April 2, 2004 4:00 AM PST

Microsoft's iPod killer?

Microsoft is expected to unveil copy-protection software this summer that will for the first time give portable digital music players access to tunes rented via all-you-can-eat subscription services--a development that some industry executives believe will shake up the online music business.

Sources say the technology--code-named Janus and originally expected more than a year ago--was recently released in a test version to developers and that a final release is now expected as soon as July.

Janus would add a hacker-resistant clock to portable music players for files encoded in Microsoft's proprietary Windows Media Audio format. That in turn would help let subscription services such as Napster put rented tracks on portable devices--something that's not currently allowed. Fans of portable players could then pay as little as $10 a month for ongoing access to hundreds of thousands of songs, instead of buying song downloads one at a time for about a dollar apiece.

Few online music subscription plans have enjoyed great success to date, but some music company executives said they believe Janus will make renting music more attractive to consumers and eventually give a la carte download services such as Apple Computer's iTunes Music Store a run for their money.

Device makers, too, see the software as a way to take on Apple and its industry-leading iPod player, which for now offers no support for rented music. Anticipating the Janus release, MP3 player makers including Samsung have already begun advertising support for the technology in a handful of high-end products.

News.context

What's new:
This summer may see the beginnings of a shake-up in the online-music industry--sources say new Microsoft copy-protection technology will finally arrive, bringing the all-you-can-eat subscription model to portable players.

Bottom line:
If fans of iPod-like devices can be convinced to drop the idea of owning song files, they could shift to paying a subscription fee for ongoing access to hundreds of thousands of tunes--something that would cost them hundreds of thousands of dollars under the current dollar-per-download paradigm.

More stories on this topic

"To us, Janus finally provides the platform on which we can build a new type of experience for the consumer," said Zack Zalon, president of Virgin Digital, the British conglomerate's new online-music division. "We believe this is it. This is what consumers are going to want. We want to be big participant in changing consumers' attitude towards what music really is."

Microsoft executives associated with the project declined to confirm details of the technology's release. "As we've said before, enabling access to unlimited downloads on consumer devices will open up all new scenarios for the distribution and enjoyment of digital content," Jason Reindorp, the group manager for Microsoft's digital media division, said in an e-mail statement.

Online-music insiders have debated for years about whether future services will ultimately resemble a traditional CD store--requiring consumers to purchase each single song--or a new model in which subscribers pay a monthly fee for unlimited access to all available music, without the right to keep the music after they stop subscribing.

Apple Chief Executive Officer Steve Jobs has been the most prominent proponent of the pay-per-download model, saying that consumers want to own, not rent, their music. Apple's iTunes supports solely downloads, one of the few services to focus exclusively on a single model, and has captured a dominant part of the market to date, selling more than 50 million tracks in its first 11 months.

Others argue that consumers used to the anarchic world of Kazaa and other file-swapping networks have grown accustomed to having thousands of music files at their fingertips. Only services that offer that kind of breadth of content--without requiring customers to pay thousands of dollars--will wean digital music aficionados away from file swapping, argue subscription advocates.

Analysts said they expect subscription services to trail downloads in popularity, given the alien quality of the rental concept.

David Card, a digital media analyst with Jupiter Research, said he doesn't expect Janus to drive dramatic growth in online music subscriptions, adding that it could take years for music rentals to challenge CD and download sales, if they ever do.

"I think this is good, but it's not as if this is a silver bullet," he said. "It is important in adding another feature to the ultimate goal of creating the 'celestial jukebox,' but it's probably not going to jump-start the market."

What's in it for Microsoft?
The Janus release comes as Microsoft is prepping its own commercial music service, which is expected to launch on its MSN Internet service this year and may include a subscription component along with the ability to purchase downloads.

Although Microsoft plans to get into the retail music market, its primary ambition is to be a technology provider and ultimately make its software the de facto industry standard for encoding and playing back digital media files--goals toward which the company could take a big step if subscription services based on Janus catch on.

