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Microsoft to Launch MSN Music Service in 2004
securitas writes "SmartMoney.com reports that a Microsoft spokeswoman confirmed plans to launch an online music download service in 2004 via the MSN Web site. The story was first reported in the Wall Street Journal (paid subscription required). Microsoft may undercut the per-song prices of competitors Apple iTunes and Roxio Napster. A reliable source is cited as saying that Microsoft has been in talks with major music companies and a post for a senior-level marketing position for the service was added to Microsoft's recruiting site last week. Observers expect that the company will use Windows or the bundled Windows Media Player to gain a competitive advantage over other services that require a software download to use them. Interestingly, in this May 2003 analysis piece about Apple's iTunes Microsoft denied any plans to launch a music download service. More at CNet."
But how are these services going to generate actual profits? From what I understand Apple doesn't make anything from their .99 cent songs. They're mainly looking for people to buy iPods to play those songs on.
If Walmart and Yahoo and Microsoft and "Joe's MP3 Warehouse" are selling music at the same price point, where are the profits coming from? Or is this yet another Internet enterprise that is built on a house of cards?
I hope that all these services offer OPEN standards that can be mixed and matched. For instance, I don't want to buy a song from Walmart that only plays on "Wal-Player" or something.
Whadda ya think sirs?
"Music is everybody's possession. It's only publishers who think that people own it." - John Lennon.
Given that Apple has said they barely break even at 0.99/song, and Microsoft says they plan a lower price point, it looks like Microsoft is going to eat costs to gain market share.
Given that the X-Box was rumored to cost Microsoft money for each box sold-- money they hoped to make up in software, it's not as clear how this will work for songs. Songs won't drive sales of Microsoft OS. That's the hazard of being a near-monopoly: everyone either has you, or already doesn't want you.
So how will they profit? Microsoft doesn't have a history of raising prices after driving off competitors; they're usually content to just rule marketshare and continue sales as usual. But they do have a tendency to use their clout to cut others out in deals.
So, prediction: Microsoft gains leverage in the market, then starts to cut deals with music companies saying "you only sell through us, not Apple or anyone else". Overall goal: ensure Windows Media Format (and DRM) become the standards, thus ensuring Windows is seen as the only OS for doing music.
Hazard: Apple already has a good media lock, so they won't be able to be un-entrenched in this.
Prediction: hell if I know.
A.
It's half way through November. May was eons ago in IT speak.
The important questions from all Europeans: When will we be able to use it?
Personally I think in this situation both MS and Apple would strive to maintain ease of use for both their services. Pissing off the customers will result in a choice of service instead of the potential ala carte usage. And that choice could fall either way. Of course the file types differing and proprietary as they are do push people to pick one service over another. But I think there probably are a decent number of users that are content to use both services and burn cds of their purchases.
Note: I have ignored Roxio Napster. I played around with it and was not impressed. Not to say they won't improve but right now I do not think they are solid.
"What we do in life echoes in eternity." Maximus Decimus Meridius
"I don't see how it violates the settlement, unless they prevent Windows users from using other web browsers. As long as you can still view sites using another browser on your computer, there is nothing to stop you choosing whichever browser you want. So they are not using market power to tie people in to their web browser"
I actually feel more sorry for the non-Apple competitors in this arena. They're largely tied into the WMA and Redmond OS and have alread surrendered their souls to the new comptetitor. Talk about squeezed from both sides. At least it's unlikely that competition from Micro$haft will completely destroy the Apple solution.
It is odd that such a 'technology leader' is always second (or later) to market. I guess they have to rely on the true innovators to show them the path to money. "Your potential, Our passion?" finally makes sense now, as long as our potential is the one to create new markets for them to dominate.
Just remember, if you are in the software industry, every dime you spend on Office/Windows/... is a dime our passionate friends will use to take your market away once it becomes lucrative enough to pursue.
Of course, they may have already purchased someone else's software to make this happen. I can't imagine whose. It seems like all the major players have already been purchased by other major players.
In any case, Walmart seems to be trying to launch it's music service in time for christmas. It is hard to see MS competing with this, especially given that MS has, as of now, no product and no significant relationship with the labels. Even if MS controls the front end and DRM, It would require a massive amount of shenanigans to catch up. They might be able to succeed in the EU, but MS seems to be having a number of difficulties there, and may not ship a music enable Windows after the new year.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Of course MS denied any plans to open a music store back then. The few people outside Apple who had heard of it probably expected it to tank; who was gonna bet that an Apple-only product, competing against p2p/free download services like Kazaa and using a relatively obscure file format, was going to be the success it turned out to be? But now that Apple has shown that people are willing to use services like iTMS, Microsoft will no doubt come swooping in and try to make a billion or two.
MS has nothing to do with anything until someone else has already made a ton of money in a given market segment (think Xbox after Playstation, game peripherals after Thrustmaster, IE after Netscape, and even the graphical OS after the debut of the Mac). So it's not surprising that they want a piece of the music store pie at this point in time, after others have already spent lots of money figuring out what works for the consumer and what doesn't. It's like free R&D and user testing.
My only question is how MS is going to make money from this by charging less per song, if even Apple is only breaking even on iTMS. A monthly subscription fee maybe? Who knows, we'll have to wait and see.
the coolest club on
Sticking feathers up your butt does not make you a chicken - Tyler Durden
Talk of this is extremely risky at the moment. The EU is looking at this very problem right now. Word of this only hurts their defensive position and assures harsh punishment by the EU.
Got Code?
I'm posting anonymously to help protect my identity because I *gasp* work for a member of the RIAA.
