The iPod and iTunes existed, and were wildly popular, for years before the iTunes Music Store existed, so no, they weren't using DRM on launch. It's only becaus

The iPod and iTunes existed, and were wildly popular, for years before the iTunes Music Store existed, so no, they weren't using DRM on launch. It's only because there was so much DRM-free media around that the iPod could become popular enough that selling music on iTunes was a vaguely interesting proposition; without that built-in market, the iTMS probably would never have been worthwhile.