Microsoft has worked hard to establish its Windows Media file formats in the industry and has won converts among record labels and music services. But it has struggled to win over consumers, having made relatively little headway against the dominant MP3 file format even as it has drawn antitrust scrutiny over its digital media plans.

Last month, European regulators hit Microsoft with a $617 million fine in relation to its digital media practices and ordered the company to offer PC makers a version of its Windows operating system with its media player stripped out. The software giant is also battling a civil antitrust suit involving its digital media business in the United States, where rival RealNetworks is seeking up to $1 billion in damages.

Part of the trouble with subscription services to date is that subscribers typically haven't been able to transfer the millions of files available to them to their portable music players. Record labels have largely required that subscription content "time out," or be made unplayable if a subscriber stops paying, and MP3 players haven't had the capability to support that feature.

That's where Janus comes in. The technology would add a "secure clock" to Microsoft's Windows Digital Rights Management technology, which would let an MP3 player tell whether a particular file was past its expiration date.

Microsoft has been working on that problem--a technically tricky one--for quite some time, and industry sources have said the company originally planned to announce it at the 2003 Consumer Electronics Show in Las Vegas.

Considerable time has elapsed since then, but sources say Microsoft developers finally appear to be reaching the finish line. Beta, or test, versions of the software have gone out to some developers within the past month, industry sources say. The software is expected to be released by late summer or early fall, with some citing a date as soon as July.

A few MP3 player manufacturers, including Gateway and Samsung, have begun quietly advertising Janus support in the specifications for their new high-end products. A representative of MP3 player manufacturer Digital Networks North America said the company was in negotiations with Microsoft and would support Janus, when released.

A Gateway representative said that company had been mistaken in listing current Janus support in the iPod-like player now available on Gateway's Web site, since Microsoft has not yet provided final specifications. But the company would support the technology when it was released, the representative said.

Online music companies are clearly eager for the prospect to make their subscription offerings more attractive to a generation of consumers who are snapping up iPod-like MP3 players, which can hold thousands of songs at a time.

"We are very excited about it, and will support it," said one executive at a music service, who asked not to be named. "We believe it's real and think it will be implemented."

Music service executives said they were still in negotiations with record labels over how to treat the new technology. Allowing people to bring thousands of songs at a time to portable players may wind up costing more than the $10 a month that most subscription services charge today, the executives said.

Nevertheless, some music services are eager to drive more consumers to subscription plans, since per-song download stores have tiny or even nonexistent profit margins.

"There are a couple of companies that are dependent on (subscriptions) for a steady revenue stream that doesn't have a one penny margin," said Liz Brooks, senior vice president of business development for Buy.com's BuyMusic site, which does not offer a subscription plan. "This could be very important."

Jupiter's Card notes that consumers have repeatedly said in surveys that owning music is important, however. It will take considerable time before a large part of the market grows used to the idea of subscribing to music the same way people subscribe today to TV services, they say.

"I think we're really at the stage for the next few years where (subscription) music services are for music aficionados, not for the mass audience," he said. "There are not enough of them that this is going to be a $10 billion business anytime soon."

CNET News.com's Evan Hansen contributed to this report.

36 comments

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Add your comment
This has been tried before....
Divx in the DVD world tried this....It bombed spectacularly and now is only a memory.

Napster offers all you can eat and AFAIK the service is being snubbed by the alternative Napster service that is actually purchasing the tracks.

Time and again consumers have voted with their wallet that they want to own not lease. Not rent. But own a product.

IMHO, I think we will see the same result of this effort.

PS- I don't own an iPod or even a Mac but I have used iTunes and iTunes Music Store religiously since October. The software is fantastic. Deceptively so. There is a powerful set of features under that innocent simple facade. At some point here once the iPod hits a 60GB capacity I will get one. I made the leap 2 weeks ago to convert all 135 CD's I have to AAC after spending many an hour comparing MP3, WMA, and AAC audio codec. I truly believe AAC is the best audio codec, short of RAW WAV files, on the market.
Posted by Jonathan (832 comments )
Reply Link Flag
same result
<a class="jive-link-external" href="http://www.analogstereo.com/turntable_stanton_str8_150_stanton_st150.htm" target="_newWindow">http://www.analogstereo.com/turntable_stanton_str8_150_stanton_st150.htm</a>
Posted by Ipod Apple (152 comments )
Link Flag
This has been tried before....
Divx in the DVD world tried this....It bombed spectacularly and now is only a memory.

