At Netflix Investor Day, Netflix CEO Reed Hastings revealed their timeline for the end of the rental-by-mail biz, and why they're digging so hard into digital distribution: It "will probably peak in the next five years." Taken more broadly, it's more or less predicting that the real end of physical media is in T minus five years—'cause presumably, as long there are discs, Netflix's model assumes you'll get 'em from Netflix. While the end of physical media has been predicted lotsa times, it's rare that a company puts a death sentence on its core business, so this isn't the cheap willy-nilly futurism we're used to gagging on. [Reuters via Alley Insider]

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Okay, so DRM is dead dead dead. Hurray, right? Well, Wired says it's simply being swapped out for digital watermarking, which will lay out breads crumbs for the labels to follow as songs make their way across P2P networks, and the bundle of evidence will allow them to place pressure on ISPs to engage in large-scale network filtering.

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Less than a week after it came out Sony BMG was planning to sell music not loaded down with copyright, they're officially selling DRM-free MP3s through Amazon's MP3 store later this month, making it the first to carry DRM-free music from all four major labels. Check the press release below, we're grabbing more details right now.

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Looks like there might another major announcement at MacWorld. BGR says they've "confirmed" that Apple is launching a record label with Jay-Z, who's set to step down from Def Jam. Jay-Z and Jobs are both brilliant businessmen, and the move would make sense on a number of levels: The labels almost view iTunes as a competitor now, the industry landscape is rapidly transforming, and whoever finds the magic formula for a new kind of label/distribution firm stands to make a lot of money as they establish the new paradigm of the industry. And iTunes already is something like a label. This could be megaton big. [BGR]

Just got word that the Rhapsody music service has a new Facebook app called Music By Rhapsody. You get "access" to 4.5 million songs, and there's a preference engine that recommends songs for you and your visitors to play from the profile page. The price catch is, you get 25 free songs per month, after which you have to upgrade to a paid-for plan.

And the whole thing, still in beta, feels more promotional than servicy. Like many Facebook apps, the promise of doing things right there on the profile page is quickly dashed, and you're whisked away to another page after just a click or two. I don't blame Rhapsody, I just think the Facebook app format is—ahem—highly overrated. I could be wrong; go check it out and report back here. [Rhapsody on Facebook]

The media-sharing/social networking site Imeem has inked a deal with Universal Music, making it the first site of its kind to forge unholy bonds with all of the Big Four. Calling it a blood contract wouldn't be too unfair, given how much Imeem has to bleed out for its users to simply embed and stream music (i.e., promote artists for the labels): Universal gets a guaranteed payment every time a song's streamed, plus a cut of the ad revenue from ads shown on the same page as one of their songs.

No wonder labels don't want to deal with iTunes.

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Even if the remaining major labels who have yet to ditch DRM are dragging their feet on the road of inevitability, major online retailers don't feel like waiting around for them to finally do the deed. Wal-Mart has reportedly made an ultimatum of some sort to major labels demanding that they start selling in MP3 so the retail giant can add them to their upcoming MP3 store, which, coming from a retailer of that size, should get their attention. And as we reported on Friday, Amazon plans to give away one billion MP3s with an upcoming Pepsi/Super Bowl giveaway.

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The Writers Guild strike languishes on: Heroes ends for the year next week. In a bid to end our suffering, the producers' trade group has made a "groundbreaking" offer to the Writers Guild, grandiosely titled the "New Economic Partnership." The deal's a mind-blowing less-than $US250 flat fee for an hour-long show to be re-broadcast on the internet for up to a year. If you recall, internet distribution's sort of the sticking point and writers asked for 2.5 percent of the "distributors' gross revenue". Let us count the ways writers get screwed by the producers' Scrooge-y offer.

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NBC has become quite the digital distribution whore, like they broke up with their longtime lover and are slutting it up to make them jealous or something. Their latest partner is Netflix.com, where subscribers can watch Heroes eps the day after they air—the release curiously avoids the word "stream"—as well as past eps of 30 Rock, The Office and others. Okay, this might've been cool last year, or even a couple months ago, but nothing so far indicates how the Netflix deal is at all different from what you get on Hulu or NBC.com or NBC Direct, though the guess is that Netflixsters might be spared annoying ads.

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