Even Microsoft would find it difficult to deny that Windows Media Player (WMP) has had something of a chequered past. Once lacking in features and aesthetic appeal, the software giant has spent the past year transforming its ugly duckling into an all-in-one media centre.

WMP 10.0, which should be launched by the end of this year, is the result. While the overall user experience is greatly improved, it is the enhancements to the DRM (digital rights management) that will be of most interest to PC users.

Previously codenamed Janus, Windows Media DRM 10.0 for Portable Devices could make a real impact on digital entertainment. Subscription services such as Napster already allow you to download music and play it on your PC.

But until now you haven’t been able to copy subscription content to a portable device without paying a significant price premium. This is because portable players have had no way of checking if the licence for a protected track is still valid. In theory, it could cost you thousands to fill up your favourite 40GB music player.

Portable players that support the new DRM scheme, such as the recently launched Portable Media Center devices, change all that by including a secure clock that can be used to check if the licence for a downloaded track is still valid. If it is, the track plays; if not, silence.

DRM lets online services offer subscription content that can be moved to portable devices for no more than the existing monthly subscriber’s fee. So a £9.99 per month online music store subscription now allows you to fill up a DRM-compatible portable player – as long as you keep paying up every month.

In the future, you could rent a dozen films to take with you on a Portable Media Center when you go on holiday. This is the kind of flexibility offered by the new technology.

This kind of subscription-based model is not a million miles away from the approach taken by mobile phone networks, where hardware is a loss leader propped up by monthly tariffs. We can hear the marketing promotion already: ”Roll up, roll up! Subscribe to Napster for two years and get a Creative Zen Portable Media Center for free.”

But the familiar cry of ’monopoly’ may yet put a dampener on Microsoft’s DRM ambitions. In August, the European Commission (EC) opened an investigation into plans by both Microsoft and media giant Time Warner to take over US DRM company ContentGuard Holdings.

The concern has been raised that Microsoft and Time Warner could wield their combined power in the software and media markets to squeeze out any competitors.

The EC’s concerns were first raised back in April when Microsoft announced that it was increasing its investment in the DRM firm, while Time Warner also revealed that it was to inject more cash. Together the companies purchased almost all the shares previously held by ContentGuard’s original technology provider Xerox.

The ContentGuard probe comes hot on the heels of the EC scrutiny of Microsoft’s dominance in the PC operating systems market. Earlier this year the commission wrapped up its five-year investigation into the software maker’s alleged abuse of its position. Microsoft was hit with a fine of €497.2m (about £340m) and ordered to offer a version of Windows without the WMP software.

But not for the first time, Microsoft can smell gold in them there digital hills. The worldwide DRM market is expected to grow quickly over the next few years, generating revenue of around £400m by 2007, according to a research analyst at IDC.

Furthermore, the same researcher recently predicted that over 70 percent of DRM revenue in 2007 would be derived from the Windows operating environment. That’s more than loose change – even for the world’s richest man.