Amazon's DRM Free World

Amazon decided it wants in on the digital music service market and clearly has its eyes on snatching up iTune users. So what are the implications of Amazon's new foray into digital music peddling?

Well, the move will make Amazon the first digital music service to offer songs 100% free of Digital Rights Management. Most of the big record labels favor DRM, which attempts to prevent access to or copying of digital media. But DRM frustrates many consumers who cannot transfer songs to different music players, like from Apple's iPod to Microsoft's Zune. EMI is the only major label that has ditched DRM, but its unclear if others will follow.

Who loses out in this deal? Blackfriars says Microsoft does because it invested billions of R&D funds in DRM. Other losers will be subscription sites like RealNetworks and Yahoo Music that will struggle because they won't be able to guarantee their ongoing revenue flow.

JupiterResearch's David Card says Amazon, the world's top online retailer of CDs, will soon be formidable adversary to Apple's iTunes software. But not initially. First it will have to beef up its music catalog.

StartupSquad is more skeptical and says that without a music device, Amazon won't be able to draw the users that iTunes does.