The grapevine says some at CES are being told Microsoft will no longer develop PlaysForSure, its proprietary DRM system, a move Microsoft swore up and down it would never make when the company failed to include PlaysForSure support in the Zune line.

According to PC Pro News,"Microsoft will concentrate exclusively on its Zune platform, which is not compatible with PlaysForSure. Microsoft has neither confirmed or denied the reports, which draw on comments made by an executive for one unnamed music service and have been confirmed by others in the industry. Microsoft CEO Steve Ballmer has said that he expects PlaysForSure to continue, although he has explained that Zune was conceived because the PlaysForSure approach had failed to dent Apple's dominance of digital music."

And just when Napster was starting to show new signs of traction. It's unclear yet what all this means for the many PlaysForSure partner companies but, the end of development could put them all in a very precarious place. This could be a good thing for some, as Real Networks and Sandisk seemed to see this coming a while ago, and have created a new, competing subscription-capable DRM format.

See Also:
Think PlaysForSure is dead? Don't tell Napster
Real Networks and Sandisk hook up
BBC catches on to PlayForSure lockout on Zune
Microsoft prepared for long haul and big investment in Zune

When UMG forced Microsoft's hand and extorted gained a deal to get $1 per Zune sold as compensation for what UMG CEO Doug Morris calls "a repository for stolen music", it became a widely held belief that UMG beat Microsoft at the negotiating table. Microsoft, just days away from the Zune's launch _needed_ UMG's extensive catalog -- which includes labels and imprints such as Def Jam, Geffen, Interscope and Verve -- for the Zune Marketplace.

ZDNet's Jason O'Grady offers a different idea, "Why in the world would Microsoft agree to such a dangerous precedent? The obvious reason is that MS needed to get access to the Universal catalog. My favorite (and more dastardly) reason comes from Macalope who claims that Microsoft did it "to try to screw up Apple's business model.""

We're watching the beginning of a slippery slope. UMG won't be the last label to demand a royalty on hardware, and now that the precident has been set, Apple may be UMG's next target. Graver still, O'Grady posits that the movie studio's will be next, and offers evidence that they are already warming up to demand tighter DRM restrictions on movies bought from the iTunes store. How far will UMG go and, what that means for device manufacturers is still up in the air but, recent statements by UMG's CEO show that he's ripe and ready for battle.

[via ZDNet]