DRM-Free Music Plays for Microsoft. Sorry, Apple

Apple CEO Steve Jobs is getting exactly what he asked for nearly a year ago: industry movement away from DRM music. But the DRM freedom he wanted is looking more like DRM freedom from Apple. There has been a whole lot of shakin' going on the last two weeks with respect to DRM-free content: * Warner made its library available to Amazon, as unprotected MP3s * Sony BMG announced plans to release its catalog DRM free * In second quarter, Napster will go back to its MP3 roots, with a library available in the unprotected format While the DRM-free moves may be good for consumers, many labels' have another motivation: DRM freedom from Apple. The iTunes Music store is the biggest seller of DRM music, which should be good for labels wanting to curb piracy. But as iTunes/iPod dominance has increased, labels have found themselves in an increasing Apple choke hold. Universal broke free by refusing to renew its contract with Apple and by making content available DRM free to everybody but iTunes Music Store. Apple could be in real trouble if consumers favor DRM-free content, and more of it is available everywhere else but iTunes Music Store. Microsoft is perhaps the biggest beneficiary of the DRM-free movement. MP3s can be played pretty much on any device, including Windows Mobile phones or Zunes. Meanwhile, many music stores selling DRM-free content continue to offer subscription content in Windows Media Audio DRM. Napster is example. The music store will sell MP3s but offer WMA DRM tracks for monthly rentals. So, Microsoft's benefit is two-fold, while Apple locks customers into a sales-only model with limited DRM-free content. In October, I declared DRM freedom. I dumped about 2,000 iTunes tracks, replacing as many as I could with MP3s from Amazon's music store. For Christmas, I got a new Zune; now I get subscription WMA DRM music as well. I will no longer buy DRM content. Apple's music business model is about end-to-end control, which labels such as Universal are trying to wrestle free from iTunes/iPod. MP3 stores will increase consumer choice of content and devices, which can only hurt Apple's iTunes/iPod business model. Apple only really loses if: * iTunes is denied access to choice, unprotected MP3 content * Competing music stores offer DRM subscription services that run on most other music players, but not iPods. DRM free is perhaps the biggest news coming out of this year's Consumer Electronics Show, even though some important announcement proceeded the event. Consumer Electronics, PC and other device manufacturers want to break the content barrier, making music or videos available across devices or homes. DRM free will facilitate content portability, for personal use. Microsoft benefits another way. Apple's music store and music player have impeded the Windows entertainment strategy. Through music, Apple had a seemingly end-to-end lock on a crucial entertainment endpoint for PCs and CEs in the home. In 2008, Microsoft will be able to seize control again, in part because of DRM free. Be careful what you ask for, Mr. Jobs. Microsoft Watch