June 9, 2005 12:48 PM PDT

Microsoft planning music subscription service

With Apple Computer's dominance over the digital music business growing, Microsoft is planning to bolster its own online song store with a new subscription service later this year, sources familiar with the plans say.

The software giant launched its song download store, similar to Apple's iTunes store, last September. The Microsoft MSN-branded service did not include a subscription plan at that time, focusing instead on selling individual songs online and through Windows Media Player.

But Microsoft is now working with record labels and copyright holders in preparation for launching its subscription-based component, sources familiar with the talks said. The company held an event earlier this week in New York aimed at providing an update on the project's progress, sources said.

News.context

What's new:
Feeling Apple's sting, Microsoft is looking to diminish iTunes' influence with a new subscription music service. Sources say the company is also considering a more direct attack on Apple, seeking rights from copyright holders to give subscribers a Microsoft-formatted version of any song purchased from iTunes so they can be played on devices other than an iPod.

Bottom line:
The new service could complicate the delicate balance Microsoft has struck in the digital music business, by both providing key technology for companies such as Yahoo and Napster, while also competing with them.

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The tentative features of the new service--which is still under development--include advanced community aspects and playlist-sharing. But sources say Microsoft is also considering a more direct attack on Apple, seeking rights from copyright holders to give subscribers a new, Microsoft-formatted version of any song they've purchased from the iTunes store so those songs can be played on devices other than an iPod.

Microsoft declined to comment specifically on the service.

"We think that the subscription model is very interesting," said Christine Andrews, lead product manager for MSN. "It is something that we will continue to look into, but we don't have anything specific to announce at this time."

The new service could complicate the delicate balance Microsoft has struck in the digital music business, by both providing key technology for companies such as Yahoo and Napster, while also competing with them.

That Microsoft is willing to complicate that relationship underlines how important the digital media business has become, analysts say. Microsoft and others see the future of home computing focusing increasingly around digital entertainment and consumer electronics, and in that space Apple has taken a substantial lead with its iPod music player and iTunes digital music store.

Indeed, at its developers' conference in San Francisco this week, Apple CEO Steve Jobs announced that the iTunes store had captured an 82 percent market share in the digital download business in May, despite ongoing competition from Microsoft, Yahoo, Sony, RealNetworks and others.

"The main thing for Microsoft as a company is to get as much use as possible for the PC as a home entertainment device, and one way to do that is ensure that there is a lot of readily available content," said Matt Rosoff, an analyst for research firm Directions on Microsoft. "Their concern is that none of the partner services will take off or will be effective, keeping Apple as a dominant platform."

Like others, must explain subscriptions
According to people familiar with the company's plans, the service is being developed as a piece of downloadable software separate from the standard Windows Media Player--a departure for a company that has historically pressed all multimedia content into its basic player software.

Much like the recently released Yahoo Unlimited subscription

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22 comments

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MS is so jealous
they can't see straight. They're going to allow people to dl a MS formatted copy of any song purchased on iTunes? If I was a copyright holder, why would I agree to this? whats the point? And a month into doing this little scheme, Apple will announce they are licencing their Fairplay DRM, effectively cutting off MS at the knees.
Posted by 202567676114204908075970046337 (26 comments )
Reply Link Flag
MS is so jealous
they can't see straight. They're going to allow people to dl a MS formatted copy of any song purchased on iTunes? If I was a copyright holder, why would I agree to this? whats the point? And a month into doing this little scheme, Apple will announce they are licencing their Fairplay DRM, effectively cutting off MS at the knees.
Posted by 202567676114204908075970046337 (26 comments )
Reply Link Flag
Forget it MS
82% of people downloading digital tunes are already using Apple's
iTunes music store. There is no way that people are going to switch
once they have already invested in starting a digital music library
with iTunes. I have spent $270 bucks since December 2004. Throw
in an iPod shuffle that will not play windows media files and Apple
has got me locked in.

I don't mind that. ITMS is cheap, high quality, and just works.
Posted by rodnarms (45 comments )
Reply Link Flag
Forget it MS
82% of people downloading digital tunes are already using Apple's
iTunes music store. There is no way that people are going to switch
once they have already invested in starting a digital music library
with iTunes. I have spent $270 bucks since December 2004. Throw
in an iPod shuffle that will not play windows media files and Apple
has got me locked in.

