Jupiter Research Analyst Michael Gartenberg offers a lackluster reaction to the news that Wal-Mart has opened a DRM-free MP3 music store. As a fan of DRM-free music I’m disappointed at Michael’s very shallow analysis of this move by Wal-Mart into unchained digital music.

Michael takes a shot at the price point for Wal-Mart’s offering stating, “Overall, not too much to get excited about. $.94 vs. $.99 won’t matter much to consumers.” Hold on guy. Let’s compare apples to apples here. The iTunes non-DRM ‘high quality’ versions of songs go for $1.29 per track. Wal-Mart’s 256K MP3 versions cost $.94 each. I read that as a twenty seven percent price difference. I think that will make a difference to people who buy music.

Gartnenberg then takes his shot at the lack of DRM stating, “Lack of DRM is interesting but it’s not clear that it matters to the vast majority of consumers…” I can tell you that it definitely matters to anyone who has ever tried to move their iTunes music collection. There are some legendary stories of iTunes DRM hell. I’ll tell you who DRM matters to. It matters to people who buy a lot of music online. When you dabble in online music purchases its not such a big deal. And I know a lot of people like myself who opt out of purchasing music online because of the DRM restrictions and associated hassles. In fact, all of the music I’ve bought from iTunes has come as a result of gift credits or promotional downloads. People who love music buy less because of DRM.

Another area where many media analysts miss the target is in the failure to see the significance of the phone as a device for playing of music. The fact is that just about every adult person in the United States has a cell phone. The vast majority of newer phones have the capability to store and play music from flash storage cards. The only phone that supports the AAC format out of the box is the iPhone. So what percentage of cell phone music players are represented by iPhones? I don’t know the number but conventional wisdom will tell you its small since the iPhone is available on only one carrier and so far only in the U.S. So there are millions of people who would use their music purchased online with their phones (I do with my Samsung Blackjack) but can’t due to the dearth of MP3 formatting. Thankfully there are new possibilities.

Whether we like it or not Wal-Mart is a major player in online music sales in the U.S. They are not nearly as big as iTunes but that doesn’t mean they can’t steal market share. If Wal-Mart fails to capture market share it won’t be because of the MP3 format, pricing or file quality. Their new MP3 store scores a big win in all three of those areas.

Wal-Mart’s failings in this area are ones that are obvious and should be corrected soon. The Wal-Mart digital music store only works with Internet Explorer. According to their site, “We will be making enhancements to our updated version in the future to support the Firefox browser.” That can’t come soon enough in my opinion. The catalog of music is currently limited but still includes some great music. Given the fact that the iTunes Plus catalog is limited as well this isn’t really Wal-Mart’s fault. The fact is that it will take time for labels to come around on the DRM-free format.

This move by Wal-Mart may not signal a blockbuster tipping point for digital music in MP3 format. But it is very significant in light of the fact that we now have two major digital retailers (including Amazon via their funding of Amie Street) who are making a meaningful investment in the MP3 format. Pressure from moves like this will move the music industry to adopt these formats much quicker than they would have if left to their own devices. That’s music to my ears folks.