Let me play devil's advocate for a moment.
Let's say someone starts the ideal music service: "HonestMusicCo.com".
All downloads are reasonably priced, come in high quality audio (minimally compressed in your choice of AAC, WMA, and MP3), and each download has *NO DRM*.
On the first day, many folks flock to the service and buy tons of tracks. All is good with the world!
"See!" says HMC, "People will honestly pay for music!"
Three weeks later, a handful of the HMC tunes show up on the P2P-services-which-shall-not-be-named. Within two months, the majority of HMC's catalog is duplicated on these free services.
While many people continue to pay HMC for their music, millions of college students and others who have more time than money gleefully descend en masse on the free P2P services, enjoying the higher quality of the freshly supplied music. And for those who don't want to download P2P apps, a new company that's sprung out of a country with lax digital rights laws is reselling the HMC tracks at 40% below the HMC prices, eroding HMC's market.
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Ah, the beauty of no DRM! Now everyone's happy! Er, wait a minute, no, the artists aren't happy because their "sales" are now in Lithuania and they make no money off this. The labels aren't happy for similar reasons. HMC execs, several of whom just got laid off in their firm's budget crunch, aren't happy either. Consumers? Well, after hearing that HMC is cutting back on what songs they can afford to offer and the rate at which they add new music, well, consumers aren't happy anymore, either.
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Do I really believe all of this will happen when DRM is removed?
Yes and no.
I'm a bit more optimistic, but I see the above scenario as quite possible :|