The record companies are ceding ground very slowly. But Apple's been pushing for a long time. I mean, honestly, what do they have to GAIN from DRM? It's all a matter of the people they deal with.
They gain vendor lock-in. Everyone who buys songs from iTunes with DRM is forced to either buy iPods forever, or lose the ability to play them on their player of choice.
Without the DRM, we'd see a much more fragmented player market. iPods might still be the leaders, but they'd almost certainly have a lower market share.
I agree that that would have lost Apple some ground, but I think they'd still be vastly ahead of other people. The DRM doesn't stick people. The incredible branding does.
People think iPod sounds reliable, and MP3 player sounds unstable. They go for the iPod because they think it's the only one there is.
