Earlier quoted context omitted.
Apple had DRM on iTunes with FairPlay and AAC for around six years until the courts forced them to remove it. iTunes was still a huge business for them at the time. Sure that DRM was the real issue? Likewise, claiming that the Root Kit business (by which time the iPod had been around for a good 5 years) sunk Sony’s business seems like a bit of a reach.
I bought an iPod in that era, and didn't buy a single DRMed song -- ripped all my CDs, that was more than enough. If you look at iTunes revenue vs iPod sales, most people did what I did. Sony didn't support that. And the smaller companies that pioneered ripping+mp3 players had less-attractive products and interfaces.
Sony wanted to keep the minidisk ATRAC codec (arguably much better than mp3, unfortunately while mp3 became ubiquitous despite patents, ATRAC never did) along with the draconic drm.
I lived a year in Japan in 1997-98 - I recall a fellow high school student had racks upon tracks of "pirated" MDs at home. It was a similar price model to streaming; less pr cd/disk, but "at least something" - as everyone would rent a CD and buy a blank mini-disk - and rip at home. No digital/lossless copy from a copied MD to a blank.
Classic example of the west being slow at adapting some tech, then "jumping" to the next (here, using a computer to rip cds, not dedicated hw, like an MD deck and cd player, linked via digital coax/optical cable). And then skipping cd rentals in favour of first pirated music, then streaming. Much helped by by free software like Winamp that AFAIK ignored the licensing on mp3 in most cases.
The iPods were certainly helped by mp3 file-sharing - that probably wouldn't have happened if they could only play back aac or whatever - if they weren't mp3 players not merely music players.