Microsoft have announced that the Zune will officially be a hockey playing, moose loving, beer drinker.  The Zune team has made the official annoucement at CES 2008.

 “We are excited to offer Canadians an alternative music experience with Zune,” said Zune Canada group manager Craig Tullett.

Microsoft launched the Zune in the U.S. in November of 2006 with a 30 GB model.

Last year the company eclipsed its stated goal of selling one million Zunes, shipping a total of 1.2 million. By comparison, since launching the first iPod in 2001, Apple has sold more than 100 million units, and more than three billion songs through the iTunes store.

U.S. album sales died another 9.5 percent in 2007 according to figures released recently. A total of 500.5 million albums sold as CDs, cassettes(do people still have cassette players?), LPs (wow!) and other formats (8 track anyone?) were purchased last year, down 15 percent from 2006’s unit total, said Nielsen SoundScan. About 850 million digital tracks sold in 2007 from places such as iTunes, Zune.Net, Amazon.com and Emusic, compared to 588 million in 2006, and digital album sales accounting for 10 percent of total album purchases. Last year, iTunes became the third-largest music retailer in the U.S - behind Wal*Mart and Best Buy.

Overall music purchases, including albums, singles, digital tracks and music videos, rose to 1.35 billion units, up 14 percent from 2006. The decline in music sales isn’t due solely to LemonWire and BitTorrent though, with more music becoming available on Xbox 360 in games such as Rock Band and Guitar Hero, along with an increase in video game prices and DVDs, consumers are having a hard time deciding what to buy with their dollars, pounds and euros.

Scarily, Josh Groban had the best-selling album with “Noel.” The album, a collection of Christmas songs, sold around 3.7 million copies. High School Musical soundtrack came in second with around 2.9 million units sold and The Eagles’ comeback album, “Long Road Out of Eden,” finished third selling around 2.6 million copies. No Eminem, Madonna, Radiohead, Coldplay or Amy Winehouse to keep up the real music sales then….

Universal Music Group came out top with 31.9%, Sony BMG, rolled in second with with 24.97 percent, Warner Music remained third-largest, with a 20.2 percent share. EMI ranked fourth with a 9.3 percent share. A report released in November by Jupiter Research forecast digital music sales will continue to grow to $2.8 billion, comprising 34 percent of U.S. consumer spending on music in 2012. The recording industry continued to benefit from mobile music, with mobile phone owners buying 220 million ringtones - something the record execs keep quiet about when talking about revenue numbers - as they know they’re ripping off the consumers.

EMusic subscribers downloaded nearly 500,000 tracks and audio books on Christmas Day alone. The company’s paid subscriber base exceeded 400,000 at the close of the year.

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.

Earlier this year, Universal Music Group big-cheese Doug Morris opted against a new 2-year contract with iTunes, and instead has a rolling month-to-month contract with Apple.  According to a report today in BusinessWeek, the UMG is gearing up to launch an iTunes competing service of their own to be named “Total Music”.   BMG Music have also thrown their name into the program and is having talks with Warner Music Group. Together the three companies music giants would have control of over 70% of all the music sold in the U.S., with Apple iTunes currently holding control of over 70% of the music sold online in the U.S.The new Total Music service would be looking to hook up with direct iPod competitors as well, such as Microsoft’s Zune player, mobile phone carriers and game consoles looking to work themselves into more a part of total home entertainment.

From PC World’s news report:

The plan is to get hardware makers to absorb the cost of a $5 monthly subscription, so that consumers would get their music essentially for free when they buy a new player, and the hardware industry would be compensated by selling many more devices.

“You know that [the subsctiption is] there, and it costs something,” one tech executive who has seen Universal’s presentation told BusinessWeek.com. “But you never write a check for it.”

Microsoft is one lead candidate to take up the fight with Universal and revive its Zune music player in the process.  But the wireless carriers are the most adept at bundling devices and services under a contract to keep the “free” feeling alive. I’d expect fierce fighting by wireless companies for deals with Universal.

