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According to reports coming out of the Consumer Electronics Show in Las Vegas, Microsoft will concentrate exclusively on its Zune platform, which is not compatible with PlaysForSure. Microsoft has neither confirmed or denied the reports, which draw on comments made by an executive for one unnamed music service and have been confirmed by others in the industry. Microsoft CEO Steve Ballmer has said that he expects PlaysForSure to continue, although he has explained that Zune was conceived because the PlaysForSure approach had failed to dent Apple's dominance of digital music.

'We said, if we just keep on our current model, it's unclear that we're going to expand our footprint in these portable devices,' he said in an interview prior to Zune's November launch.

J Allard, the Microsoft corporate vice president who oversaw Zune's development has also said that PlaysForSure will continue to be supported.

'The PlaysForSure is still a program we're going to invest in, we still have a lot of partners there, and for a class of consumers who that want to have a hand-crafted media experience and maximise their choice, we have an answer,' he said.

PlaysForSure enables devices to play DRM-protected downloads from stores such as Napster and Real's Rhapsody. Real, for one, is thought to be working on its own DRM to replace Microsoft's.

Napster's chief technology officer, William Pence, said that Napster is also looking at its options, although

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he believes Microsoft will continue to support PlaysForSure.

'While certainly an interesting assumption, the odds that PlaysforSure will be abandoned are not great,' he said in a paper entitled 'The Future of Online Music: Why Closed Platforms will Fail'.

'Microsoft has profited handsomely from having created a de facto standard for the personal computer, and desires to continue to profit from that franchise for years to come,' he said. 'That is why it is very much in their interest to keep entertainment solutions open as part of that platform, and why they are more likely to continue to support PlaysforSure, even as they hedge their bets and offer closed offerings alongside.'

Pence stressed that although Napster is dependent on the Microsoft technology for some of its services, it already employs other systems: its mobile service uses AAC files secured with DRM technology from the Open Mobile Alliance (OMA), and the free, advertising-supported service relies on MP3 and Flash, and employs no DRM.

'If PlaysforSure were to be left to whither and die, as some speculate, established DRM systems such as OMA and others are waiting in the wings to fill the vacuum,' he said. 'Anyone with an interest in digital music would be in the market for a solution, and don't forget that when I say that I am essentially talking about the entire consumer electronics industry.'

Pence added that if PlaysForSure is abandoned - and the online music market becomes a choice between the proprietary, closed systems that are Apple's iTunes and Microsoft's Zune - it would have significant implications for the market.

'But can you imagine a global music industry where you can only buy music from two companies?, he asked. 'Does anyone believe that consumers will tolerate that type of marketplace over the long term, or that such a market will continue to foster innovation?

One might be tempted to say yes, given that the most innovative company in the market has arguably been Apple, which strongly defends its closed system as the only way it can continue to innovate. Pence disagrees.

'Since I believe strongly that the market in the end must and will be based on interoperable digital formats, if DRM is used to erect barriers to that goal, then there is no question it will be swept aside, and the industry may end up with what many have believed was the obvious choice from the beginning: open MP3 files,' he said.