We've used DRM with great success for almost a year now on
OneManBanned.tv
The site has over 35GB of exclusive content encoded at 1000kb/s and the files are downloadable "as one".
There is a big misconseption about movies expiring once the surfer cancels there membership. DRM is very flexible and since the beginning of 2005 we have lifetime licences on all of the movies - meaning the files will never expire whether the customer is an active member or not.
We make it clear on the FAQ page how DRM works so surfers know what to expect. Once the licence has been issued on the first play, the movies play like any other WMV file played on a PC. Sign ups/rebills/chargebacks are no different from our other non DRM sites.
The key to DRM i believe is to have a good amount of quality exclusive content and relax the licence rules a little.
Most of the legal music download sites use a form of DRM and it will surely get more popular and established over time.