The use of digital rights management is controversial. Proponents argue it is needed by copyright holders to prevent unauthorized duplication of their work, either to maintain artistic integrity [1] or to ensure continued revenue streams.[2] Some opponents, such as the Free Software Foundation, maintain that the use of the word “rights” is misleading and suggest that people instead use the term Digital Restrictions Management. Their position is essentially that copyright holders are attempting to restrict use of copyrighted material in ways not covered by existing laws.[3] The Electronic Frontier Foundation, and other opponents, also consider DRM systems to be anti-competitive practices.[4]

In practice, all widely-used DRM systems have been defeated or circumvented when deployed to enough customers.[5] Restricting the copying of audio and visual material is especially difficult due to the existence of the analog hole, and there are even suggestions that effective DRM is logically impossible for this reason.

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A rights managed license contrasts with a royalty-free license, wherein the buyer usually receives the right to use the content in perpetuity, with much more flexible restrictions. The royalty-free license is so named because the purchaser normally does not need to come back to pay more royalties for additional rights or uses.

Typically, for an image that has always been licensed as rights managed, the licensor is able to provide a history of usage to a prospective licensee. This can benefit the licensee, because they can be assured specific content is not being used in a certain geographical region by a competitor, for example. The history can also provide the licensor with the opportunity to make additional income from offering the licensee an option such as exclusivity within a specific region or industry. If the image does not have a recorded history (it may have initially been sold royalty-free, for example), the licensor would not be able to provide such an opportunity. Again, the rights managed license is merely a set of restrictions placed on the content’s use. At its base, it is not a guarantee of exclusivity in any sense.

The concept of rights managed comes from copyright, a statute that allows authors and publishers of works to be the sole arbiter of the exploitation of that work, and to set fees associated with that work. The economic incentives afforded by copyright give artists one way to make a living through their creative works.

Rights management can benefit smaller licensees: A local business’ newsletter which is printed monthly, and which prints 400 copies, may pay a smaller fee of only $100 to use a particular image. The benefit the business receives from the use is small, so the fee is comparable. This same image, used editorially in a national publication reaching 15 million people might have a fee of between $500 and $1000. The concept here is that when the benefit to the organization increases, so too does the fee paid to the publisher. Note that prices in this paragraph are highly hypothetical; actual prices paid for image rights can range from a few cents to hundreds of thousands of dollars.

The Royalty Free license contrasts with the rights-managed license, wherein the buyer usually receives the right to use the content in very specific ways, with restrictions placed on things like period of time used, geographic region, industry, size published, etc. Rights Managed is so called because the licensor is specifically managing the publishing rights for the content.

For an image that has been licensed as Royalty Free, the licensor is unable to provide a history of usage to a prospective licensee. This may negatively affect the licensee, because they cannot be assured specific content is not being used in a certain geographical region by a competitor, for example. There are examples of the same Royalty Free content being used in large promotional advertising campaigns by competitors.

The concept of Royalty Free comes from copyright, a statute that allows authors and publishers of works to be the sole arbiter of the exploitation of that work, and to set fees associated with that work. The economic incentives afforded by copyright give artists one way to make a living through their creative works.

Typically, the royalty charged for content under a Royalty Free license is based on the physical attributes of the content. For example, the larger pixel size of a digital image, the larger the fee, since the licensee gains more benefit from an image with more resolution. The typical charge for an image that reproduces well at a two page magazine spread size may incur a charge of up to $500, whereas a blog-sized image may run much less. Likewise, a longer piece of music, or a more complex Flash work could command higher prices.

Royalty Free does not mean a user is free to take and use whatever content they find available to them. It only refers to a specific licensing contract between two entities. The licensor, usually the content creator, always retains all copyright to the content, including the ability to distribute it, or allow redistribution. Each licensing contract is different. Some may allow reselling of items that include that content, such as a t-shirt or calendar with an image, and others do not. The terms of the license should be researched, to be assured if the license includes the rights desired by the licensee.