Wal-Mart dumps digital protection at online music store

Wal-Mart Stores, Inc. (NYSE: WMT) recently lost its crown as the top seller of music to Apple, Inc.'s (NASDAQ: AAPL) iTunes digital music store. But now Wal-Mart is fighting back.

America's largest retailer is abandoning "digital rights management" (DRM) on its digitally-downloaded music files. That means that any device capable of playing an MP3 file (the universal, non-protected digital music file format) can now play music purchased digitally from Wal-Mart.

As urged by Apple CEO Steve Jobs in 2007, music industry heavyweights are finally starting to drop the insistence on protecting digital music files. Wal-Mart's change of stance here should go a long way in swaying other large online digital music stores from dropping cumbersome and intrusive DRM from online music offerings. And there's another huge reason Wal-Mart is changing its mind, most likely: its entire music collection -- if switched to the MP3 format -- now becomes playable on all of Apple's iPods (and the iPhone).

If Wal-Mart wants to remain relevant in the digital download world, this is the way to do it. It's incredible to think that Apple's digital-only music sales surpassed Wal-Mart's physical CD and digital download sales, but it did. And it's a testament to how customers want their music delivered these days. The $15 CD? It's already toast, although there are still hundreds of millions purchased, even in 2007. Digital music files are taking over and killing the CD business slowly but surely. Although Wal-Mart's entire online music collection offering is not yet available in MP3 format, it has made the first step in that direction. And that first step is a doozy.