Microsoft is cutting its throat here. There isn't a single Windows user who wants a version of Windows that lets her do less with her music and movies.
Microsoft is also subverting copyright. Fair use and other public rights in copyright hinge on factors that can't be modelled in software. For example, people engaged in parody have a lot more flexibility in terms of how they use copyrighted works than people who are engaged in satire. The difference between parody and satire is pretty fine -- it's the kind of thing courts rule on, not the kind of thing that you get a computer to detect.
DRM apologists claim that DRM can be used to model the preponderance of fair uses, but this is completely untrue. Fair use almost always hinges on intention -- there isn't any software that is capable of reading a user's mind and determining intention.
So here come Microsoft, the great defenders of copyright, selling out both their business and copyright: creating devices that no one wants that models a copyright law that doesn't exist.
What's the use of having a swaggering bully of a monopolist if it can't muster the intestinal fortitude that Sony displayed from 1976-1984 when it battled in Congress and all the way to the Supreme Court for the right to manufacture VCRs despite Hollywood's insistence that these were tools of piracy?
In short, the company is bending over backward--and investing considerable technological resources--to make sure Hollywood studios are happy with the next version of Windows, which is expected to ship on new PCs by late 2006. Microsoft believes it has to make nice with the entertainment industry if the PC is going to form the center of new digital home networks, which could allow such new features as streaming high-definition movies around the home.Link
PCs won't be the only ones with reinforced pirate-proofing. Other new consumer electronics devices will have to play by a similar set of rules in order to play back the studios' most valuable content, Microsoft executives say. Indeed, assuring studios that content will have extremely strong protection is the only way any device will be able to support the studios' planned high-definition content, the software company says.