Apple's move to embrace DRM-free tracks from EMI via its iTunes Store has begun a digital music standards war, according to BusinessWeek columnist Arik Hesseldahl. "If I were an employee of Microsoft and involved with its confusing digital-music efforts, built around its highly DRM-protected WMA format, I'd be sweating right now," Hesseldahl said. Apple boss Steve Jobs was likely purposely ambiguous about his preferred file format in is open letter titled 'Thoughts on Music.' "[Jobs] didn't mean selling unprotected MP3s, but unprotected AAC songs," the columnist noted. "The decision will have important long-term effects, especially as more labels follow EMI's lead." Microsoft, which initiated a 'PlaysForSure' branding program to ensure widespread compatibility of players and DRM-protected musical tracks, quickly abandoned its own program in favor of launching its own Zune player and Zune Marketplace. That move, coupled with Microsoft's WMA format -- which is expensive to license -- will make the open AAC format much more attractive to device makers, according to Hesseldahl.

Apple's iPod and a slew of other portable media players support the AAC file format, which was developed by the MPEG group as the successor to the popular MP3 format. The adoption of unprotected AAC musical tracks means iTunes purchases will play on a wide variety of non-Apple portable players. Even Microsoft's Zune player supports the AAC format, alongside the Sony PlayStation Portable and several Sony Walkman-branded players. Other companies that produce players which support AAC include SanDisk, Creative Technology, Sharp, Palm, and RIMM.

As a result, online music stores such as Napster, Yahoo Music, MTV's URGE, and others that currently sell WMA songs which are protected by DRM may be forced to consider adopting DRM-free AAC tracks, making them compatible with Apple's iPod. Apple is well known for making most of its money from iPod sales, while the iTunes Store has operated at "above break-even" for the last two quarters.

"If more labels follow EMI's lead, and the other online music stores of the world are offered the same conditions on DRM-free music as Apple, Microsoft will have completely failed to corner the digital-music market, and by this time next year, there will be talk of it pulling the plug on its WMA-based efforts entirely," Hesseldahl said. "Or it will be forced by market forces to follow Apple's lead entirely rather than, as it has with the Zune and Zune Marketplace, copy it poorly."