Wal-Mart Drives Stake Through the Heart of DRM

If Wal-Mart kills something, it often stays killed. And Wal-Mart has decided to kill digital rights management, or DRM -- the software encoded in downloadable songs that restricts where and how the song can be played.

Wal-Mart has been desperate in the realm of downloadable music. It launched a music service on Wal-Mart.com a couple of years ago, thinking it might beat iTunes by competing on price. Wal-Mart charged 88 cents a song vs. iTunes' 99 cents. But the songs were encoded with Microsoft's DRM, so they could not easily play on iPods, the most popular player. For the most part, nobody came to Wal-Mart's music store.

So Wal-Mart is now embracing MP3 downloads, which have no restrictions. An MP3 music file can play on any music player. The price per song will be a bit higher than others on Wal-Mart's site, at 94 cents per MP3 song. But that's still a nickel lower than iTunes, with no DRM.

This is a major blow to DRM -- why would anyone buy a DRM-restricted song for 99 cents when they can get a DRM-free song for 94 cents? It's also a significant challenge to iTunes. For the first time, iPod owners have a real reason to buy their music from Wal-Mart instead of iTunes.

Look for responses from other on-line retailers. This is only going to get more interesting.

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