Napster offers all you can eat and AFAIK the service is being snubbed by the alternative Napster service that is actually purchasing the tracks.

Time and again consumers have voted with their wallet that they want to own not lease. Not rent. But own a product.

IMHO, I think we will see the same result of this effort.

PS- I don't own an iPod or even a Mac but I have used iTunes and iTunes Music Store religiously since October. The software is fantastic. Deceptively so. There is a powerful set of features under that innocent simple facade. At some point here once the iPod hits a 60GB capacity I will get one. I made the leap 2 weeks ago to convert all 135 CD's I have to AAC after spending many an hour comparing MP3, WMA, and AAC audio codec. I truly believe AAC is the best audio codec, short of RAW WAV files, on the market.
Posted by Jonathan (832 comments )
Reply Link Flag
same result
<a class="jive-link-external" href="http://www.analogstereo.com/turntable_stanton_str8_150_stanton_st150.htm" target="_newWindow">http://www.analogstereo.com/turntable_stanton_str8_150_stanton_st150.htm</a>
Posted by Ipod Apple (152 comments )
Link Flag
How soon to a hack?
Assuming that both Bill Gates and Steve Jobs are correct, i.e. people like to own their tunes and also would like essentially unlimited access to them, then how long do you think it will take for a hack to be developed for Janus? 2 days? More, less? In advance of Janus' release? Likely.

If, instead of attempting a technological solution, all the hardware and software companies involved donated their R&#38;D budget for these initiatives to compensate the artists and copyright owners, in lieu of wasting their resoruces on an unending fruitless spiral, the problem would go away.
Posted by sachs (2 comments )
Reply Link Flag
about 4 minutes
The trouble is, if a song can be heard it can be recorded.

Here's how: Use a double-male courd and plug one end into your computer's (or whatever device you're using to play the music) head-phone or speaker outlet. Then, plug the other end into the "mic" port on another computer's sound card. Record the song as it plays using a program as simple as the Windows 98 "Sound Recorder". Since the song is being transferred digitally, you'll get pretty dang good quality copy. It's sort of like copying a song over the radio.

Please note that I don't subscribe to these services or record music using this method. I buy my music and support the artists that I enjoy. However, I'm just illustrating how freaking easy it is to copy music. If you can hear it, you can copy it. These efforts are useless and just make life difficult for those of us who actually follow the law by choice.

This problem stems from a sociatal issue of lawlessness and mutual disrespect. You cannot force a criminal to follow the law. They need to WANT to follow the law.

Anyway... I won't go off on this. It's all just a waste of time to me and it makes my life difficult so it kind of ticks me off.
Posted by utdream (2 comments )
Link Flag
How soon to a hack?
Assuming that both Bill Gates and Steve Jobs are correct, i.e. people like to own their tunes and also would like essentially unlimited access to them, then how long do you think it will take for a hack to be developed for Janus? 2 days? More, less? In advance of Janus' release? Likely.

If, instead of attempting a technological solution, all the hardware and software companies involved donated their R&#38;D budget for these initiatives to compensate the artists and copyright owners, in lieu of wasting their resoruces on an unending fruitless spiral, the problem would go away.
Posted by sachs (2 comments )
Reply Link Flag
about 4 minutes
The trouble is, if a song can be heard it can be recorded.

Here's how: Use a double-male courd and plug one end into your computer's (or whatever device you're using to play the music) head-phone or speaker outlet. Then, plug the other end into the "mic" port on another computer's sound card. Record the song as it plays using a program as simple as the Windows 98 "Sound Recorder". Since the song is being transferred digitally, you'll get pretty dang good quality copy. It's sort of like copying a song over the radio.

