One more detail about the latest Zune update: the Zune Pass, which costs $14.99 a month, is now going to allow users up to 10 permanent downloads per month. That's in addition to the unlimited downloads that expire if you stop paying your subscription. Think of it like an insurance policy for Zune Pass: if your Zune breaks and you decide to switch to another brand of MP3 player, you'll still get to keep some of the songs you downloaded.
I believe that Microsoft is the first company to offer free permanent downloads alongside unlimited temporary downloads. Subscription service eMusic does sell permanent downloads, but limits you to a certain number per month. Nokia's Comes With Music might offer more bang for your downloading buck, as it allows you to keep all of the songs you've downloaded during a one-year period. But those songs are DRM-protected, limited to your phone and one PC, and can't be burned to CD. In contrast, Zune's music catalog is about 85 percent MP3s. (Microsoft also announced that it's added songs from Universal Music and Sony BMG to its MP3 catalog, along with Warner, EMI, and a lot of indies.) This means a lot of the Zune permanent downloads will be completely unrestricted.
Is all this going to be enough to wrest some market share from the iPod, or even help Microsoft overtake number-two SanDisk in the MP3 player space? Probably not this year. But given that the Zune devices are just the first shot in a long-term plan to become a major digital audio and video distributor, I'm not betting against Microsoft. Look how long the company was willing to spend money on the Xbox business before it became a real player in console gaming.