It was pretty stunningly apparent at the time that the Internet was very good for information sharing, that crushing Napster hadn't exactly stopped people from sharing digital media, and that trying to make media exceedingly secure and hard to use was not a winning strategy.
If you want a customer to pay for your product, you have to offer value - if it's both more expensive and harder to use, you've made adoption pretty unlikely. In '03, MP3 players were entirely prevalent, mostly didn't support useful DRM, and the music industry mostly sold little silver discs which came with no restrictions.
So it wasn't that the threat model to make music readily redistributable for free was "the smartest black hats out there figure out how to crack your crypto and DRM", it was "an average user rips a CD into MP3s and shares it".
As you might expect, it was frustrating to try to deal with the competing demands from Hollywood at the time. People mostly didn't bother attacking the DRM - they just went and created or file-shared to get the more usable files without the protection layer. But there was still a great deal of insistence that whatever content protection layer was put in could be a vault to keep media safe forever, rather than a speedbump to piracy. (Meanwhile, of course, CDs were raw bitstreams of high fidelity audio data...)