Apple's next move that might crush Amazon MP3

At today's Macworld Expo in San Francisco, Apple will most likely be announcing that three more major labels will offer DRM-free MP3s on iTunes. As many of you already know, DRM, or Digital Rights Management, controls how you access your music and protects files against being shared. EMI is the only major label that currently offers DRM free tracks on the music store, but Sony, Universal, and Warner Music reportedly just signed deals.

As part of the deal, reports say that Apple is going to re-work their pricing structure, which the labels often complain about, and offer price tiers -- Newer songs will retain their 99-cent pricing, but older catalog tracks will now reportedly cost in the 79-cent vicinity. In addition, hit songs will now cost more, allowing the labels to fully capitalize on their most sold tracks.

This is bad news for Amazon. Amazon MP3 currently offers DRM free tracks, but even with that seemingly large advantage, still hasn't been able to get much of iTunes market share. Data passed on to the Wall Street Journal by music executives says that Amazon has as little as 5 percent of market share, while iTunes has over 70 Percent. By this point, anyone who had a big problem with DRM would have left iTunes, so if Apple finally does drop DRM, it's only going to take away Amazon customers. Amazon was contemplating for a long time if they should start a music store, and their main reason for launching Amazon MP3 was because they thought that they could grab a reasonable portion of iTunes market share by drawing customers in with DRM-free music--turns out it wasn't so simple. We'll see exactly what Apple confirms today at Macworld, and if Amazon has a plan of attack.