In a quite expected move, Napster announced today it will start selling DRM-free tracks for 99 cents, a price that puts it in direct competition with Apple’s iTunes.

Until now Napster had sold songs protected with Microsoft’s Windows-based DRM (digital rights management) system, which prevented users from illegally making multiple copies or distributing music tracks to other people.

Napster’s Chairman and CEO Chris Gorog explained that the music store has decided to choose the DRM-Free MPF format because of its ease of use and broad interoperability.

The songs available on Napster (six million according to the company) will be playable on any device, including iPods. They also can be burnt on CDs and transferred to other devices. Napster won’t kill its ‘all you can eat’ music subscription service.

The company charges $12.95 for the on-demand streaming service and $14.95 for the Napster-to-Go portable syncing service.

However, it remains to be seen how Napster will compete against iTunes or Amazon MP3 store.

Last month, The NPD Group rated iTunes as the biggest music retailer in the United States. The data released by The NPD Group are based on NPD’s Digital Music Study, which is an annual survey of US consumers’ demand, and NPD MusicWatch, that tracks past seven-day music purchase habits of the US population age 13 and older.

The iTunes Store became the largest music retailer in the US based on the amount of music sold during January and February 2008. Apple’s iTunes surpassed WalMart, which had the first place in March. In the same research Amazon MP3 Store ranked fourth.

Launched in September last year, Amazon MP3 Store has currently close to 4 million DRM-Free songs and is selling the tracks at 89 cents, making the offer even more interesting for potential buyers.

In January, Amazon announced that it is ready for the international rollout, which is scheduled to happen sometimes later this year.

Maybe Napster should consider a similar move in order to increase its sales, especially since it already has local sites in UK, Germany and Japan.