I'm old enough to remember when most software was tied to a device.  You either had "Apple"-compatible (floppy disk) software for your Macintosh or Apple II computer, or you had "IBM" compatible software for DOS or whatever OS they ran.  A Word file saved on one would not play on the other.  I vaguely remember some software that could convert to the other format but I think they didn't do a great job of this.   Eventually, some compatibility was established but not after Apple became relegated to being a niche player while Microsoft went on to dominate.  This is a tale best told by other people who lived through it and studied it closely.  At that time, I was worried about doing my Math homework after soccer practice and oblivious to the technology battles of the time.

Many people have pointed to a similar situation involving digital music with Apple's proprietary platform dominant and Microsoft's "open" platform trying to make inroads.   Many in the music industry view this dominance with wariness.  On the one hand, Apple is a huge customer of theirs.  On the other hand, their balance of power is such that they have successfully resisted things like variable pricing.  Dave Goldberg, one of the smartest people I've met in this industry, is a vocal proponent of having the labels remove their DRM requirements when selling music to encourage more competition.   Selling music that is "iPod Compatible" makes a lot of sense on its face.

Last week Yahoo announced the release of a Jessica Simpson track in MP3 format, sans DRM.  This will be an interesting test but will probably be inconclusive if the track doesn't sell well.  The reason is that there are at least 3 dependent factors being tested including the lack of DRM, a $1.99 price point that's double the normal price, and the personalization that users get, which is supposed to be the reason behind the higher price.  If the track sells well, then great.  If it doesn't, then we still won't really know the whether greater sales from selling unprotected files is worth any tradeoff from greater piracy.  One argument against the greater piracy issue is that labels already sell unprotected music in the form of CDs that are easily ripped into MP3 for sharing.  This is true but I also can buy that removing that one step in the process may spur more casual piracy, or at least more fair-use sharing, which can still impact revenues.

Regardless of what comes of this, the music business needs to keep experimenting like this.