apparently also made some consumers' machines vulnerable to hackers. Sony also got into hot water with several states over the incident. 

Many consumers are fed up with DRM in general, which often seems to do more to inconvenience consumers than combat piracy. (After all, pirates have a tendency to be ahead of the game when it comes to circumventing copyright protections.) Apple's (Nasdaq: AAPL  ) Steve Jobs has come out publicly against onerous DRM, and there are signs that some companies are starting to get the idea that making things extra tough on your customers probably isn't a good business strategy. Look at EMI's recent agreement to provide DRM-free downloads on iTunes. Yahoo! (Nasdaq: YHOO  ) has also predicted a huge sea change in DRM-free music, having stated last winter that its music store should be free of DRM by this year's holiday season.

And of course, the fact that Sony still has the shadow of the other DRM debacle haunting it means this latest development fits into the "will they never learn?" category. Last I checked, user comments on Engadget's site skewed toward "furious" (and as of this writing, the story had been "dugg" for the site digg 1,025 times and counting). Although some of the comments were entertaining -- one user described this as Sony achieving copyright nirvana, in that intellectual property can't be copied if it won't work -- many expressed anger at Sony and suggested boycotts of its products, including the PS3 and the Vaio.

A spokesperson from Sony contacted me after original publication of this story to give Sony's perspective on the situation, so in the spirit of offering all points of view, here is the company's statement: "Sony DADC has offered its customers ARccOS copy protection for more than two years. In order to protect content, ARccOS is frequently updated. Recently, an update that was installed on approximately 20 titles was found to cause an incompatibility issue with a very small number of DVD players (Sony has received complaints on less than one thousandth of one percent of affected discs shipped). Since then, the ARccOS system has once again been updated, and there are no longer any playability problems. Any customer who has contacted Sony Pictures Home Entertainment with a complaint has been given a replacement DVD."

While it may be true that this impacted only a few customers, the fact that the issue has been making the rounds in the blogosphere still represents the risk of negative perceptions. And I stand by my opinion that if Sony doesn't rethink its attitude on DRM and its effect on consumers, it seems likely the company is going to suffer more negative perceptions. And for Sony investors, that's a real risk to contemplate.

Yahoo! is a Motley Fool Stock Advisor recommendation. To find out what other companies David and Tom Gardner have recommended to subscribers, click here for a 30-day free trial.  

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.


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