Nick Statt at CNET on the current trial against Apple for preventing music sold by RealNetworks from playing on the iPod:
Apple’s FairPlay digital rights management system, a technology that would detect other music stores’ song files and prevent users from loading them onto the iPod…
This is a completely incorrect description. FairPlay was the DRM that Apple wrapped around the song files it sold from the iTunes Store, ensuring that they would only play within iTunes and on iPods. It had absolutely nothing to do with music sold from other stores, and certainly didn’t actively “detect” music from other sources and block it. Multiple online music stores sold DRM-free music before iTunes did – eMusic, Amazon, CD Baby, etc. – and you were always able to load purchased music from those services into iTunes and sync it to your iPod. Always.
Had Real simply sold DRM-free music like those other retailers, they would have been compatible with iTunes and the iPod as well. Instead, they sold music in their own DRM-encumbered format, then reverse-engineered FairPlay to trick iTunes and the iPod into supporting those files. Apple had no obligation to allow that, and were actually required to prevent it, because a breach of FairPlay gave the record labels the right to pull their music from iTunes. So Apple updated FairPlay to break Real’s reverse-engineering and maintain the terms of their contract with the labels.
This article, and the above quote in particular, make it seem like Apple was blocking music from any competing stores and doing so purely to prevent competition, which is simply untrue. There were (and are) multiple alternative sources for legally purchased online music that were compatible with iTunes and the iPod.