Last night, my graduate class in digital media held a debate over open-source software development versus proprietary systems development. Within minutes, the two groups were having at it over digital rights management (DRM) software and its use with digital media.

My open-source group argued that we’ve never had the opportunity to build cohesive business models around unrestricted media, while my proprietary systems group argued that the safest ways to build innovative businesses is to protect intellectual property.

The conclusion of the class: protected content should be a foundation for development, but users need to have unrestricted rights to move their entertainment from device to device and open-source developers should be able create new functionalities for existing products.

What’s amazing is that all of this came about without any professorial prompting. It was a common-sense solution to an ongoing, real-world problem, by relative novices to digital media.

In that context, reading the digital media news lately has been bittersweet. While there is increased competition in the digital music market today, that competition is focused on DRM-intensive business models.

Best Buy announced it would be a retailer for the RealNetworks and SanDisk music service. The company will sell the SanDisk Sansa e200R Rhapsody digital music player (or check out this upgrade that’s already been announced), and act as a reseller for RealNetworks’ Rhapody music service.

The deal, made more complex by the coordination of three companies, essentially operates in the same manner as Apple’s iPod and iTunes (which struck a deal with Starbucks to create a Starbucks-only iTunes storefront).

Customers can purchase the Sansa e200R (it doesn’t quite roll off the tongue in the way iPod does), which comes with a two-month trial version of Rhapsody, a digital music service offered by RealNetworks.

From the Reuters story:

Best Buy said it will throw its promotional weight behind the new service offering buyers of the SanDisk Sansa player a free two-month subscription to its music store allowing consumers unlimited access to millions of songs during the period.

But users won’t be able to listen to the songs after the promotion expires if they don’t sign up to the service. The subscription download service is normally priced at $14.99 a month and users can also buy individual downloads at 99 cents a song. Apple’s iTunes also sells songs at 99 cents each but does not have a monthly subscription service.

Is this a good thing for consumers? Yes and no.

Competition is always good for consumers, and upstarts, such as the triad in this market, often push existing partners to offer more options–and Apple has thoroughly dominated this market for the past few years. However, each service treats music as a licensed property, which means ultimately it stays in the hands of the companies running the services.

I can’t get my head around that part of these services being “consumer friendly.”