Microsoft jumps into music world
Benny Evangelista, Chronicle Staff Writer Tuesday, November 18, 2003
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After months of speculation, Microsoft on Monday confirmed plans to enter the increasingly crowded online music market, putting it in competition with companies such as Apple and Napster.
Microsoft's MSN online service is working on an online music download service that will start next year, Lisa Gurry, group product manager for MSN, said in a statement.
Gurry and other Microsoft representatives provided few other details about the new service. A spokeswoman said decisions about how much songs or subscriptions would cost are still pending.
Details aside, just the fact that the Redmond, Wash., softwaremaker -- with $32 billion in annual revenue -- is throwing its considerable weight into the online music gold rush is important news in the $31 billion worldwide record industry.
"It's too early to say whether Microsoft washes everybody else out of the pond,'' said Phil Leigh, senior analyst with consulting firm Inside Digital Media.
But music, Leigh said, "is only the first wave of the Gold Rush. Much like the one in California was followed by the Klondike, we believe that Hollywood films and similar video programming will follow recorded music into Internet distribution.''
Speculation about a Microsoft online music venture started soon after Apple found early success with its iTunes Music Store, which was started in April and expanded in October to include PCs that run on Microsoft's Windows 2000 or XP operating systems.
Microsoft's entry was inevitable, said Dan Sheeran, senior vice president for RealNetworks Inc., which operates the Rhapsody subscription music service based in San Francisco.
Sheeran said the MSN service may be bad news for companies that rely on Microsoft's media technologies because they might have to compete against a giant. But Sheeran said the attention Microsoft brings to the overall online music market is good news. Meanwhile, the Australian company that markets Kazaa, the huge file-sharing network and arguably still the biggest force in online music, outlined plans to start a marketing campaign to counter the Recording Industry Association of America's strategy of suing individual file- sharers to stop what it calls digital piracy.
Sharman Networks Inc. on Wednesday will start running ads in major newspapers in the United States, the United Kingdom and Australia asking consumers to join a "Kazaa revolution.''
The $1 million campaign is intended to persuade consumers to buy more artist-sanctioned songs that are being offered through Kazaa. The campaign also hopes to drum up public support.
"We want to mobilize 60 million Kazaa users to pump up the volume and send a message to the recording industry,'' said Sharman Chief Executive Officer Nikki Hemming.
But RIAA spokesman Jonathan Lamy said Kazaa must first block copyright- protected songs before it can be "considered responsible corporate citizens who don't induce their customers to break the law.''
E-mail Benny Evangelista at bevangelista@sfchronicle.com.
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