CES - Bach: Wireless key to future entertainment

I want to switch gears to DRM. I know this is a huge issue. Can you talk about Microsoft's approach and where DRM in general is headed?

I think there are a couple things going on in the DRM space. The first thing I want to say is, we want to produce the DRM that the content industry wants. One of the things you have to understand is who's in charge of what feature set is in the DRM itself, and generally it's the content providers. It's their content that's being protected. We try to work with them to produce the feature set and capabilities they want. The biggest source of dissatisfaction to me with DRM today is that consumers are never exposed to DRM itself. When you run into something that won't play on a device, you get this somewhat odd error message. You're not sure what's happening, you're not sure what to do about it. We have to do a better job insulating consumers from DRM. The protection still needs to be there, but consumers shouldn't have to interact with it.

You believe it should be seamless?

I think it should. Now that's a goal. It's a high bar. It's a very high bar because every content provider has a different approach to how they think about it. But I think that is the direction we want to go.

We have a lot of devices that just play Windows Media DRM straight up, no problem. The Zune itself has a specific DRM to it because, like the iPod, it is a vertical ecosystem that we try to protect to make sure the consumer experience is great.

So you can play songs from the Zune on any other device?

Right, that's true. It's very much like the iPod. And the idea behind it is, you're trying to make this tradeoff that I talked about between complexity for the customer and flexibility. Today we haven't got the right balance there. We've optimized for the customer experience that when you buy a Zune song it plays, and it plays great, but you do want more flexibility ultimately, and we need to figure out a way to do that.

The challenge in DRM, longer term, is working with the content providers and saying, "Where do you want DRM to go?" Today, I think they've been more focused on protection, and I'm hopeful that in the future they'll think, "How do I drive additional revenue and sales? How do I use the way we protect our content as a way to drive more sales rather than less?" We're starting to see people take that attitude. You're starting to see content providers think more broadly. We just have to be smart about working with people to make that happen.