September 22, 2004 4:00 AM PDT

Can IM morph into 'instant music'?

As Internet giants step into the crowded online music arena, some are banking on a new weapon to help attack market leader Apple Computer: instant messaging.

Yahoo last week acquired digital music service Musicmatch for $160 million in cash in a move that adds a multimedia player, a digital music store and a subscription service to the company's arsenal. Despite the acquisition, Yahoo is on track to launch its own music service, music industry sources said, and eventually combine it with Musicmatch.

News.context

What's new:
Yahoo, Microsoft and other Internet giants are banking on their online chat software to help push music downloads--and shout down iTunes.

Bottom line:
Tapping further into digital music illustrates IM's transformation over the years from a simple text chatting tool to a control panel for multimedia applications.

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Yahoo's plans are still sketchy, but sources close to the company say instant messaging will play a key role. While the popular IM software already lets people listen to online radio, new versions will let people share and interact with one another's digital playlists.

"The whole advantage that (Yahoo) has is using its broad reach to push products and integrate them," said one source familiar with the plan who spoke under the condition of anonymity.

A Yahoo representative declined to comment for this story.

Microsoft has publicly acknowledged similar interests in tying its MSN Music online store into MSN Messenger. In a press conference last month, MSN's corporate vice president Yusuf Mehdi described a scenario in which two IM chatters could listen to each other's playlists and then buy the songs if they wished.

Without any fanfare, MSN has already begun toying with playlist sharing. The latest MSN Messenger, version 6.2, contains a link to a test application called ThreeDegrees. Among other features, the software lets a person share a playlist with other members in a private group.

Microsoft's Mehdi said eventual MSN Music features on IM will stem from ThreeDegrees development. A Microsoft representative declined to comment further on music integration in Messenger, but offered a glimpse of how ThreeDegrees is being used.

"It's a research product to test IM features," the representative said.

America Online has not talked publicly about its future online music plans. Its latest AOL Instant Messenger, version 5.9, includes a button to a Netscape-branded online radio stream.

Spreading the gospel
For the Web portals, diving into the online music market means playing catch-up to Apple's iTunes, currently the market leader. To do that, the portals will tap every possible advantage, such as promotion across highly trafficked online areas and weaving services into applications like IM.

How long are you on IM?
Although MSN's instant-messaging service commands the largest U.S. audience of the top three, its users are apparently the least chatty.
Average usage stats in August
IM application Unique users (millions) Time chatting (hh:mm:ss)
MSN Messenger28.6 1:27:30
AOL Instant Messenger27.6 4:59:09
Yahoo Messenger18.1 2:48:21
Source: Nielsen/NetRatings
Instant messaging ranks with e-mail and Web surfing as one of the most popular activities on the Internet. Studies show that IM users are loyal and stay connected for hours at a time.

For users at home and at work in August, MSN Messenger led the pack with 28.6 million unique users, followed by the once-dominant AIM with 27.6 million, according to Nielsen/NetRatings. Yahoo trailed at 18.1 million, the research firm said.

MSN users spent an hour and a half using IM every time they launched the software. AIM users spent five hours per session, and Yahoo Messenger users typically logged on for about two hours and 50 minutes, Nielsen/NetRatings said.

Combining IM and music make further sense because people develop strong attachments to songs.

"Music is one of those deeply emotional and personal things," said Mike McGuire, an analyst at GartnerG2. "We all exchange information when we get interested in news stories, but not at the depth of discovering music."

The birth of a platform
The addition of digital music features illustrates IM's transformation over the years from a simple text-based chatting tool to a control panel for multimedia applications.

AOL, MSN and Yahoo have added dozens of bells and whistles into their technologies to broaden IM's appeal. Current versions of Yahoo Messenger, MSN Messenger and AIM let people play games, share photos, listen to Net radio stations, communicate through Webcams, and send text messages to cell phones.

This is a contrast from IM's simpler, text-based roots. Popularized by AIM in the mid-1990s, instant messaging became a way for people to communicate with friends, families and business contacts in real time.

Microsoft made a noisy entry into the field in 1999. When MSN Messenger launched, it let users communicate directly with AIM screen names. After months of AOL blocks and MSN workarounds, the companies retreated into their separate corners, but it set a nasty precedent for messaging.

Yahoo, MSN and AOL have since maintained a steady peace. But under the surface, the companies are waging a cold war-style arms race for control of valuable real estate on the PC desktop.

Microsoft is taking full advantage of its Windows monopoly to grow MSN Music. The music store is already available in its Windows Media Player 10, and MSN Messenger is next on the list.

"Here they've got this asset; it's got millions of users," Matt Rosoff, an analyst at Directions on Microsoft, said about MSN Messenger. "One thing that Microsoft can do to build a digital media platform is link different services together. You use your big assets to point consumers to new services you're offering."

