Cesar Menendez has a blog post entitled Zune and DRM (or "My Bad; I mis-Blogged") where he addresses some of the concerns around the Wi-Fi sharing features of the Zune. He writes

I misspoke (mis-blogged) on last week’s post. We don’t actually “wrap all songs up in DRM:” Zune to Zune Sharing doesn’t change the DRM on a song, and it doesn’t impose DRM restrictions on any files that are unprotected. If you have a song - say that you got “free and clear” - Zune to Zune Sharing won’t apply any DRM to that song. The 3-day/3-play limitation is built into the device, and it only applies on the Zune device: when you receive a song in your Inbox, the file remains unchanged. After 3 plays or 3 days, you can no longer play the song; however, you can still see a listing of the songs with the associated metadata.

So, to answer the direct question, Zune doesn’t have “viral DRM.” And mea culpa on telling everyone that we impose DRM.

In reading this, it seems that although Cesar has clarified the implementation the behavior [to end users] is still the same whether the music files are wrapped in DRM or the Zune knows that any song it gets over Wi-Fi can no longer be played 3 plays or 3 days without having to alter the files. I'm curious to see what the answers are to some of the questions asked by Joshua O'Madadhain about the 3 play/3 day feature since this is currently the most interesting feature of the device.

PS: I finally got to play with a Zune device at work and I like what they've done with album art in the music experience. The wider screen for watching videos is also a nice touch. I did have some difficulty with the controls because I kept trying to treat the D-pad as a scroll wheel due to my over-familiarity with the iPod. Check out the videos of playing music and videos on the Zune and Zune to Zune music sharing on Youtube if you want to see what it's like.