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

Jupiter Research has done some prognosticatin' and come to the conclusion that digital sales are going to keep on growing. In fact, if predictions hold true, digital sales will grow at a compounded rate of 16% per year, to a total of 2.5 billion dollars, or just over 22% of total US consumer spending on music.

Glenn Coolfer astutely observes, "Before you do any math, read a blog post about the survey by Jupiter analyst David Card. He explains something the press release does not: Jupiter did not count ringtone sales as digital revenues. He wrote, "Digital music sales will total 22 percent of US consumer music spending in 2011, and ring tones another 12 percent." Combined with download spending, the adjusted digital figure is actually 34%. That leaves the CD with about 66% of the market."

Subscription services are forecast to keep growing as well, with a staggering 32% compounded growth rate in just that category alone. Napster must be salivating but, frankly I don't see it. Unless some major shift comes along and changes the subscription landscape, or the Major labels relent to an eMusic style model, I just don't see how 32% growth in subscriptions is remotely possible.

Rumors of Microsoft potentially making a play at becoming a part of the major label system though an aquisition of EMI are "odd and unlikely" one analyist says. This comes after some media speculation that the software giant was interested in a takeover of the music giant.

Microsoft has had a tough time with the labels lately. As the Zune nears retail, details are surfacing not only of Microsoft's agreement to pay Universal $1 per Zune sold -- an absolutely ludicris idea that amounts to Universal being paid for its existance, as near as I can tell -- but also of rocky licensing talks for Zune's subscription service. Where label reps have reportedly demanded between $6 and $8 per month in licensing fees for Microsoft to offer subscription music content on Zune, far more than rivals Yahoo! Music or Napster pay to offer a similar service.

The labels have shown time and time again that, when they smell money in someone's pockets, they pounce. Maybe it wouldn't be a crazy idea for Microsoft to become a part of the music business; They've already mastered anti-competitive practices and would only lack the knowledge required to drain the talent and lifeforce out of underperforming new artists, a skill I'm sure they could develop quickly and inexpensively.