It has been perfectly possible to mix and master in DSD for a very long time. I wrote a historical summary on this topic in
post #104 of another thread.
Sony's engineer Ayataka Nishio, who designed the first dedicated digital processor for DSD editing, the Sony CXD2926 (see below)
has been interviewed by a Japanese website. He stated that it is not until Sony released said processor that its partner, Philips, was definitely convinced to step in the SACD bandwagon.
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The image caption in Japanese states that the CXD2926 processor was released in August 1996.
But many engineers at Philips believed that mixing directly in DSD was pointless and that it was better to convert DSD to PCM. In fact, some at Sony thought the same thing. Paul Frindle, famous for being one of the main developers of the Sony Oxford OXF-R3 all-digital PCM mixing console,
recounted on the Gearspace forum that all efforts to mix while remaining in or returning to DSD were foolish and that he even withdrew from the DSD mixing tools development project entrusted to Sony Oxford. But other engineers persevered and, of course, fulfilled the parent company's order by producing all the devices I talk about in the above mentioned historical account.
As for Philips, while they collaborated with Merging to help develop the DXD format—which is merely a marketing name inspired by the DSD acronym, even though it's simply a 24-bit/352.8 kHz PCM format—their own engineers nevertheless designed a method capable of making edits or gain adjustments directly on a DSD stream, without converting the entire file to PCM. This technique has been available since the release of the very first version of the Pyramix system capable of SACD production. Which just goes to show, nothing is simple, or black and white!
As far as DRM is concerned, it should not be forgotten that robust copy protections were a feature made mandatory by the disc industry in a set of specifications for a new generation of optical disc they released under a
steering comitee.