Microsoft's Online Music Store to Launch Thursday, September 2nd

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.siliconvalley.com/mld/siliconvalley/news/9539158.htm' target='_blank'>http://www.siliconvalley.com/mld/siliconvalley/news/9539158.htm</a><br /><br /></div><i>"Microsoft Corp., hoping to take a bite out of Apple Computer Inc.'s highly popular online music service, is gearing up to launch its own Web site for selling songs over the Internet. With Thursday's planned debut, the software maker will become the latest competitor in a market experts say is still in its infancy - but one that is expected to grow considerably more popular in the coming years."</i><br /><br />I'm really looking forward to this and am cautiously optimistic that it will be quite good. I hope. :-) What would it need to have to impress me? 160 kbps to 192 kbps audio quality, be available in Canada, and have DRM that actually works properly. Which reminds me, I still have to rant about Puretracks and their busted DRM model...

[James Fee]

I'm not expecting much, but that doesn't mean it won't be a success. I've never been impressed with MSN offerings in the past, especially the first versions of them.

The problem with going after iTunes is that they have to compete with Napster, Real and Musicmatch. Eventually MSN will overcome the others, but they are splitting a smaller piece of the pie than iTunes has with the iPod having 58% of the market (http://www.ipodlounge.com/ipodnews_comments.php?id=4916_0_7_0_C).

[Jason Dunn]

The problem with going after iTunes is that they have to compete with Napster, Real and Musicmatch. Eventually MSN will overcome the others, but they are splitting a smaller piece of the pie than iTunes has with the iPod having 58% of the market (http://www.ipodlounge.com/ipodnews_comments.php?id=4916_0_7_0_C).

Uh...that's some interesting math their using. ;-) First, they neglected to mention that's of the HARD DRIVE-based market, and that number seems insanely high to me considering that about a month ago I read it was 28%. Unless things have radically changed. 8O There's no arguing that the iPod is a huge success, but "58 percent share of the digital music player market" seems like hype to me.

[James Fee]

There's no arguing that the iPod is a huge success, but "58 percent share of the digital music player market" seems like hype to me.
Probably right about that, but I think its fair when comparing online music stores. The bottom line is hardware needs to drive the stores as well as the music offering. If there was a real "iPod killer" that played WMA, then MSN would have something to drive sales. I'm not sure there really is a reason yet to choose MSN over Napster or Musicmatch. I guess the hope for users is that there will be a price war.

[Jason Dunn]

The sad thing is that even if the new players from Creative are iPod killers, trying to battle the huge mindshare that the iPod has is a long, painful process. It took Microsoft six years to make headway against the "Is that a Palm?", and the battle still isn't won. I wonder if Creative has the guts of steel for a battle like that?

[Felix Torres]

Apple's quoted numbers are based on dollar share not unit share.
Which tends to double their share given that most of their installed base sold are the $300-400 level. not the $150-250 level of their competitors.

Its kinda like Mercedes or BMW reporting sales in dollars and not units sold.
For the purposes of this discussion, the likelihood of success of MSN store, the number that matters is the fraction of customers, not how much money they spend on a player. After all owners of flash-based players buy music online, too.

For the record, the 2003 worldwide *unit* share numbers reported by the ECONOMIST in JULY were:

Apple 21.6%
iRiver 14.1%
Rio 13.9%
RCA 13.7%
Creative 10.1%
Others 26.6%

More recent numbers, including the first half of 04 had Apple up to 29% and most competitors down a point or so each, since they hadn't introduced the new players yet.

The thing to keep an eye on is how much traction MS gets out of the "Plays For Sure" campaign, stressing that it doesn't matter which player you buy, as long as it supports WMA you'll be safe. Coupled with the Apple-Real fracas, there is a real opportunity there for the second tier vendors to grow the WMA market faster than the market as a whole.

[James Fee]

I didn't put the number there to get into a discussion on its validity. My point was that iTunes is a success because of the iPod being a success. Lets not get off topic here too much...

We'll see what happens, but the stores are now here and its up to the hardware manufactures to take it to Apple.