Adam "TidBITS" Engst has posted his new issue, which takes on the role of the DMCA and the Mac. It's a great piece!
The end result here is that innovation is stifled. Companies that license CSS cannot, even if they wanted to, produce products that consumers might like to buy, such as DVD recorders that could copy a DVD. That keeps new companies, niche players, or even independent programmers from competing with the consumer electronics giants with innovative features that in any way run afoul of CSS. So although the consumer electronics companies might not have minded consumers copying DVDs, since they would sell the equipment to make that happen, it's worthwhile for them to abide by CSS to eliminates potential competition.
Equally as problematic is that the CSS license's numerous requirements force the consumer electronics firms to be technologically responsible for regulating our movie viewing and copying behaviors for the studios. Signing this draconian contract is an all-or-nothing deal, so the movie studios have cleverly managed to pass off the dirty work of technological regulation on everyone else (they just produce the content; the DVD and player manufacturers must implement CSS). It's a big step toward a trusted system in which all the parties are bound by the CSS contract.
(As an aside, another effect of the CSS contracts is also to move the entire issue from the world of copyright law, where there is at least some presumption of needing to benefit the public, into the world of contract law, which doesn't give a damn about the public good. If this continues to the logical extreme, the concept of copyright, and unauthorized access to any content, could be locked up forever in simple contracts that lie underneath a trusted system's technologies, all backed up by the DMCA's anti-circumvention provisions.)
(Thanks, Adam!)