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iTunes threatened by DRM-free music

Will DRM-free music & competitors kill iTunes?

More competition and coexistence

While subscription services, by definition, require DRM, Reindorp said that eliminating DRM for songs that are bought rather than rented would open up the digital media marketplace.

"Selling unprotected music means an iPod user could buy something from Zune Marketplace or a Zune user could get music from iTunes," he said. "That would make it a matter of the stores and services competing with each other more."

And given that the Zune trails far behind the iPod, more competition is what Microsoft is looking for. Reindorp also noted that subscription and pay-per-track services can coexist. That's particularly true because subscription services, with their virtually unlimited downloads, encourage users to explore new music, which they later may want to purchase.

"I can assure you that [these possibilities] are part of the active conversation we're having with our label partners," Reindorp said.

Forrester's McQuivey agreed that subscription services are different from services from which you purchase the music and that the record labels are interested in both models.

"I would argue that subscription services don't substitute for iPod and iTunes; they really substitute for radio," McQuivey said. "For a lot of people, radio is just a way to find good music. To the extent that subscription services succeed, it'll be because you can download a ton of music, see what you like and discard the rest."

But the experts also agreed that the biggest changes to the competitive landscape will eventually occur because, despite the visibility of the iPod, the iTunes store and the forthcoming iPhone, not many people have bought into digital music yet.

"Those of us who live in the digital industry think everybody has a digital music player," Reindorp said. "But if you look at the total market, there are a huge number of people who have yet to get into this space."


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