I don't mind that. ITMS is cheap, high quality, and just works.
Posted by rodnarms (45 comments )
Reply Link Flag
Awesome innovation, Microsoft (yeah, right)
Soo... how many more ideas are they gonna steal?

Recycle Bin (stolen from Macs way back), MSN Messenger, Tabbed Browsing, MSN Search, MSN Spaces, Desktop Search, and now this...?
Posted by hion2000 (115 comments )
Reply Link Flag
Awesome innovation, Microsoft (yeah, right)
Soo... how many more ideas are they gonna steal?

Recycle Bin (stolen from Macs way back), MSN Messenger, Tabbed Browsing, MSN Search, MSN Spaces, Desktop Search, and now this...?
Posted by hion2000 (115 comments )
Reply Link Flag
When MS misses the boat...
... they really come up short. In the world of 'also ran's, MS is
seventh in a three man race. Apple did the music sales better
than MS so now MS tries ubscriptions? But Real does
subscriptions better. MS is cheaper? Maybe, but it's MS. Windows
compatible MP3 player? that's the iPod, along with iTunes on
thePC. Windows Media format? Apple does it better, even with
MP3.

"At this point, the whole online music market is centered around
Apple and the other guys."

Wonder why???? Don't expect MS to tell you what music lovers
already know.
Posted by Earl Benser (4310 comments )
Reply Link Flag
When MS misses the boat...
... they really come up short. In the world of 'also ran's, MS is
seventh in a three man race. Apple did the music sales better
than MS so now MS tries ubscriptions? But Real does
subscriptions better. MS is cheaper? Maybe, but it's MS. Windows
compatible MP3 player? that's the iPod, along with iTunes on
thePC. Windows Media format? Apple does it better, even with
MP3.

"At this point, the whole online music market is centered around
Apple and the other guys."

Wonder why???? Don't expect MS to tell you what music lovers
already know.
Posted by Earl Benser (4310 comments )
Reply Link Flag
Now this is entertainment
"The most important question is what ability Microsoft and its
partners have to explain this model to consumers," said Jupiter
Research analyst Michael Gartenberg.

What are they going to explain that apparently at least 82
percent of consumers don't already know? Personally, I would
love to hear them explain the part about downloading
"replacement copies of iTunes-purchased song(s)"

Oh yeah, consumers will be delighted to do that, lol.
Posted by Terry Murphy (82 comments )
Reply Link Flag
Now this is entertainment
"The most important question is what ability Microsoft and its
partners have to explain this model to consumers," said Jupiter
Research analyst Michael Gartenberg.

What are they going to explain that apparently at least 82
percent of consumers don't already know? Personally, I would
love to hear them explain the part about downloading
"replacement copies of iTunes-purchased song(s)"

Oh yeah, consumers will be delighted to do that, lol.
Posted by Terry Murphy (82 comments )
Reply Link Flag
RIAA benefits more from subscription base
That's my opinion. They know that once the user doesn't pay their monthly fee, all the songs they have vanish.

Microsoft is late to the game as usual, but who really cares about subscription base? Until the RIAA stops raping customers, p2p is where I'll go.
Posted by bobby_brady (765 comments )
Reply Link Flag
RIAA benefits more from subscription base
That's my opinion. They know that once the user doesn't pay their monthly fee, all the songs they have vanish.

