As CyberLawg previously discussed the dominant iTunes is
beginning to see substantial competition buoyed by Apple’s restrictive digital
rights management (DRM) on its downloads.
The newest competitor is Wal-Mart, which has the power to
redefine a market based on its massive retailing power. The retail giant has
announced that it will begin selling music online that is DRM free for much less
than that offered by iTunes. While iTunes sells its DRM free music for $1.29,
Wal-Mart’s current pricing has DRM free music at only 94 cents; even less than
the price charged by iTunes for DRM protected music.
Bottom Line: While
Wal-Mart’s entry is likely “promotionally priced” and the library is more
limited than other services, it is increasingly apparent that DRM protected
music will likely not win out in the marketplace unless it is priced LESS than
similarly available DRM-free music. Whether iTunes and the major labels will
react to this shift in the marketplace is less a question of “if” and more a
question of “when.” Consumers have made it clear that DRM is not palatable to
their needs, and certainly when it is sold at a premium price.