Please note that I don't subscribe to these services or record music using this method. I buy my music and support the artists that I enjoy. However, I'm just illustrating how freaking easy it is to copy music. If you can hear it, you can copy it. These efforts are useless and just make life difficult for those of us who actually follow the law by choice.

This problem stems from a sociatal issue of lawlessness and mutual disrespect. You cannot force a criminal to follow the law. They need to WANT to follow the law.

Anyway... I won't go off on this. It's all just a waste of time to me and it makes my life difficult so it kind of ticks me off.
Posted by utdream (2 comments )
Link Flag
Who is mixing the dope at C/Net?
It's evident that the only service that is
successful is offering paid per song/album.

iTunes speaks for itself and the hopeful
dreams of subscription services are fantacy.
Don't you thik that Apple knows the average
number of downloads per customer? If it was
higher than $10 per month over a year's time
they would add subscription service also.

BTWIf thesubscription model did take hold,
Apple would just add that choice and the
playing field would be level again. It all comes
down to ease of use, integrated
software/hardware and marketing, none of
which any of the present and/or future players
have, including Sony and Microsoft.
Posted by Mr.Bob (2 comments )
Reply Link Flag
Spot on
I agree - it's the package that counts most, not the business
model. Apple are the only one out their with a damn fine and
complete package. I just can't see anyone beating them at this
game - it's what they do best.
Posted by (15 comments )
Link Flag
Not quite
FYI, the Rhapsody subscription service is enjoying quite a healthy existence. Combined with the Real Music Store, Real Networks is the only company that supports both subscription and download-based services. I like those odds.
Posted by jerimiah797 (4 comments )
Link Flag
subscription model did take hold
<a class="jive-link-external" href="http://www.analogstereo.com/turntable_stanton_str8_100.htm" target="_newWindow">http://www.analogstereo.com/turntable_stanton_str8_100.htm</a>
Posted by Ipod Apple (152 comments )
Link Flag
Who is mixing the dope at C/Net?
It's evident that the only service that is
successful is offering paid per song/album.

iTunes speaks for itself and the hopeful
dreams of subscription services are fantacy.
Don't you thik that Apple knows the average
number of downloads per customer? If it was
higher than $10 per month over a year's time
they would add subscription service also.

BTWIf thesubscription model did take hold,
Apple would just add that choice and the
playing field would be level again. It all comes
down to ease of use, integrated
software/hardware and marketing, none of
which any of the present and/or future players
have, including Sony and Microsoft.
Posted by Mr.Bob (2 comments )
Reply Link Flag
Spot on
I agree - it's the package that counts most, not the business
model. Apple are the only one out their with a damn fine and
complete package. I just can't see anyone beating them at this
game - it's what they do best.
Posted by (15 comments )
Link Flag
Not quite
FYI, the Rhapsody subscription service is enjoying quite a healthy existence. Combined with the Real Music Store, Real Networks is the only company that supports both subscription and download-based services. I like those odds.
Posted by jerimiah797 (4 comments )
Link Flag
subscription model did take hold
<a class="jive-link-external" href="http://www.analogstereo.com/turntable_stanton_str8_100.htm" target="_newWindow">http://www.analogstereo.com/turntable_stanton_str8_100.htm</a>
Posted by Ipod Apple (152 comments )
Link Flag
They just don't get it.
Why on earth would I want to pay $10 a month to listen to my music... and then when I can't afford it, or want to switch services.... I lose EVERYTHING I have been listening to for the last year??? That's crazy! Imagine if Columbia House came and confiscated your entire CD collection when you quit thier service.
Posted by (8 comments )
Reply Link Flag
They definitely don't get it
Exactly. Or for some reason the service stops carrying some tunes you love.

People like to own their tunes for a reason, the same as people buying DVDs even though they are availabe at rental stores and on stations like HBO. People like to own the stuff they really like to ensure their access to it.

A rental service might be good to hear new songs before deciding to buy a few, but that's the only use I see for it.
Posted by kxmmxk (320 comments )
Link Flag
They just don't get it.
Why on earth would I want to pay $10 a month to listen to my music... and then when I can't afford it, or want to switch services.... I lose EVERYTHING I have been listening to for the last year??? That's crazy! Imagine if Columbia House came and confiscated your entire CD collection when you quit thier service.
Posted by (8 comments )
Reply Link Flag
They definitely don't get it
Exactly. Or for some reason the service stops carrying some tunes you love.

