Mp3 files can be traded very easily, creating a vast inventory of 'free' music. The music industry is strongly opposed to unrestricted Mp3 distribution, of course, because of fears of lost revenue, and has sanctioned a form of Digital Rights Management (DRM) to protect their interests.
In the days before the CD, it was possible to copy records to tape but each subsequent generation would cause the audio signal to be degraded. Record companies weren't overly concerned about losing revenue to this type of copying, because they felt that consumers would not accept the inferior quality of copies. Digital media changed all that - exact copies can be made any number of times without degradation. Digital media is also much easier to distribute worldwide via Internet.
As soon as Internet Mp3 trading became widespread the music industry clamped down hard. They filed lawsuits against music distribution services like Napster and Kazaa and succeeded in prosecuting individuals who were caught exchanging Mp3s.
The music industry wanted a system to prevent consumers from freely copying and trading music. Several types of Digital Rights Management have been developed and at the present time, every online music store that operates in the United States uses some form of DRM.
Consumers who buy songs from Internet music stores usually receive them in either WMA or AAC format. AAC is used for the Apple iPod, while WMA is used for most other types of Mp3 players. Digital Rights Management can be integrated into both of these formats. A typical DRM scheme limits the number of times a song can be copied or burnt to CD. There may also be limits to how the songs are used on private networks - AAC songs can only be heard on five computers at one time.
Many view Digital Rights Management as unnecessarily restrictive. After all, if you buy a CD from a music store, you have the right to copy that CD, rip it to your computer and sell the original copy. If you buy a song from an Internet music store you do not have any of those rights. What's more, the online vendor can change the terms of sale at any time after the purchase. We have already seen this with Apple - they changed the CD burning rights from ten copies to seven, applied retroactively.