MS Poised for Music Domination
By Brad King
June 14, 2001
At first glance, Microsoft, the company that has crushed its competition and gobbled up rivals over the years, hasn't seemed so imposing in the music business.
Sure, it launched MSN Music in April. But the service offered no real innovation. It's a mix of what its competitors already offer: Internet radio, music news and music search.
On Tuesday, Microsoft added 100,000 song clips to its site after inking a deal with Loudeye, an encoding and digital delivery company. It's a nice addition, but not one that is likely to strike fear in the hearts of companies set to launch streaming and download subscription services this year.
Yahoo, America Online, RealNetworks, MTV, and even upstart Napster continue developing consumer music subscription services.
But what looks like Microsoft's muted attempt to compete with other music services appears to be a red herring. While other companies are focusing on getting music from retailer to customer, Microsoft appears well on the way to making its media delivery system indispensable.
According to one analyst, Microsoft is using content delivery as a way of getting more people to use the company's brand of media file and desktop media player -– which could ultimately lead to control of the digital distribution marketplace.
"MSN Music is just a placeholder at this point," said Steve Vonder Haar, director of media and entertainment strategies at The Yankee Group. "Down the road, once they achieve their vision of the world, and Windows Media is in every consumer device and they have achieved ubiquity, then they will have achieved the Windows goal. Online music distribution is a means to an end for getting its operating system and delivery system platform into the marketplace."
Besides, it hasn't exactly been smooth sailing for Microsoft in terms of providing the actual music.
See, the music companies weren't too keen on dealing with Microsoft early in the digital music game because of the size of the company. That meant that what little content existed was being distributed by the labels in formats like Real and Liquid Audio.
But Microsoft has slowly convinced content holders that its digital rights management technology solutions would protect their content, and the promise of this is bringing music labels and movie studios into the fold.
Eventually, music labels and retailers began asking for their content to be delivered in Windows format because the media files could be delivered in a secure fashion, said a spokeswoman at Liquid Audio.
Microsoft has already started trumpeting its rights management solution as the industry standard, promoting Rioport and CenterSpan's adoption of the technology. Microsoft is also making inroads in the e-book and film business, claiming over 7.5 million transactions have been made using Windows DRM solutions.
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