Now that Microsoft has released some hard facts about Zune we can finally begin to sort out how much of an impact the product might have on the digital music market. For weeks we’ve been hearing rumors about how Zune’s wireless capabilities will be used to enable new types of music sharing and discovery. It’s the one feature that could potentially set Zune apart from the iPod.

Unfortunately Zune’s wireless music sharing is turning out to be one of those features that seemed better when it was just a rumor. While Zune users will be able share music with friends, there’s a catch (isn’t there always). As Jim noted earlier, recipients of shared songs will only be able to listen to them three times or for three days, whichever comes first. It sort of sounds like a really bad tire warranty.

Zune accomplishes this amazingly stupid feat by wrapping shared music in a proprietary layer of DRM, regardless of what format the original content may be in. If Microsoft’s claims are to be believed, this on-the-fly DRM will be seamless and automatic – which must be some kind of first for Microsoft.

What Microsoft has created is a new form of viral DRM. Zune will intentionally infect your music with the DRM virus before passing it along to one of your friends. After three listens the poor song dies a horrible DRM enabled death. Talk about innovation.

Microsoft will undoubtedly claim this limitation is designed to support artists and prevent piracy. There’s just one problem. Not all artists want their music protected by DRM. Furthermore, not all artists benefit from having their music protected by DRM.

While it may come as a surprise to Microsoft and the major labels, independent musicians frequently promote their music by posting unencrypted mp3 files on their websites in hopes of finding an audience. If Zune is really all about community, as Microsoft claims it is, then it would allow music to spread virally, instead of DRM.

Meanwhile, if you’re a musician who is more concerned with building your audience than you are with restricting access to your creative works, you might consider adopting an appropriate Creative Commons license. Based on the item below it appears that Zune’s viral approach to DRM is in violation of all of Creative Commons licenses. It’ll be interesting to see how long it takes before someone actually challenges Microsoft on this.

What happens if someone tries to protect a CC-licensed work with digital rights management (DRM) tools? If a person uses DRM tools to restrict any of the rights granted in the license, that person violates the license. All of our licenses prohibit licensees from “distributing the Work with any technological measures that control access or use of the Work in a manner inconsistent with the terms of this License Agreement.”

Creative Commons FAQ

Update: Since most of you probably won’t be wading through the comments below I’ll address an issue that should have been included in the original article above. It’s been asked repeatedly how I know that Zune will wrap non-DRM’d songs in a layer of DRM. Confirmation of this actually came from Microsoft’s own Zune Insider, Cesar Menendez.

This is from his blog in response to reader questions about Zune functionality.

I made a song. I own it. How come, when I wirelessly send it to a girl I want to impress, the song has 3 days/3 plays? Good question. There currently isn’t a way to sniff out what you are sending, so we wrap it all up in DRM. We can’t tell if you are sending a song from a known band or your own home recording so we default to the safety of encoding. And besides, she’ll come see you three days later. . .

Update 2: Zune Insider Cesar Menendez has contact me with clarification about Zune’s file sharing limitations. See my latest post for more details.