The best drm I have heard mentioned on these threads is Stardocks for galactive civ 2, I think you could install and play with no drm, but in order to get patches and use online features ect you had to register. Stuff like that gives people an incentive to buy the game. I know there are still flaws with this, but its going in the right direction.
Two points:
1) Patches for GalCiv2 were cracked and DLable within hours of them being up for legitimate users
2) Brad's company now uses their own Steamalike called Impulse (which is also pretty nice, but then I'm not a Steam fearing luddite)
3) Stardock's game development budget, and the flexibility to be all loosey goosey with DRM, comes from their extremely profitable and successful Windows modification business -- essentially,




that you can buy to customize or add functionality to your Windows desktop
The most important anti-piracy tool in Stardock's arsenal is its development of a positive image in a niche group of hard-core strategy game buyers, and its nigh on constant involvement with that group through forums, chats, and extensive betas and dev journals. It is extremely difficult and time intensive to maintain that level of community involvement without somehow screwing up, and essentially requires that the developmental lead also be the community manager.
Some of the other up and coming niche develishers (developer/publishers), like Paradox Interactive, work on a very similar model -- the lead developer is also the individual in charge of ensuring the community is kept involved in the development process through dev journals and regular communication on the forums.
The fundamental truth that both of these companies, and a few others, have realized, is that niche markets of extremely hardcore strategy gamers tend to be older in age, extremely loyal to a brand that courts them, with a good deal of disposable income to spend on games.
That sort of model wouldn't work for Civ5, which is a much more mainstream product aimed at a far wider -- and, on average, younger and therefore generally poorer -- audience. Rather than asking the Lead Dev of an incredibly large team to manage both development and community relations, the developer instead chooses to maintain a much lower profile online, replacing community involvement with a higher profile in the established media. The extensive modding community takes over the role of responsive developer in many ways, helping to drive sales by increasing the perceived product value.
This increased distance between player and developer base has the unfortunate result of significantly decreasing the perceived need to support the game/developers, thereby resulting in a far lower per unit profitability than you'd expect to see on more niche titles. DRM more broadly is an attempt to convert more non-paying users to paying users, thus improving per unit profitability and mildly to moderately improving the return on the game itself, depending on how one models the effect of DRM.
Steam is an incredibly successful attempt to combine carrot and stick to convert more piracy to sales, improving per unit profitability. The low profile of the DRM aspect, the unobtrusiveness of the client itself, the consolidation of both games library and patching, their strong support for independent developers, and their regular and aggressive discounts (intended to expand their network and increase sales volume) are all significant carrots in their favor. That games are also somewhat to moderately more difficult to crack due to Steam is a bonus, but not nearly so significant as the strong network of Steam users, which tends to exert positive peer pressure on potential pirates, who, after all, want to play the game with their friends as much as the next person, and cannot do so on legitimate servers with their friends if they do not themselves have a legitimate copy.
The long and skinny is that Stardock is a difficult act to copy for other devs, and uses its own Steam-like DRM. That Steam's DRM is more the positive peer pressure of the network. And that Steam is far superior to a DRM scheme that has more in common with a rootkit than a dongle key (aka the first post's reference to the incredibly draconian Alpha Protocol DRM).