Apple Keeps Humming

"DRM is an embedded feature of the subscription services and they can't run their business without it," says Phil Leigh, senior analyst with Inside Digital Media, a Web site that focuses on the digital music business. "Now they are stuck with it for the bulk of their services and the disadvantages of DRM are going to plague them."

Meanwhile, Apple's partnership with EMI, could shift consumer buying patterns when it comes to music, say some analysts.

Though consumers have embraced digital music players, they still buy CDs because they want higher-quality music and no restrictions. Now, instead of purchasing CDs at their local retailer and then ripping them onto their iPods, users could directly download high-quality music from iTunes.

Monday's announcement of the partnership with EMI for DRM-free tracks could also help Apple in its ongoing tussle with some European countries over what was earlier perceived as a closed iTunes system.

Cupertino, Calif.,-based Apple has been battling concerns from some European countries that iTunes could be potentially anticompetitive. Opening up iTunes eases that pressure on Apple and helps it keep away legal action of the kind that has mired Microsoft(MSFT) in Europe with its Windows operating system.

Shares of Apple were up 72 cents, or 0.7%, to $93.63.

The DRM restrictions on songs from iTunes also had led to a thriving system of illegal music downloads that made tools and tracks available to users who wanted their music without restrictions. "DRMs haven't worked, and may never work, to halt music piracy," Jobs had acknowledged.