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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."
When is this going to stop being news...when walmart start selling musi....oh wait...
When do you think the first "bug" will apprear that will break iTunes and/or Napster's music playback on Windows with an update to Windows Media Player?
I smell another anti-trust suit coming.. isn't this yet another blatant violation of the suit they settled not so long ago?
Please direct all bug reports to
I heard they were going with Ogg Vorbis for maximum cross-platform compatibility.
1. Spread Fear, Uncertainty and Doubt by announcing intent to compete
2. Launch inferior product tied to monoply powered desktop OS.
3. Work to bring service nearly to par while undercutting all competition with illegaly earned war chest.
4. Destroy competitors and cease innovation.
5. PROFIT!
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.
So now we're going to be complaining about the Blue Sound of Death? What would that even sound like? Is it anything like one hand clapping?
Now we're in for it. I can imagine the DRM attached to an MSN music service would the most restrictive yet, allowing only one copy of each file downloaded on one PC, ever. The real run happens when the clueless user installs the latest security patch, only to find that none of their music works, and reads the fine print to discover that a PC is defined as "the unique collection of hardware, software, and specific Windows version that exists at the time of each music download". Don't like it? Well, if you had never stolen that music and put J.Lo out on the streets, this never would have happened, Bobby. Now, pony up for another copy of that track and we'll call it even, and might not even send Lars and Mungo to your house for a visit...say, would you like to buy a Longhorn upgrade?
"Linux doesn't exist. Everyone knows Linux is an unlicensed version of Unix"- Kieren O'Shaughnessy
I am in awe of these compaines wanting to jump on the online music bandwagon. I believe with everyone putting all their "eggs" so to speak in the online music basket they are setting themselves up for what I believe could be akin to the .com burst. With so many new online music services coming online, the only for-profit entity coming out ahead are the labels. With the strong-arm tactics currently being used by the RIAA and such towards file swappers, I can imagine there is a lot of overhead involved to run an online music store.
So this would explain why MS were so concerned about shipping a "substandard" version of windows without WMP... ...Otherwise they wouldn't be able to tie in all those European customers to a hobbled music service with a "oh look, you already have the required software installed" media player...
It's not that MS is necessarily killing competitors with each little feature, its more the way they use each toe hold to push forward into the next market and the next market and so on. Even if they were the worlds best and nicest software producer I think this kind of monopolistic action is extremely dangerous.
1984 arrives at long last and we discover that it isn't the government watching us, but Bill Gates...
I don't see how it violates the settlement, unless they prevent Windows users from using other music services. As long as you can still play the other stuff on your computer, there is nothing to stop you choosing whichever service you want. So they are not using market power to tie people in to their service.
Of course, they may well have a strategy to gradually extend the features available to Windows Music Shop users, while restricting these to other people - for instance, it may become a lot easier to burn CDs from Windows Music Shop than from iTunes, because of some obscure driver incompatibility that you need a degree in CompSci to unravel. Or it may be possible to play only Windows Music files from within Internet Explorer. I should stop now, before I give too many ideas to the folks at Redmond.
Microsoft are still allowed to compete, as long as they do it fairly. The moment they stop competing fairly, there will be a howl of protest, and the lawyers can start dusting off the terms of the agreement.
Could this be Netscape vs. Internet Explorer all over again?
Once again, Microsoft is late to the game. Apple started it this time with iTunes (where it was Netscape with the web browser). Initially, Bill and MS were reluctant to get on the bandwagon with the Internet. Then, it started to leave without them. They smell money and take off after it. "Well, we'll just give our browser away for free and because it's installed by default, why would anyone pay for Netscape?" Of course many "average" users didn't blink and eye used IE and Netscape died.
Are we going to have the online music wars now? MS, again late to the party says, "Well, we've got Media player already installed by default and it's free. Now all we have to do is undercut everyone else on the prices of singles and albums and we'll own the market. If anyone matches our prices, heck, we've got so much money in the bank, we'll just give the music away. We'll also slip some DRM in and make our compression technology proprietary. Customers will love us for free music and the RIAA will love us for DRM."
Nahhh, Microsoft is definitely not a monopoly.
Co-founder and designer at Music Nearby: http://musicnearby.com
The Sherman Act prohibits the use of a monopoly to leverage entry into other markets, and it'll be a clear violation of the Act if they bundle their music download service with WMP.
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Hang on, don't they already do this? At least in the UK, I already have access to the service, and have downloaded 4 tracks already, which could be burned to a CD for 99p ($1.60?) each. It already works via WMP 9. Maybe we're just the guineapigs.
