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Microsoft Makes New Push Into Music

Published: October 15, 2012 | 7:49 am
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SEATTLE — Music fans have often viewed Microsoft as something like a bad cover band, one that pumped out uninviting facsimiles of Apple’s iPod and iTunes with its Zune music players and service.

Now that the Zune brand is dead, Microsoft is once again in search of a hit in digital music. But this time, to improve its odds of success, it is marshaling some of its most powerful brands as never before: Windows and the Xbox.

On Monday, the company plans to announce a service called Xbox Music that will offer access to a global catalog of about 30 million songs. The service will let consumers listen free to any song on computers and tablets running the latest version of its Windows software, as well as on the Xbox console. Microsoft will not initially limit how much music can be streamed, though that could change over time.

The service is part of a broad set of bets Microsoft is making this fall to help regain ground it has lost to competitors, especially Apple and Google. In addition to Windows 8, a major new version of its flagship operating system that will start shipping Oct. 26, the company is close to releasing a new version of its Windows Phone operating system for mobile phones and its first Microsoft-designed computer, a tablet device called Surface.

In an aggressive push to persuade lots of people to use the service, Microsoft will package the software for Xbox Music with Windows 8. The arrangement could awaken antitrust concerns about Microsoft’s use of Windows to gain toeholds in new markets.

Microsoft’s do-over in the market is a sign of how a strong music service has come to be seen as a prerequisite for any serious player in the gadget business. Apple first showed the way with that strategy by making it simple to buy songs from the iTunes Store, helping it sell more iPods. Google and Amazon have also gotten in on the act, adding music stores to their Android and Kindle devices.

In addition to competing with those big companies, Xbox Music is entering a landscape thick with independent music services that offer their own variations on the listening experience. Spotify, for example, provides on-demand listening to a large library of music, while Pandora programs radio stations tailored to its listeners’ individual tastes.

Scott Porter, principal program manager for Xbox Music, said many music fans today relied on a variety of services like those, along with more traditional sellers of songs like iTunes, to satisfy all their musical needs. This approach, though, can be tedious.

“The dilemma is that music has become work,” he said. “Our vision for Xbox Music is that it shouldn’t have to be work.”

Xbox Music incorporates elements of all of those services. There is an option to buy songs, so a music fan can own them permanently with minimal restrictions. There are Pandora-like radio stations built around songs and similar-sounding music.

And there is an option akin to Spotify that lets users listen free to any music from their computer, though they will get audio and visual advertisements. (Some major bands, like the Beatles, are missing from the catalog.) Like Spotify, Xbox Music offers a $10-a-month ad-free service that includes many other features, like the ability to listen to music on smartphones and the Xbox 360 game console.

While finding music on other services can sometimes feel like studying a glorified spreadsheet, Xbox Music is much richer visually, with artist photos that can be flipped through quickly.

Analysts say the success of Xbox Music will depend on far more than whether the service itself is any good, since the strategy is to have it enhance the appeal of Microsoft-powered gadgets that have much broader functions. “This is not going to matter if no one wants the devices,” said Richard Greenfield, an analyst at BTIG Research. “You need to have a killer device.”

That will be tricky on phones. The first smartphones on which the service will be available are those running a new version of Microsoft’s mobile operating system, Windows Phone, which has struggled to gain traction.

Microsoft has a far stronger position in the living room with the Xbox, having sold more than 67 million consoles to date. Don Mattrick, president of the Microsoft division that oversees the product, has made it a priority to transform the Xbox from a game device into an all-purpose hub for video and other forms of entertainment. Xbox Music will first appear on that device when Microsoft begins updating its software over the Internet starting on Tuesday.

In a departure for a company that generally favors devices run by its own software, Microsoft will release versions of the Xbox Music service that run on Google’s Android and Apple’s iOS devices next year, Mr. Porter said.

One factor working against Microsoft is its dismal track record in music. Its Zune players sold poorly, and the company eventually stopped making them. After that it focused on making its Zune music service work on its mobile phone software, without much success.

Xbox Music could get its biggest lift from Windows 8, a product Microsoft has redesigned completely to take advantage of touch-screen devices. Early reviews of the new operating system have been mixed. Microsoft urgently needs Windows 8 to help it respond to the blockbuster success of the iPad and to inject some energy into a PC market that is in an awful slump.

While the PC market does not generate the excitement it once did, people still buy hundreds of millions of computers every year, the vast majority of which run Windows. Mark Mulligan, an independent music analyst in Britain, said Microsoft’s bundling of Xbox Music into its ubiquitous operating system could be a way to push digital music services further into the mainstream.

Mr. Mulligan wondered whether that bundling would attract the interest of regulators, especially in Europe, where Microsoft has tangled with antitrust enforcers for a decade. “I assume they’ve done their due diligence,” he said.

Still, Microsoft’s behavior does not appear to be all that different from that of Apple and Google, both of which include software for accessing their own music services in their mobile products.

“Customers expect devices in today’s market to offer core experiences like music services,” said Mr. Porter of Microsoft, adding that Windows users would be able to easily reach other music services through the app store.


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