The iPod maker is expected to make two announcements, possibly as early as this week - the first will be to allow streaming of protected AAC content via USB; the second will be to licence its Fairplay DRM to the company's Made For iPod licensees.
This is an interesting move that I hadn't been aware of. Apple is now opening up pieces of Fairplay so that others can benefit and the consumers aren't *completely* locked in. Interestingly, as the market is demanding (and even some of the major labels are moving towards) a DRM-less ecosystem, the company with arguably the biggest amount to lose in that scenario is Apple.
MP3s are the great equalizer. While it is certainly not the best audio compression scheme, it is obviously the most widely supported. Virtually every media device on the plant can play an MP3. So, if MP3s become the standard, then iTunes will have to start selling unprotected MP3s to compete. Then a song you bought on iTunes could play anywhere - which granted, will still most commonly be an iPod. But, the rest of the market would also be selling content that would play on an iPod (and an iPhone). At that point, do you care where you buy your content? It may be in the virtual check-out line, could be from a news story, or a review on Pitchfork. The backend provider is almost marginalized, and others will be building compelling applications on top of their catalogs - give they pennies to MusicNet, keep the dollars from the ad revenue. Just look at what companies like Yottamusic are already beginning to do.
It will be interesting to see how hard Apple fights to keep DRM part of the online music market - and to what extent it becomes a liability in consumers' eyes. Apple has done a great job convincing people that when they buy a song from iTunes they "own" it and can do with it whatever they please. Steve Jobs has a gift that way... he tells people what to believe, and when to believe it, and they do. Sign me up for that. That's magic.