I play Diablo II and Neverwinter Nights. I play these games with my friends. In fact, I've purchased four copies of Diablo II so that I can play with friends at LAN games days. Each copy of these games comes with a special "CD Key", and a "copy protected" (ie: intentionally faulty) media.
My first problem is that the Diablo II CD Key is fixed onto the CD jewel case - so if someone steals my Diablo II CD case, they've got the CD Key. Do you think that reporting the theft to Blizzard has any effect? No. The thief (or his client) is still playing my copy of Diablo II - I can tell, because if I install the game again using the wrong CD Key, it tells me that someone else is using that CD Key.
In theory, I could work around this problem by claiming the theft on my insurance - except that the theft occurred somewhere between leaving home for a weekend LAN game, and returning home. I suspect that one of the guys at the LAN game purloined the CD case in order to support his drug habit - I've lost sunglasses and keyrings at the same place with the same person present. Regardless of who stole it, the CD Key isn't covered by home and contents because I wasn't home at the time. No insurer in Australia offers personal effects insurance unless my home and contents insurance is above a certain value, and they complain if you over-insure. Mention that you live in a group house (ie: you live with people that you're not in a relationship with) and they suddenly lose interest in insuring you.
The CD-Keys for Neverwinter Nights, Shadows of Undrentide and Hordes of the Underdark are printed inside the respective manuals. In my case, being in posession of the Platinum edition, all three keys are in the one manual, and all three packages of software are in the one set of discs.
So problem one - CD Keys mean that someone else can steal your licence, regardless of whether or not the CDs were stolen at the same time.
My second problem is that I have to manually handle the intentionally faulty media in order to play the game. This involves removing the media from the jewel case, inserting it in the CD-ROM of the PC, playing the game, then removing the media from the CD-ROM drive and putting it back in the jewel case. Along this manual handling path come the risks of scratches - from dropping the media through having the CD-ROM drive eject the media while it's still spinning. All sorts of environmental factors come into play to cause damage to the media. Regardless of what rights I may or may not have with respect to making "archival" copies, what use is a copy that I can't play? The data I need isn't the content that's written on the media, it's the purposefully introduced faults that the game looks for to ensure that the media is "real". Until I have the equipment, the archival software and the right to reproduce those intentional faults in the media, I can't really make a play disc, can I?
My third problem is related to the first two - in order to play the game, the physical media has to be present. If I go to a LAN party and leave my Diablo II play disk at home, I can't play the game. This is true regardless of whether the copy on my LAN party machine is my only copy of the software currently installed, or how many licences I actually have. Then pity the poor fool who turns up to a LAN party with laptop in tow, but forgot that he had the floppy drive inserted instead of the CD-ROM drive. Doesn't matter if you have the physical media with you, if your computer doesn't have a CD-ROM drive.
From my experience, the only thing that CD "copy protection" is good for is boosting the market for No-CD hacks. My gaming experience would be much more enjoyable if I didn't have to waste so much time handling media.
As for dongles - don't get me started. They break, they get lost, they are incompatible with each other or other devices that legitimately use the same interface, and they're bulky to boot. I bought my PowerBook because it was small and unobtrusive. I didn't want to have an 802.11 antenna hanging out of a PC Card slot, neither do I want a USB dongle hanging out the side of the machine so I can run some software on the bus to work - the real purpose of dongles is to get caught up in lanyards, key rings and clothing. That, and to boost the sales of dongles and expensive repairs to laptops that have had USB dongles violently removed by a passer-by's clothing. Never mind the data corruption that occurs when a USB dongle disappears - such as happened to me when the USB hub that the dongle was plugged into lost power. The dongle disappeared so the program decided I was a criminal, at which point it promptly crashed and took 3 hours of work with it.
Then there are the problems with compatibility and upgrade costs. One application we have here at work is incompatible with its previous version. It doesn't require a CD-Key, but it does use a dongle. If you lose the old dongle, you can't get it back. You have to upgrade the software (that's more money out the window) and buy the dongle for the new version. At which point you can't properly use the files you created in the previous version, because that old format hasn't been suppported for years, and the functionality you used to rely on is no longer present.
My challenge to companies like Blizzard - stop relying on media presence to let the game run. Just use CD Keys (if anything at all). I'm sure you won't "lose" as much money through "lost sales" as you spent on the copy protection mechanism and all the support calls from people whose machines you've FUBARed by using your chosen mechanism. To this day, I still don't see the point in requiring a dongle for the use of software which is tied to particular hardware - it's not going to do me much good to use your software if I don't have your expensive laboratory equipment, is it?