Microsoft’s MSN Music service is dead and buried as of August 31, when the company will stop issuing DRM keys, a company statement unveiled on Tuesday. What that will do is allow music to play only authorized computers, but transfers on other computers or upgrades from Windows XP to Vista will mean losing the music library.

The company announced the decision in a customer e-mail: “As of August 31, 2008, we will no longer be able to support the retrieval of license keys for the songs you purchased from MSN Music or the authorization of additional computers. You will need to obtain a license key for each of your songs downloaded from MSN Music on any new computer, and you must do so before August 31, 2008. If you attempt to transfer your songs to additional computers after August 31, 2008, those songs will not successfully play.”

The MSN Music Store was officially launched in September 2004, but it never managed to become as big as Apple’s iTunes Store, which meant an inevitable announcement two years later: the service stopped selling downloads, redirecting customers to Zune or Real Rhapsody.

Rob Bennett, who also made the 2006 announcement, explained in a CNET News interview the reasons for stop issuing DRM keys: “every time there is an OS upgrade, the DRM equation gets complex very quickly,” he said. “Every time, you saw support issues. People would call in because they couldn’t download licenses. We had to write new code, new configuration each time…”

In other words, it’s not a lucrative deal anymore (after closing the service in November 2006, Microsoft has offered support for customers who wished to move their music libraries to other computers). And Bennett also offered a response to critics that have accused Microsoft of trying to control legally purchased music at the customers’ expense:

“Had we had the ability to deliver DRM-free tracks at the time, we absolutely would have done that,” said Bennett. “We talked to the labels at the time about that […] Now, the industry is making progress. The labels are understanding the downside of DRM when it’s used the way they wanted to use it, they end up punishing the users who bought music legally more than those who want to circumvent the system.”