Microsoft is late to the game as usual, but who really cares about subscription base? Until the RIAA stops raping customers, p2p is where I'll go.
Posted by bobby_brady (765 comments )
Reply Link Flag
So what the hell?
How is the subscription service the way to go? It never ceases to amaze me how these companies dangle this tripe in front of me and expect me to bite. When I buy a CD, I want to keep it, not rent it. Now if they could only drop the price per song and offer lossless format options... there's your silver bullet. Until then, back to p2p...
Posted by dinkelburt (14 comments )
Reply Link Flag
So what the hell?
How is the subscription service the way to go? It never ceases to amaze me how these companies dangle this tripe in front of me and expect me to bite. When I buy a CD, I want to keep it, not rent it. Now if they could only drop the price per song and offer lossless format options... there's your silver bullet. Until then, back to p2p...
Posted by dinkelburt (14 comments )
Reply Link Flag
Bill has missed the point (again)
iPod is not the best MP3 player in all categories and is rivaled by many others, but until the other MP3 player rival the ease of use they will not out sell the iPod, regardless of what music service is behind them. And what's with these music services being described as 'subscription' services ? When I subscribe to a magazine I get to keep the ones I received after I stop paying, these services are music rental services.
Posted by (2 comments )
Reply Link Flag
Bill has missed the point (again)
iPod is not the best MP3 player in all categories and is rivaled by many others, but until the other MP3 player rival the ease of use they will not out sell the iPod, regardless of what music service is behind them. And what's with these music services being described as 'subscription' services ? When I subscribe to a magazine I get to keep the ones I received after I stop paying, these services are music rental services.
Posted by (2 comments )
Reply Link Flag
If MS products are so great...
... then why do Microsoft employees have to use black headphones to disquise the fact that they're listing to their iPods on the MS campus? I'm referring to an article at Wired magazine's site.
Posted by sanjef (31 comments )
Reply Link Flag
If MS products are so great...
... then why do Microsoft employees have to use black headphones to disquise the fact that they're listing to their iPods on the MS campus? I'm referring to an article at Wired magazine's site.
Posted by sanjef (31 comments )
Reply Link Flag
Suck it up MS
Let's face it, with the Feds looking over their every move, i.e., MS can't rely on their old anti-competitive practices anymore, the chances of MS catching up with Apple's ITunes is slim to say the least. For that matter I would wager that anywhere MS doesn't have a foothold now in, they would have to buy their way in to compete, e.g., if they bought Rapsody or some other online service; then maybe they could make inroads. And that would come at a price, but they have the $ to burn.
Posted by lrd123 (50 comments )
Reply Link Flag
Suck it up MS
Let's face it, with the Feds looking over their every move, i.e., MS can't rely on their old anti-competitive practices anymore, the chances of MS catching up with Apple's ITunes is slim to say the least. For that matter I would wager that anywhere MS doesn't have a foothold now in, they would have to buy their way in to compete, e.g., if they bought Rapsody or some other online service; then maybe they could make inroads. And that would come at a price, but they have the $ to burn.
Posted by lrd123 (50 comments )
Reply Link Flag
Pointless
I guess MS saw all the money that RIAA and Apple has sucked out of gullible fools and want a piece of the action. Whether you are renting it(what a joke), or buying it, MP3's are a ripoff.

Why would someone spend money on a restrictive lossy format?

Until someone has the guts to create a per song model, and offer uncompressed songs, why would anyone bite? Of course the music that the RIAA cares about would probably not ever see a system like this. The good news is that most of the music produced by major labels is trash anyway.

DRM is too restrictive, it circumvents fair use and abuses the consumer. Give me a reasonable price, uncompressed music and allow me to make multiple copies on whatever media I want(CD's, cassettes, whatever), and I would dive right in, and so would millions of others.

Most CD's released have one or two good songs(none in many cases) and the rest is mediocre at best filler. Buying CD's is like standing in line to get slapped. MP3's are fine to run on small gadgets and most PC's, but the faults are very noticable on semi-decent or better stereo equipment.
Posted by Bill Dautrive (1179 comments )
Reply Link Flag
Pointless
I guess MS saw all the money that RIAA and Apple has sucked out of gullible fools and want a piece of the action. Whether you are renting it(what a joke), or buying it, MP3's are a ripoff.

Why would someone spend money on a restrictive lossy format?

Until someone has the guts to create a per song model, and offer uncompressed songs, why would anyone bite? Of course the music that the RIAA cares about would probably not ever see a system like this. The good news is that most of the music produced by major labels is trash anyway.

DRM is too restrictive, it circumvents fair use and abuses the consumer. Give me a reasonable price, uncompressed music and allow me to make multiple copies on whatever media I want(CD's, cassettes, whatever), and I would dive right in, and so would millions of others.

Most CD's released have one or two good songs(none in many cases) and the rest is mediocre at best filler. Buying CD's is like standing in line to get slapped. MP3's are fine to run on small gadgets and most PC's, but the faults are very noticable on semi-decent or better stereo equipment.
Posted by Bill Dautrive (1179 comments )
Reply Link Flag
 

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