Microsoft Pursues Business-As-Usual Competition To iTunes Music Store

by , 8:00 AM EDT, May 27th, 2003

Microsoft is quietly preparing a music service of it's own that will compete with the iTunes Music Store (iMS), according to a C|Net report from Evan Hansen. The service, originally supposed to be revealed back in January of this year, will most likely be a subscription-based model, similar to other label-sponsored services like PressPlay and MusicNet. PressPlay, which was purchased by Roxio last week, currently runs on the same Microsoft technology that will be used in the Big Redmond's new service. In addition, Microsoft has some additional measures aimed directly at making renting music more attractive to consumers. From the article:

Services such as Pressplay, which uses Microsoft technology, have been put on the defensive with news that Apple has sold more than 2 million downloads since April 28, the day its iTunes Music Store launched. But Microsoft is betting that new security enhancements planned for later this year could make renting music, rather than owning it, more attractive to consumers.

Microsoft said it is developing software that makes it easier for subscription services to transfer music to portable music players. These services now provide unlimited downloads of hundreds of thousands of songs to a PC for a monthly fee, but they typically do not allow files to be moved around much. Microsoft said it will soon address this shortcoming with technology that will allow unlimited downloads to a portable device--a dramatic improvement.

"We can already support unlimited downloads tethered to the PC," said Jonathan Usher, director of Microsoft's Windows Media division. "The next step is enabling access to unlimited downloads on consumer devices."

With Microsoft's service leaning towards an expanded subscription model, the article continues to discuss the virtues and problems with that sort of system:

Subscription services are "ahead of their time" according to a senior executive at another record label, who said a key stumbling block is providing unlimited access to subscription music away from the PC on portable music players and other devices. "Ultimately, there will be a huge audience for this, but the services need to provide portability," he said.

"Downloads are very close to an old-fashioned experience," he added. "Subscriptions are much more of a shift...but the technology isn't right for the shift to happen. We're hoping it will happen this year, that the technology companies will provide portable players that can play the music."

Microsoft's Usher said that Windows Media already supports secure playback on some 15 portable music players, including the Diamond Rio, but only for songs that are purchased, not rented. He said the company is continuing to work on enhancements to support subscription services on devices.

Microsoft plans to add support for a clock in portable music players and other consumer-electronics devices. The clock would provide a "time out" feature much like that used in PC versions of its DRM software. If customers don't pay their monthly subscription bills by a certain date, access to the files on those devices is cut off.

The original article has much more information and quotes, and is a good read.

The Mac Observer Spin:

This is another stellar example of something we have often discussed at TMO: Microsoft long ago lost sight of the fact that what is good for Microsoft is not necessarily what customers want. Microsoft wants a market where everything -- software, music, video, books, and someday even computer time -- is rented, and pursues that goal while completely ignoring the fact that its customers simply do not want it. Big Redmond is trying hard to move its customers to a subscription scheme for Windows and Office, for instance, but has been forced to back off of some aspects of that due to customer rebellion. We use the term "rebellion" loosely, of course, because there were still plenty of lemmings willing to sign up for those software subscriptions, just not all of them.

Subscriptions benefit Microsoft because it ensures recurring revenue. Of course, that's bad for consumers, as it also ensures recurring payments. By contrast, the thing that Apple has offered as a subscription, .Mac, is service based. Though the majority of Mac users have not signed up for .Mac, those that did wanted the services being offered, as opposed to wanting to have to pay Apple year after year for something like Mac OS X, or music.

In fact, Steve Jobs made a point of saying at the media event announcing the iTunes Music Store that consumers don't want to rent their music. They don't, and portability isn't going to change that. This is quite simply why PressPlay and MusicNet have been duds, while the iMS has started off with a bang. Renting music from Microsoft would be that company's dream, but it's a dream that very few consumer share; Microsoft, in its perpetual myopic self-absorption, is missing that point yet again, and is going to fail with a music service pursuant to that business model. That will be the case even if the company makes it as intrusive as its other products are in Windows XP.

That is not necessarily to say that Apple's iMS will be a hit on Windows, but a music subscription system from Microsoft will definitely fall on deaf ears.

CNET News.com Article