While Universal is currently running DRM-free music trials on iTunes rivals, it is not said if Total Music would be DRM-free. But removing DRM from the digital music landscape could be the the next big cause, giving a competitive advantage to its champion.

Microsoft are not taking the launch of the new iPods lightly.  Bill Gates glossed about the new Zune 2 and the launch date of November 2007 in a widespread video interview recently.  If you’re not in the know, Zune 2 will be avabilabe 80Gig hard-drive, 8Gig and 4Gig flash editions.

According to reports from a “source” inside Microsoft, a new batch of Zunes are due out in both flash memory- and hard drive-based forms. The new, smaller, flash Zune (the Draco) will be hitting shelves in pink, red, black, or army green colors, will have a 4GB or 8GB capacity, and will feature a “squircle” (the source’s term, not ours) for navigation, which won’t have a center button but can be pushed, “From any side.” The hard drive-based player (the Scorpio) will be available in 80GB, sports the soon-to-be infamous “squircle,” and touts a screen which the source claims is “awesome” for video.

On Wednesday morning Apple is expected to announce the latest iPod.  Being characteristically mum in advance of the announcement, the invitation sent to the media dogs last week didn’t give much away, however, it did show a silhouette holding an iPod.   The invite was in the style of Apple’s “Cover Flow” iTunes and iPhone browsing feature. “The beat goes on,” it said.Apple’s announcement will have implications for Microsoft, which last year launched its Zune music player in an effort to compete with the iPod.   Apple sill dominates the portable music market, and Microsoft’s previous efforts to compete, in alliance with its hardware partners, weren’t effective. The Zune is the company’s own device.

So far, Microsoft has come out with a 30-gigabyte Zune player. The company’s executives have said they will need to expand the product line to include smaller and cheaper, flash-based Zune models to better compete with the iPod lineup in general, and with the popular iPod Nano in particular.

“Certainly if Microsoft has any hopes for Zune, they are going to have to refresh that product before the holidays,” said Michael Gartenberg, a Jupiter Research analyst. “They are going to have to do it in a very meaningful way and it’s going to require a major revamp of that product line.”  Launching the first Zune model last year, Microsoft executives said they didn’t expect to be able to overcome the iPod’s advantage in the short run. Data from the NPD Group show Zune in the No. 2 position in the specific niche of hard-drive based players, and that spot may be the most realistic position for the company for the time being.

The Zune’s primary differentiator is a wireless song-swapping feature, but it requires other Zune users to be in the vicinity — something that’s not common, given the low market penetration.

To be sure, all is not perfect for Apple in digital media. Last week, its deal for NBC television shows on the iTunes Store unraveled.   But Microsoft still has a long way to go to catch up. In July, Microsoft’s Robbie Bach, president of the company’s Entertainment & Devices Division, reiterated that it would be three or four years before Microsoft gets where it wants to be in the portable music market.

“You are going to see more from us in terms of new software, in terms of new devices, in terms of new features,” Bach told analysts during a meeting on the company’s Redmond campus. “You’ll see us broaden our presence in the marketplace for sure going forward.”

Wired are reporting that Toshiba’s announcement of a flash-based Gigabeat U jibes interestingly with rumors of an upcoming flash-based Zune.  The original Zune was based on Toshiba’s hard-drive-based Gigabeat, so it stands to reason that the upcoming flash Zune will be a remake of the Gigabeat U.  If Microsoft tries again, it should allow over-Wi-Fi downloads, robust internet radio, and all of the other wireless features that should have been included the first time around (some of which are also missing from the iPhone ).

According to ZuneScene they have an inside source at Microsoft who has confirmed that there is a new Zune coming our way with a code name of “Draco”. The new Zune will not be marketed under this name which in our opinion helps keep this rumor flexible, but they do have some specs.According to the leak, the Draco Zune will come with flash memory of 4GB or 8GB, will have video playback and Wi-Fi connectivity and is expected to be available for the coming holiday season.