DRM might be holding back a lot of the online music providers, but not necessarily for the reason that first comes to mind.  Ars Technica looks at the question of using DRM that makes the music unplayable on an iPod.  Since 3 of every 4 MP3 players is an iPod, that can have a big impact.
“The Holy Grail of online music sales is the ability to offer iPod-compatible tracks. Like the quest for the mythical cup itself, the search for iPod compatibility has been largely fruitless for Apple’s competitors, whose DRM schemes are incompatible with the iconic music player. For a music store that wants to succeed, reaching the iPod audience is all but a necessity in the the US market, where Apple products account for 78 percent of the total players sold. Perhaps that’s why eMusic CEO David Pakman sounds downright gleeful when he points out that “there’s only two companies in the world that can sell to them—Apple and eMusic.””

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