News that Sony BMG is moving to DRM-free downloads means all the major record labels have removed copyright-protection from their downloads - but what does this mean for Zune.Net and iTunes? Industry analysts have said Apple probably will lose market share in digital downloads as the majors gravitate away from DRM, the resulting increase in online music sales outlets will likely create a larger market in general.

The iTunes market share will decline, predicted Phil Leigh, an analyst with Inside Digital Media, but the move away from DRM “will probably stimulate demand for the iPod.” Sony’s move follows the other Big Four labels — Warner Music Group, Universal Music Group and EMI Music — that have defected from DRM over the past year as the music industry attempts to find a digital strategy that makes money and doesn’t piss off users. Warner Music recently said parts of its catalog would be open to Amazon.com shoppers.

Michael Nash, a vice president of digital strategy for Warner, said Dec. 27 that the label was dumping DRM because it needed to counter the dominance of Apple, which since 2003 has sold more than 3 billion songs — most of them coded with DRM that only plays on the popular iPod. DRM-free songs can be played on the more than 100 million iPods and iPhones already sold, but non-Apple DRM-coded downloads largely don’t operate with Apple devices.

However, Rojas suggested that, with the death of DRM, the iPod could begin losing its dominance to competitors like Microsoft’s Zune, which is incompatible with Apple’s FairPlay.
Still, DRM has not stopped online piracy. The Recording Industry Association of America says billions of dollars are lost each year to pirates. “Because DRM has not stopped piracy, one way of stimulating legitimate sales is to empower competitors to iTunes,” said Inside Digital Media’s Leigh.

The RIAA, which has sued more than 20,000 people, did not immediately respond for comment on Sony’s reported abandonment of DRM. Ray Beckerman, a New York attorney who defends individuals sued for unlawful downloading, suspected the industry would forge ahead with its lawsuits.