by - July 30th, 2004
The Financial Times of London is reporting new details on Microsoft's long awaited foray into online music downloads. According to the newspaper, Microsoft will launch its store this August. Other details include features similar to some of those being offered by Apple with its iTunes Music Store. From the article:
It is unclear how much Microsoft would charge per track, but it is understood that major record labels granted the software giant similar terms to those offered to Apple, which sells single tracks for 99 cents.
[...]
People familiar with the music store praised its user-friendly interface. It will include a powerful song search engine and a feature that would recommend artists and tracks based on customers' musical preferences. Consumers will also be able to share playlists and chat with each other.
"It will be 'share, talk and buy' for those who want it. They are really going for a feature-rich music experience," said another person familiar with Microsoft's music store.
There is more information about the music store in the full article.
Will Microsoft finally prove to be Apple's competition? First, BuyMusic.com was going to beat Apple by being first to market for Windows users. Then Napster 2.0 was going to be the service that would dethrone Apple. Napster was followed by MusicMatch, Dell's rebranding of MusicMatch, and a host of other services culminating most recently with Sony.
In each case, Apple remained unaffected, and the company's market share of 70% of legal downloads simply hasn't changed.
Microsoft, of course, has resources that only an untamed and state-sanctioned monopolist can bring to bear, including that enormous monopoly power in the world of operating systems. The Financial Times, for instance, points out that Microsoft's MSN online service claims 350 million unique visitors each and every month, and then there's the fact that the company has updatable versions of its Windows Media Player on every Windows PC on the planet.
In addition, if it wants to, it can afford to take a loss on each and every song sold through its online store until the cows come home. That means that the company could undercut Apple's pricing for downloads b 10 to 20 cents without blinking, allowing the company to buy share in this emerging market. That would be great in terms of forcing prices down, but would make the entire market a money loser for everyone except the labels.
That is, of course, if music consumers are willing. Right now, it's Apple that has near-monopoly power in the market, including the seemingly unstoppable iPod. Apple also has "cool" on its side, and as someone was pointing out to me just last night, Microsoft has never, ever achieved "cool," and is unlikely to do so any time soon.
If anything, Microsoft is more likely to prove the undoing of its erstwhile early-partners in the music download business, companies that use Microsoft's WMA platform to offer their own downloads. Those companies are going to find that they were merely guinea pigs that Microsoft used to figure out what worked and what didn't.
That will leave Microsoft and Apple in the #2 and #1 spots, respectively, with Sony floundering about like an 8-track tape out of water (note that Sony has time to fix its bizarro online store and music player fiasco). The other services are going to wonder what the heck hit them.
Over time, however, can Microsoft gain any real market share from Apple? I don't know, and I say that with no hint of rosy glasses anywhere near my eyes. Indeed, it's Microsoft, and not Apple in whom I am placing my faith.
Name Microsoft's successes. I'll help you out: Windows and Office. The company's fabulous wealth and power were built on and financed by those two product lines. That's it. Everything else the company does ranges between abject failure and a steady financial drain. I have little doubt that in the long run, Microsoft's foray into the music download store will be one more such drain, though the company will successfully keep out most other potential competitors.