Three little letters still have the audiobook divisions at various houses—and at least one agent—concerned. The use of DRM, or digital rights management, to deliver digital audio files has been debated by spoken-word publishers for well over a year now. Last week Random House became the first big house to announce it will start distributing its entire digital audio catalogue DRM-free beginning March 1. Many hope the move will significantly expand the market for digital downloads (already the fastest-growing segment of the audio market), while others fear the change poses a threat to the industry.

The DRM debate was first stirred up when the online music retailer eMusic.com started selling digital audiobooks last year. eMusic, the second-largest digital music e-tailer, significantly trailing the juggernaut iTunes, sells its files DRM-free. The lack of DRM, which differentiates the e-tailer from iTunes, allows customers to more easily transfer downloaded files among devices. Critics charge that DRM-free files are easier to pirate; proponents say the format is more customer-friendly and will encourage more e-tailers to sell digital audio.

When eMusic made its foray into the audiobook market last fall, Random was one of the houses that conducted what it dubbed “a test of DRM-free distribution.” The test, which watermarked selected DRM-free files sold on eMusic for tracking, found no instances of eMusic-originating files turning up on illegal file-sharing sites. In a memo to agents and other “publishing partners,” Madeline McIntosh, senior v-p and publisher of Random’s audio group, noted that the test did not prove consumers aren’t pirating audiobooks, just that DRM-free files are not the issue. “We did find many copies of audiobook files available for free,” she wrote. “But they did not originate from the eMusic test, but rather from copied CDs or from files whose DRM was hacked.” To ease authors’ concerns about piracy, Random will not sell DRM-free audio if the author requests it.