People like to own their tunes for a reason, the same as people buying DVDs even though they are availabe at rental stores and on stations like HBO. People like to own the stuff they really like to ensure their access to it.

A rental service might be good to hear new songs before deciding to buy a few, but that's the only use I see for it.
Posted by kxmmxk (320 comments )
Link Flag
FUD, pure and simple *NM*
*NM* means no message.
Posted by Byronic (95 comments )
Reply Link Flag
FUD, pure and simple *NM*
*NM* means no message.
Posted by Byronic (95 comments )
Reply Link Flag
Yawn....
....zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
Posted by smellcoffee (10 comments )
Reply Link Flag
Yawn....
....zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
Posted by smellcoffee (10 comments )
Reply Link Flag
I hate this subscription crap!
Everything is going to subscriptions. Games, music,
books... pretty soon we'll be paying $720 a year (at $60/
month) for stuff we used to spend no more than $300 a
year on anyway.

I like the idea of buying only a few songs here and there,
and not being forced to pay money when all the music
that's being cookie-cuttered out sucks.
Posted by olePigeon (39 comments )
Reply Link Flag
spend no more
<a class="jive-link-external" href="http://www.analogstereo.com/turntable_stanton_str8_80_stanton_t80.htm" target="_newWindow">http://www.analogstereo.com/turntable_stanton_str8_80_stanton_t80.htm</a>
Posted by Ipod Apple (152 comments )
Link Flag
I hate this subscription crap!
Everything is going to subscriptions. Games, music,
books... pretty soon we'll be paying $720 a year (at $60/
month) for stuff we used to spend no more than $300 a
year on anyway.

I like the idea of buying only a few songs here and there,
and not being forced to pay money when all the music
that's being cookie-cuttered out sucks.
Posted by olePigeon (39 comments )
Reply Link Flag
spend no more
<a class="jive-link-external" href="http://www.analogstereo.com/turntable_stanton_str8_80_stanton_t80.htm" target="_newWindow">http://www.analogstereo.com/turntable_stanton_str8_80_stanton_t80.htm</a>
Posted by Ipod Apple (152 comments )
Link Flag
Great idea coming from Microsoft...
In the Always-On world this will be "Fantastic".
I am sure, there will be a cultural change and the people will accept this kind of services.
We will live in an ubiquitous wirelles world.
Posted by (2 comments )
Reply Link Flag
Great idea coming from Microsoft...
In the Always-On world this will be "Fantastic".
I am sure, there will be a cultural change and the people will accept this kind of services.
We will live in an ubiquitous wirelles world.
Posted by (2 comments )
Reply Link Flag
Proprietary
Propietary does not always means 'bad'. The thing is that wmv and wma formats are inferior than the competition. But the ugliest part is that behind these is one company best known for its monopolistic and unethical, even for the tough bussiness world, attitude.
Really boring I'd say. Micro$oft (and c|net) haven't changed a bit all these years.
Posted by (9 comments )
Reply Link Flag
Proprietary
Propietary does not always means 'bad'. The thing is that wmv and wma formats are inferior than the competition. But the ugliest part is that behind these is one company best known for its monopolistic and unethical, even for the tough bussiness world, attitude.
Really boring I'd say. Micro$oft (and c|net) haven't changed a bit all these years.
Posted by (9 comments )
Reply Link Flag
They really don' get it
People want to own the music, burn it and have it for life not rent it.

Without being overly dramatic subscriptions create economic slaves (MS should know they are one of the biggest sellers of subscription based software)
Posted by robanga (47 comments )
Reply Link Flag
They really don' get it
People want to own the music, burn it and have it for life not rent it.

Without being overly dramatic subscriptions create economic slaves (MS should know they are one of the biggest sellers of subscription based software)
Posted by robanga (47 comments )
Reply Link Flag
 

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