Microsoft considers ditching DRM for Zune

 

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By Simon Aughton

Posted on 10 Apr 2007 at 10:21

Microsoft has revealed that it has held talks with EMI and other major record companies about the possibility of selling DRM-free downloads for its Zune portable media player.

The company revealed that in the wake of EMI's non-exclusive deal to sell unrestricted tracks through Apple's iTunes it is prepared to ditch its long-standing commitment to DRM.

'Consumers have made it clear that unprotected music is something they want,' Microsoft spokeswoman Katy Asher said. 'We plan on offering it to them as soon as our label partners are comfortable with it.'

Apple will begin selling DRM-free EMI tracks from next month. While its impact remains to be seen, the smart money is on the other major labels following suit, not least because of the extra income the unencumbered tracks will generate. And even the most ardent advocates of DRM cannot ignore the evidence that DRM has done little, if nothing, to curb the scale of unauthorised p2p file sharing.

That DRM-free downloading will take off is by no means certain given that the unrestricted files will be between 25 and 30 per cent more expensive, albeit at a much higher quality. But if it is adopted by all the major labels, then that poses a problem for Microsoft beyond the simple matter of tweaking its Zune Marketplace to provide a DRM-free option.

Portable player manufacturers will no longer need to provide support for Microsoft's Windows Media DRM, and pay the necessary licensing fees. Instead they could, for example, integrate support for the AAC format that Apple is using, and advertise their products as iTunes- and iPod- compatible. The decline of DRM could mean the decline of Windows Media and further undermine Microsoft's so-far-unsuccessful efforts to supplant Apple as the leading player in the digital music market.

As Arik Hesseldahl noted for BusinessWeek, why follow Microsoft when you have an opportunity to take a slice of the iTunes pie

'If more labels follow EMI's lead, and the other online music stores of the world are offered the same conditions on DRM-free music as Apple, Microsoft will have completely failed to corner the digital-music market, and by this time next year, there will be talk of it pulling the plug on its WMA-based efforts entirely,' Hesseldahl wrote. 'Or it will be forced by market forces to follow Apple's lead entirely rather than, as it has with the Zune and Zune Marketplace, copy it poorly. Think of it: Microsoft labelling its second Zune player as "compatible with iTunes".'

Microsoft is planning a major marketing push for Zune over the next few months, but if sales figures to date are any indication it will need a lot more than that to make any dent in Apple's dominance.

NPD figures for February gave Apple 73.7 per cent of the US portable music player market; Microsoft was fourth with 2.3 per cent, behind SanDisk and Creative. Apple has just announced that it has sold 100 million iPods, which means that in this quarter alone it has already shipped almost 12 million, 50 per cent more than it sold in the same period last year.