BTW, due to an interesting set of circumstances, you can download Tubular Bells parts (sides) 1 and 2 as one 99p track each, or the whole album for 7.99! (assuming 1 credit=1p; this can vary)
Phil
I take the view that this is a good thing (tm) for Microsoft to do. They're big enough that they may be able to muscle the record companies into cutting them a deal for the songs. This of course will anger Apple and set off a series of lawsuits in every direction. Either way it shakes up the industry quite a bit, and that's what we need. Lots of competition. And I imagine M$ is bound to lose money anyway on this deal, since they don't have a hardware player. And if it did come down to litigation, I don't think anyone would be sorry to see lawsuits directed at the RIAA or M$
The sending of this message pretty much inconveniences everyone involved.
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.
The problem is that MS includes media player with the default windows install. In fact, there is no way to remove it. Furthermore, they have put their own add on software into the OS at a very low level and load at system boot (ala IE) to make their software appear much faster. Unless they agree to do that with iTunes, musicmatch, etc, then they are abusing their monopoly.
This would basically represent the exact anti-trust case which they lost. The justice department could just replace all instances of IE with Media Player and resubmit the lawsuit. And just to be consistent, after the DoJ won the case, they would have to roll over and give MS a sweetheart deal.
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
The problem is my nearsighted friend is that they will undersell Apple itunes until it goes under *then* gouge their customers.
Ever notice Office is like hella expensive?
Tom
Someday, I'll have a real sig.
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.
I see opportunities for new "independent record companies", ie. new music companies that do not have the huge overhead and excessive middleman costs.
Right now the artist and consumer are the ones squeezed out. The cost of a CD is almost nothing to produce, it is all the money the music companies spend on advertising, high paid executives, buying time on MTV, etc. that drive costs up. The artists make very little of it.
But there could be room for a music company that eliminates a lot of the overhead and uses creative methods to advertise and distribute it's product. Possibly free or low-cost downloads of new material to get customers to try a new artist, etc. Most of the music companies big cash flow is in the younger music market. Getting kiddies to buy a Britney Spears album, etc. But as you get into the college ages people start to get inputs from new sources like student radio, etc.
The big music companies will jump on the MS bandwagon because of the massive size of the captive Windows market (the sheep) and because MS will guarantee them their artificially high prices. But if artists have a different avenue to take that gives them more control over their creative efforts and a better share of the profits they may be willing to take that route.
The music companies will continue to pump huge money into "last years thing" - think Sony paying Michael Jackson to basically produce nothing for them. Much of these losses will be hidden because the music companies are part of larger corporations that span many markets.
But over time free market economics would get them. That is if our goverment lets them. Efforts like the DCMA can try to stop this, but in the end I don't think it can. While there may be a law that says it is illegal to sell computer equipment that circumvents copy-protection, there is nothing that say an artist or a new music/media company is forced to release their material in proprietary copy-protected format like Windows media.
One way the big companies and MS will try to stop this is with "subscriptions". The spreadsheet MBA boys love a constant cash flow. Think cable TV. Think MS software licensing. They want that continued consistent cash flow. That is why MS formed MSN. They saw what AOL was making. So they will try to convince people to pay a monthly fee to download and listen to music. It will be like the cell phone companies. You will get so many minutes of music a month for a certain price. And you will probably pay a premium for going over a limit.
This could lead to some competition for the subscription market, just like there is in the cell phone business. But I think it may end up like cable TV. You will pay an artificially high price for a "package" deal that includes all kinds of music you don't want. Think the Home Shopping Channel, etc on cable. They will make the costs of buying just the songs you want high enough that many people will just "take the package" and accept it. Think of all the people who are up to their ears in credit card debt and just get by paying the monthly minimums. As long as they can go along with what society tells them they should be, they will pay their little montly charge to "be happy".
In the end the dinosaurs will go extent. MS may continue it's reign a while longer, but I think they are just stringing things out. There are opportunities available for success that lie somewhere between totally free or pirated, and over-priced and controlled.
IMHO.
Valoo !
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.
Apple's case isn't hypocritical; they aren't doing what Microsoft does, which is integrate. They Bundle.
They don't make iTunes and *integral* part of the OS, the way Internet Explorer is. Even Safari isn't an integral part of the OS; you can if you like delete all the Apps (Mail, iChat, Safari, Internet Explorer, iMovie, iDVD, etc) and use your own (Thunderbird, AIM, Firebird, Mozilla, etc) without affecting the stability or reliability of your system.
With Apple, you can unbundle without any ill effects. The only technical aspect that might be similar is the way Quicktime and AppleScript is integrated into the OS, but that's been the case since at least Mac OS 7.6, or how recently Apple added WebKit to offer HTML rendering as a service; but WebKit is based on (and continually updated against) KHTML, and was added in order to compete with Microsoft.
GPL Deconstructed