Digital music fans have never had more options, but the experience is more fragmented than ever. iTunes rules digital downloads, Spotify is the subscription music leader, and a slew of other services (Rhapsody, Pandora, Rdio, Amazon Cloud Player, Google Music, etc.) fill in the variety of remaining niches.
Xbox Music is Microsoft's latest entry in this space and while it's easy to write it off as another "me too" digital music platform, it's surprisingly comprehensive. Like Spotify, Xbox Music offers free ad-supported streaming of its subscription music library, plus Pandora-like artist-based Internet radio and a premium tier called Xbox Music Pass ($9.99 per month or $99 per year) that offers ad-free streaming and "cloud locker" functionality.
It's strong initial offering, particularly its combination of subscription streaming, locker storage, and music store, which no other service currently offers. In the demos I saw, it's the best of all worlds if you're a subscriber, offering up your own music collection (synced to all supported devices), subscription tracks and the option to buy tracks not available for streaming, provided they're in Xbox Music's catalog. It's as close as I've seen to a unified music library experience, although Microsoft hasn't specified how much cloud storage comes with Xbox Music Pass. (Xbox Music is also planning to add scan-and-match uploading, ala iTunes Match, in 2013.)
Read between the lines and that means PC use is restricted not only to Windows PCs but Windows 8 PCs, and there aren't any current plans for Windows 7 or OS X software. That's a significant disadvantage when Spotify offers desktop software for both Mac and Windows, and most other competitors like Rhapsody, Rdio, and MOG work on any operating system with their browser-based software. (And there are reports that Spotify is developing a browser-based software as well.)
Similarly, Xbox Music isn't launching with home entertainment hardware support aside from the Xbox 360, whereas services like Rhapsody, Pandora and Spotify are supported by a number of devices, such as the Sonos product line. And the vast majority of Xbox Music functionality on the Xbox 360 requires a $60-per-year Gold Live subscription, in addition to the Xbox Music Pass subscription. On the upside, iOS and Android support are on the roadmap for the coming year, so Xbox Music isn't the Microsoft-only experience that Zune was.
The focus on Windows 8 isn't all bad news for Xbox Music, though. Microsoft is making the Xbox Music app the default music playback in Windows 8, which will expose the service to a new, large audience that may not be familiar with subscription music services. And with the ability to stream a huge library of tracks for free with ads, there's a good chance many will at least give shot.
Xbox Music is a compelling new option in the increasingly-crowded digital music space, especially if you're committing to the Windows 8 ecosystem. But if you mix and match your devices, it's a much harder sell until platform support improves, especially for the desktop software.