The real problem that the controversy discloses is that DRM offers a purportedbut illusoryopportunity for the vendors to charge an unwarranted premium for their products. In that sense, it is very similar to the outlawed tying arrangements that drove copier prices from the 1960s through the early 1980s. Historically, "piracy" of goods has worked only when the premium between the absolute value of the goods and the vendor's price for the goods was large enough in relation to perceived value added by the vendor to make the inconvenience and risks of piracy worthwhile to the end user. Apparel provides an excellent example. Compare, for example, a men's mesh-woven shirt from Lands' End with one from a discount chain and another from [a major designer]. The Lands' End shirt is not at a huge premium to one of comparable weight from the discount chain$25 to $15but is substantially cheaper than the designer shirt ($40). The Lands' End shirt is of higher quality than either the discount chain's or the designer's: higher-grade thread, smoother seams, more-durable buttons, less shrinkage and color loss in washing. If one goes to a slightly off-note bazaar, though, one finds counterfeit designer shirts, but not counterfeit Lands' End shirts. (I'm sure there are exceptions, but bear with me.) The designer premium is high enough that end users are willing to price-shop for what they believe is the same thing.
The key issue, then, is price points. Let's pretend for the moment that none of the accounting nonsense and supposed "marketing cost" issues prevalent in recorded music and movies exist; that we are instead setting the initial market price based on just our actual costs, both in production and in rights. How much might a CD cost? How much might a single-DVD movie cost? I have my own ideas of both: about 35% of the "list price" now current. Others may argue about the exact price, but there is little place to argue that "list price" is a reasonable reflection of actual costs. The difference is in those "costs" and "profit points" that end users will treat as a "premium". If the end users do not perceive the difference as adding adequate value to overcome the inconvenience, annoyances, and possible liability of piracy and pirate copies, they won't support large-scale piracy. At this time, end users perceive virtually no added value; the widespread (and entirely justified) cynicism about entertainment-industry accounting is only the tip of the iceberg.
The solution to the DRM quandry is to lower prices to the point at which piracy is no longer "profitable enough" to support a market of end users. DRM is inherently breakable, particularly since with very few exceptions it is subject to a known-plaintext attack. The [insert favorite negative description of intelligence here, plural] who approve this kind of effort are actually just using a monopoly/oligopoly position in an attempt to maintain that monopoly/oligopoly. The real argument is over how much of those attempts is legitimately within the authorized monopoly provided by copyright, and how much is not. Until that argument is resolved, we simply will not have a long-term workable solution.