Last week, Martin posted about how Yahoo was planning to shut down its Yahoo! Music store on 30^th September, 2008. The store would take its DRM servers offline on this date, in effect stranding all those people who had paid money for DRM-labeled music.

Apparently, Yahoo have realized the foolishness of their decision and the impact it will have on present and future customers of their services. They are now offering refunds to the people who bought music from the store. Another option being considered is to replace customers’ music with DRM-free MP3 versions of those same songs.

In addition, Yahoo! will transfer customers to the RealNetwork’s-owned Rhapsody service. This is for those people who have a subscription to the service. All these are far better than Yahoo!’s original suggestion that consumers burn the tracks to a CD and then rip that CD to get DRM-free versions of their tracks.

Yet again, problems have cropped up because of DRM. If the music from the store was DRM-free, shutting down the servers wouldn’t have affected anyone. Thanks to DRM, not only is Yahoo! going to lose a lot of its revenue but also lots of people are going to be inconvenienced.

I for one am waiting to see just how much Yahoo! will have to refund its customers. And whether Microsoft is going to follow its example. The real winner in all this is probably Rhapsody, who’s subscriber base will increase just like that. Let’s see what’s next on the DRM agenda, which seems to be falling apart. What do you think? Let me know in the comments.