The catch: Your standard digital content (MP3 music files and MPEG-2 video files) becomes Microsoft digital content. These files are backward-compatible and work with other players, like WinAmp, but to get all the benefits, you need Media 9. With this kind of presence - from the server to the media player - the company not only sells more operating systems, it has more control. Specifically, the ability to enable or limit the portability of digital content however it sees fit. Which is where Microsoft's digital rights management tools come in. Poole's Digital Media Division spent $250 million developing software that on first glance seems to completely undermine the mission of the Media Center Edition. If the Media Center gives consumers control of their digital media, the DRM software takes it away.

Microsoft's DRM allows the studios and labels to inexpensively - thanks to modest licensing fees - put a smart wrapper on their intellectual property. The DRM gift wrap carries instructions that let the gift giver (the content providers) limit or restrict when and where the gift can be opened and how it can be used. For example, Miramax could create instructions that prevent your new Gangs of New York DVD from being archived or streamed. Universal might permit one digital archive copy of a Queens of the Stone Age CD but no burning or sharing.

Why would Microsoft both giveth and taketh away? If the company can demonstrate to movie studios and record labels that they'll be able to control their content in a PC-centric world, those content providers will be more enthusiastic about getting in the game. When that happens, consumers will be more apt to think of the PC as a media device. And that will sell more Windows.

....outsiders warn that the recording and film industries are not about to substitute marketplace experimentation for plying Capitol Hill. Microsoft may consider legislation to be poison. To Hollywood, it's Valium. "The IT guys don't think of integrating into the Washington power structure. The Hollywood guys do that like breathing," says Mike Godwin, senior technology counsel for Public Knowledge, a tech policy organization. "This is a real philosophical battle between sectors. If you told the major studios they could either make twice as much money or have more control, they'd pick more control. Same for Microsoft."

So, where does this all leave consumers - the wide-eyed masses, yearning for their content to breathe free? In Microsoft we trust.

What a coinkydink:

Digital music service MusicNet announced that its library of more than 350,000 songs from major and independent record labels are now available for download and CD burning in Microsoft's Windows Media format. Previously, the music had only been available in RealNetworks' format.

The move is designed to broaden the company's appeal to potential distributors of MusicNet's music subscription service, the company said. America Online is the only distributor of MusicNet's service, in which subscribers pay a monthly fee for access to listen to and burn music tracks onto CDs. [AP]