Billboard's Ed Christman has a great article on the major labels' official positions on DRM. EMI has already dropped DRM from its downloads, and Universal Music Group is currently testing non-DRM downloads at select retailers (but can you really see them doing an about face and sticking DRM back on tracks?).

The "tipping point," as the Gladwell-inspired Christman put it, may be an upcoming promotion run by Amazon.com and Pepsi that will give away up to 1 billion tracks (though certainly far fewer will actually be redeemed). The promotion, built around an ad run during the 2008 Super Bowl, "coincides with an ultimatum from Wal-Mart asking major labels to supply walmart.com with their music in MP3." Walmart.com could disappear and labels probably wouldn't mind, but labels should pay attention to the warning because Wal-Mart's brick-and-mortar stores represent their largest account and floor space is going to get tight next year. (Swap dropping DRM for not decimating its CD SKU count? It's worth a shot, Mr. Morris.)

Apple has a monopsony power that labels fought tooth and nail. But Amazon.com has a similar bargaining power as a buyer of media, and labels are obviously more willing to trust Amazon.com -- if only to lessen some of Apple's market dominance.

The Pepsi promotion puts a twist on the ol' "free music" and ad-based models. Rather than simply give it away or use music to sell ads, labels have an option work with advertisers and retail partners to get music onto the hard/flash drives of fans while still getting paid. How much will they get paid? Christman says sources put the amount at $0.40 per track. That's well below the $0.65 to $0.70 per track wholesale cost. As for any foot dragging over the price, labels should look at the historical precedent. They give volume discounts (plus coop marketing dollars) to physical retailers. I think one billion tracks meets the definition of volume.