Watching anxiously from the sidelines
The marriage between IM and music is not without its hurdles. Record labels have quietly expressed dissatisfaction over services that let people trade or even stream songs to each other. IM slips dangerously close to the land of peer to peer, record industry executives say.

In a sense, Apple's iTunes program already allows this, letting people who are on the same internal network browse each other's playlists and stream music. But label executives privately say this was supposed to be for home use, not for use by entire school dorms or offices--and certainly not used for downloading music, as is allowed by unauthorized hacks like OurTunes. The record labels have pushed Apple to put tighter restrictions on this practice, music industry sources say.

Label executives say that people who are part of the same subscription service can listen to each other's playlists without a problem, because they're all already paying for rights to the same music. But allowing one IM user to browse another person's playlist and stream music without paying for it could become problematic.

"If I'm streaming my collection to someone else, and no one's getting compensated for it, that's not OK," said one label executive, who asked not to be named.

11 comments

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Guys what is your obsessive preoccupation with Apple?
You guys are about as fanatical about Apple and how to go about unseating them as a Mac user is about Apple and how they are going to take over the world. LOL. Get over it. They finally found a market they can compete in. What next.
"Hurricane Jeanne may be approaching the US coast. Could this spell doom for Apple's iPod?" *rolls eyes*
Posted by Jonathan (832 comments )
Reply Link Flag
I was thinking the same thing
Yesterday there was this story about predicted MP3 sale increase over the next few years that will destroy iTunes marketshare. Today it is the tying of IM with Music that will "shout down iTunes".
What? It's cool to rally against destroying iTunes and iPod because they are the leader now?
Posted by nmcphers (261 comments )
Link Flag
word...
i am sick of 'ipod killer' this, 'itunes killer' that....while we
constantly have to hear about Longhorn's next great features
and future implementation.

can you say slant? spin?
Posted by dolfox (29 comments )
Link Flag
Greed Greed Greed
The labels are getting really ridiculous. If they are going to contend that even though you own a cd you cannot let others listen to it unless they pay for it as well. How is that any different than people coming in my car and listening to the cd im listening to at that time? How about if I let a friend borrow a cd to listen to... should he have to pay the labels a fee? Is that illegal activity? Someone needs to put these guys in check before we lose more of our civil rights.
Posted by (18 comments )
Reply Link Flag
I totally agree
Why is it ok to basically "stream" my media in my car and in my home to people at no extra charge...but the second it involves the internet and my computer the RIAA(holes) need to get their grubby little hands all over the situation. Someone needs to sue them for civil rights violations so that way members of the RIAA can go to jail for 20 years so they will stop this petty war against the P2P as well as the stifling of innovative technology.
Posted by imkain (66 comments )
Link Flag
OH NO! the Sky is falling (again according to C|Nil)
Gimme a break - you guys hate Apple. The first poster has it
pretty well figured out. By the way, ever hear of iChat? Yeah,
word has it that Apple has a very slick IM client of their own -
hooked fully into the AIM service.... get a freakin life
Posted by (54 comments )
Reply Link Flag
Can IM morph into 'instant music'?
What a great idea to add sharing playlists onto IM.

There will be concern though for the legalities, but I think that MSN Messenger has got the right idea to allow the chatters on IM to share playlists and then buy the music for download through the MSN Music online store if they like it.

<a class="jive-link-external" href="http://allwaysmusic.modblog.com/" target="_newWindow">http://allwaysmusic.modblog.com/</a>
Posted by (59 comments )
Reply Link Flag
Are you kidding?
Let's put this into perspective... How, exactly, will instant
messaging really make anyone buy more music? I can't see
myself going out and dropping $25 just because my friend used
some gimmicky feature to send his playlist to me. It's all stupid.
Posted by (2 comments )
Link Flag
This has already been done.
<a class="jive-link-external" href="http://www.mercora.com" target="_newWindow">http://www.mercora.com</a> allows you to legally webcast your own playlists of music with other IM users. It surprises me that this article is not even aware of it's existence. Not what I would call thorough investigative reporting.
Posted by wickedbob (7 comments )
Link Flag
Ridiculous thoughts
Hmm.
I will have to get subscriptions for the wife and kids (just in case I'm out of the house while they are listening).
Keep all windows closed, passers-by might hear it playing.
Note to self - Check that all guests/friends have up-to-date subscriptions before starting to play any music.
Knock on the doors of any houses which music is coming from, and ask what media they use - I'm sure they will be glad to be reminded (if subscription based media) that they should close windows so non-subscribers can't hear.
...And now for the silver lining (has to be one)
Can now call the cops on the guy with the massive car speakers, blasting out &lt;insert undesirable "artist" of choice here&gt; for all to hear...
Posted by (4 comments )
Reply Link Flag
 

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