Wal-Mart to Sell DRM-Free Music

Retailing giant Wal-Mart announced Tuesday it has begun selling digital music downloads from its website without DRM copyright protection, bringing it into more direct competition with Apple's iTunes online music store. DRM technology protects music from piracy, but also limits the devices on which it can be played. In May, Apple launched iTunes Plus, a service offering DRM-free music at $1.29 per song rather than the $0.99 per song ($9.99 per album) charged at the main site. Wal-Mart will sell DRM-free music from labels EMI and Universal for $0.94 per song ($9.22 per album). Apple CEO Steve Jobs has urged the music industry to cease using DRM and thereby allow consumers to choose for themselves how to play music they purchase. The music industry is concerned that the removal of the software will encourage piracy and discourage the purchase of CDs. Nevertheless, Universal said this month that it will test the sale of DRM-free music through Wal-Mart, Amazon and gBox -- but not iTunes. In June, Amazon.com announced a similiar move (full summary), although DRM-free songs have not yet appeared on its website. Music purchased from Wal-Mart's site will be playable on "virtually any device," including the iPod, the iPhone and Microsoft's Zune, according to senior director Kevin Swint. Wal-Mart will continue to sell copyright-protected songs at $0.88 per track.

Sources: Wall Street Journal, Reuters, Business Week, Slashdot, Red Herring, Motley Fool, Financial Times, 24/7 Wall Street
Commentary: Universal Music Group Readies DRM-Free Music, Sans iTunes • Steve Jobs: We're Ready To End DRM Now • Apple's DRM-free Music: Balancing Consumer Rights with Accountability
Stocks/ETFs to watch: WMT, AAPL. Competitors: COST, TGT. ETFs: PRFS, RTH, XLP
Earnings call transcripts: Wal-Mart F2Q08

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