I can tell you that these types of services are beginning to bring some interesting problems to the record companies, namely what royalties are paid to the artist. In the actual recording contracts, royalties are VERY specific and their definition is not very open ended. This mainly helps the recording company by taking certain monies from royalties and helps avoid confusion. And then something like music downloading comes along, which simply does not fit into ANY of the pre-determined categories in the royalties contract. And believe me, there are many specifically defined categories. This is especially true for some older contracts, where music downloading was not really a viable option. In those instances, it's attempting to fit the square peg in a round hole.
On a side note, the RIAA members may have resisted this, for this specific reason. Royalties are obviously huge for the RIAA members and attempting to pay royalties on a category that does not fit into the recording contract is problematic, to say the least.
Either way, it's simply food for thought.
Just like with IE vs. Netscape, M$ doesn't expect a profit. And it needs to do two things with their music service that will provide advantages in the long run.
1. Tie users into their DRM. Plain and simple.
2. Tie users to their media player which will be restricted to their DRM.
Number 2 kills the following companies on the Win platform: Real, MusicMatch, BuyMusic, Napster and even iTunes so long as iPod sales for Windows drop off. iTunes will still exist for the Mac tho.
Cringley's latest article has some excellent points on M$' whole DRM, platform agenda and why they lose money in most of their non-Office and non-OS ventures.
Frankly, this smacks of the same shit that happened a few years back with the browser wars. M$ sees threat, launches their money losing alternative. Then bundles it, forces relevant M$ apps to use it, and then breaks compatibility. And thanks to huge lock on the desktop - along with, really, apathy on the developer and user base - presto, competition eliminated and monopoly suceeded.
With their media player, a similar thing will happen. But instead of breaking standards, M$ will force their propreitary format on everyone who wants to use their player, thusly creating the artifical standard. Deja'vu all over again.
I really hope the EU kicks their ass on this front and them releasing a music (then video, I'm sure) service could potentially add more fuel to the fire. These guys (M$) are due a good ass kickin. We don't need their vision of computing nor their abuses. The real world does not have just one car maker or one company who builds all the houses everywhere, or even one company who makes a variety of cd players. The software world should be no different.
One reason I can deal with Apple's DRM is because I can take the songs, burn them to a cd and then rip them back in. I still have very good quality, but the songs are not restricted and in a more widely usuable format - mp3. And in the end, compatibility with all my machines is the gold standard of which I try to live by. It's hard, long road, but not an impossible one.
"Observers expect that the company will use Windows or the bundled Windows Media Player to gain a competitive advantage over other services...."
In other words I won't be buying music from Microsoft because I can't use their wares (since WMP won't run on my system). I can't say I'm terribly upset by that, as long as other vendors still exist.
Who would've thunk I'd stand up against some good, old-fashioned Microsoft bashing?
If you look at the facts, Microsoft hasn't been able to replicate its "success" with IE in any other arena. Look at mobile phones, where Microsoft has been dumping cash hand over fist and hasn't even made a dent. Look at PDAs, another area where Microsoft has been gushing cash. The largest Microsoft-based competitor to Palm (the iPaq) has less than half of Palm's market share (all the rest of the Pocket PC devices combined don't add up to the iPaq's share) -- and this despite the fact that Palm's offerings have been really sucky. Look at MSN, for Christ's sake. Microsoft has spent untold billions on that p.o.s. and AOL is still has more than 20 times the subscribers.
Don't give Microsoft more credit than they deserve. Their "wins" are few and far between. Apple may be in for a fight, but it's not inevitable that Microsoft will gain anything more than a tiny fraction of the marketplace.
Our intelligent designer has never created an animal that we couldn't improve by strapping a bomb to it.
Microsoft wants to dominate the living room and is probably planning to have the media player client in future Xboxes be able to access their music service. This in turn sells more Xboxes which in turn sells more Xbox games which is where Microsoft makes their money because game vendors have to pay a per title license fee to Microsoft.
I have THE solution, and have said it before. Here it is, I WANT them to implement it, so they are welcome to steal it from me. (hey, just give me a little credit for revitalizing the music industry) :-)
Music stores should have a HUGE database of MP3s/WAVs in the store. I mean every damn song ever recorded.
Every song older than 10 years old is $0.10.
Every song 5-10 years old is $0.25.
Every song 2-5 years old is $0.50
Every song 2 years old to 6 months old is $0.99
Anything newer than 6 months you have to buy on CD. (maybe this could be rolled into the 0.99 if it didn't fly)
1. You have kiosks set up so customers can browse the database, creating their own CDs of songs (either audio, or burned as MP3s - ZERO DRM)
2. They submit the request for the CD to be burned, which is all done behind the counter. (to avoid the customer support nightmare if they did it themselves)
3. While they are waiting for their CD to burn, they can browse the latest CDs, merchandise, etc.
4. They could charge a reasonable fee for the media and the burn. Maybe $2 per CD? Free songlist, but artwork might cost you an extra buck.
Advantages:
It gets people back into the stores! One of the first rules is to get them into the store, and they will spend money.
It isn't online, so you don't have to worry about people hacking in.
It is reasonably priced. Imagine building your favorite songs of the 80s for a few bucks. Those songs are just sitting around not making money anyway.
Maybe there is an online service where you can build your CD and submit your request, and you can go in and pick up your CD, or have it shipped to you.
They could list other people's CD compilations. Maybe have a voting system, so you could see the top 10 compilations.
Future: DVD burns of videos, concert footage, interviews, Behind the Music, etc.
Make record stores a cool place to visit again! Give people the music they want at a reasonable price, and you will be rewarded. Am I the only one who sees this?
My beliefs do not require that you agree with them.