The digital music industry is nothing short of saturated with contenders. We’ve previously blogged about a few of them: lala.com, MySpace and Pandora.

In 2006, Microsoft entered the portable MP3 player market with the introduction of the Zune. It has since gone through several iterations both in terms of the product itself and the music service sounding it, and as it stands, it is based on a subscription model just like RealNetworks Inc.’s Rhapsody. For a fixed monthly fee, you can listen to any of the songs available in the library. The catch, of course, is that you do not really own any of them. As soon as you cancel your subscription, you lose all access to the music. While the concept is interesting, many consumers want to feel like they own their music, instead of only be leasing it.

Microsoft is aware of this problem and is trying to spice up its offering. It announced on Wednesday that monthly subscribers will now also be entitled to 10 DRM-free tracks per month that they can permanently add to their library. Microsoft is hoping, with this advertised $10 value offer, to give users extra incentive to subscribe to the ‘Zune Pass’. It is also hoping to eventually increase its marketshare of the MP3 player market, which right now stands at a meager 3%.

In the mist of all of these companies coming up with new and innovative ways to sell music, the interesting thing is that the market is completely dominated by the one player using the most basic strategy, iTunes (Etilities Forum). It sells individual tracks for a fixed price, and its MP3 player owns a staggering 72% of the market. The other players may get an A for effort, but Apple gets an A for profitability.

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