From what I know it wasnt Microsoft that broke ground. I remember reading a story about CD distributor whose clients started retracting contracts in 2004. Owner quickly realized Jobs was screwing him over and it took a series of meetings to somewhat fix it.
Microsoft broke the ground. Their DRM that opened the door for legal music sales came out in 1998 I think. Certainly by 1999 I was using it commercially and had the first labels already onboard.
I remember the controversy - it was CD Baby for sure.
Was it CD Baby? Definitely not CDNow.