The problem of perfect copies and encryption

Because the cost of distributing digital copies of copyrighted intellectual property — tangible works of the mind such as music, books, and videos — is nearly zero on the Internet, e-commerce poses special challenges to the various methods societies have used in the past to protect intellectual property rights.

Unlike physical goods, digital copies are 'perfect': each copy is identical to the original, with no degradation in quality. A copied MP3 file sounds exactly like the original; a copied e-book is byte-for-byte identical. This makes piracy easy and cheap — a single copy posted online can be downloaded millions of times. Traditional copyright law, designed for physical media, struggles to address this scale of unauthorised distribution.

The technological response is encryption and Digital Rights Management (DRM). Encryption scrambles content so that only authorised parties can read it, while DRM systems enforce usage rules — limiting the number of devices a file can be played on, restricting copying, or expiring access after a period. DRM has been used on e-books (Adobe DRM), music (Apple's former FairPlay), and video (Widevine).

However, technological protection is imperfect. DRM systems have been cracked (such as the breaking of DVD CSS encryption), they can inconvenience legitimate buyers, and they sometimes conflict with fair use. There is, however, substantial agreement among online distributors and copyright owners that they need one another — the conflict over copyright management continues, but with growing recognition that legitimate distribution platforms (like iTunes, Netflix, Spotify) reduce piracy by making legal access convenient.