Analyst: Apple stunned Microsoft with price cuts

Microsoft's Zune digital music strategy has already taken a lifetime's worth of beatings from industry analysts, and it's not even out yet. American Technology Research analyst Shaw Wu is the latest to weigh in on the Zune player, saying that Apple's price cuts to its iPod line last month stunned Microsoft and forced the Seattle software giant to match its prices. As a result, Microsoft is set to lose as much as $50 per Zune sold, Wu said. The 30GB Zune will cost $250, in line with Apple's announcement last month that its new 30GB iPod will cost $249. Apple's ability to lower its prices across all of its iPods showed its "underappreciated scale and supply chain strength," Wu wrote in a research note.

Wu wrote that the Zune will likely see "modest success" in the marketplace, but sales will come at the expense of those device makers who use Microsoft's WindowsMedia music-playing software and PlaysForSure digital rights management (DRM) technology. Companies like Creative, Sony, Samsung, and Toshiba, which is manufacturing the Zune, will see sales decline as a result of the Zune launch, Wu wrote. "Ironically, it will hurt them more than it will hurt Apple," he said.

DRM buster takes on interoperability

Consumer rights' advocates have long decried the lack of interoperability among the various digital music players and services. Because companies use different, proprietary forms of digital rights management, music bought from iTunes won't play on anything but an iPod, and music bought from other legal download services except eMusic won't play on an iPod. Companies like Yahoo have criticized the DRM conundrum and have done test sales of DRM-free music in the MP3 format. Now noted software engineer DVD Jon--who was tried and acquitted for creating software that cracked the encryption on DVDs--has started a company to help break the interoperability blockade.

After a brief stint with MP3.com founder Michael Robertson's MP3tunes startup, Jon "DVD Jon" Johansen has started DoubleTwist Ventures. Johansen has reverse-engineered proprietary DRM like Apple's FairPlay and hopes to license it to companies who want their media to play on Apple's devices. Others have tried to allow other companies to sell content that will play on the iPod, but it's the first by someone with a history of being a thorn in the side of the entertainment industry. DoubleTwist is Johansen's first major attempt at commercializing his hacking.

Creative devices said to improve MP3 sound quality

Creative said today that it has a new device that will improve the sound quality of MP3s. The company said its Xmod device, which is based on the company's X-Fi Xtreme Fidelity audio platform, will improve the audio quality of compressed music, such as that purchased from Apple's iTunes or any MP3 files. The Xmod costs $79.99, with users plugging it in between an audio source and stereo speakers or pair of headphones. It works with any portable audio player including the iPod and can be plugged into a computer's USB port without requiring the use of software. Creative claims the result is "better than CD quality" sound and reaches 24-bit surround sound. Creative said the device identifies which areas of the audio file have been truncated or damaged during compression and restores those portions of the sound.

"There are more than 100 million people who listen to MP3, WMA, or AAC music on their PCs, Macs, or iPod, or ZEN players, but the quality of this compressed music is highly compromised," Creative CEO Sim Wong Hoo said. "The Creative Xmod enables them to listen to their music with audio that sounds even better than CDs. All your music is instantly upconverted to the Xtreme Fidelity standard in real time through a simple and compact device."

Fox shows to stream on MySpace

News Corp. said today that it is launching a new service to offer full episodes of its TV shows on MySpace.com and the Web sites of its local TV stations after they have aired. The new service, dubbed Fox On Demand, will be advertising-supported and will offer shows such as Prison Break, Justice, and Bones on MySpace and on Web sites in 24 US markets where News Corp. owns TV stations. The streaming video will be advertising-supported, with Toyota, Burger King, and Lionsgate Entertainment signed on as early sponsors.

Digital Music Group expands catalog

Digital Music distributor Digital Music Group struck another licensing deal today, adding the Biograph and Black Top catalogs from Shout! Factory archives. The Sacramento-based company, which buys digital rights to oldies, rarities, and independent music and sells them to digital stores like iTunes, added approximately 10,000 new tracks to its catalog with the deals. The Biograph catalog includes artists like Benny Goodman, Fats Waller, and Jelly Roll Morton, while Black Top Records brings blues legends like Earl King, Snooks Eaglin, Hubert Sumlin, and Johnny Copeland.