Microsoft probably mulling music store futures

Summary:Speaking of Microsoft's media juggernaut, I've been wondering what Microsoft plans to do with its music store. Just like with Apple, to get its media ecosystem off the ground, Microsoft had to make sure a store was in place where you could buy copy-protected recordings that would work in Microsoft's various media players (PC, PocketPC, smartphones, etc.

Speaking of Microsoft's media juggernaut, I've been wondering what Microsoft plans to do with its music store. Just like with Apple, to get its media ecosystem off the ground, Microsoft had to make sure a store was in place where you could buy copy-protected recordings that would work in Microsoft's various media players (PC, PocketPC, smartphones, etc.).  That compatibility is largely defined under the auspices of Microsoft's PlaysForSure program.  But the real idea was to create an ecosystem whereby other companies could sell PlaysForSure-compliant recordings (and eventually videos).  The ecosystem isn't much different than the way PC vendors sell PCs that support Windows.  At the end of the day, consumers get a pretty good deal because of the way all the hardware vendors are competing to sell computers to consumers.  It forces compliance with a spec (the computer has to run Windows) and competition based on implementation.  

Microsoft essentially did the same thing in software, except that it got itself into a bit of hot water by selling Microsoft Office.   Not only did the Windows-Office one-two punch set the stage for a monopoly that many people feel has disadvantaged consumers, it put Microsoft into competition with the same software vendors (Lotus, Wordperfect, Borland, etc.) it was depending on to build up the Windows ecosystem. It's not a way to make friends.

But now that we're beginning to see a kinder, gentler Microsoft (at least recently given the way it's settling up old scores and opening things up a bit)  -- oh, and a somewhat more regulated one -- something tells me it won't be in the music business for itself for very long.   Sure, Microsoft's music store is helping to jump start the PlaysForSure ecosystem, but Microsoft knows that there's much more money to be made (and fewer trust-busters to keep off its back) if it doesn't continue to compete with (or put out of business) other PlaysForSure media sources that are actually building up the PlaysForSure ecosystem, to Microsoft's benefit.  For example, Napster and F.Y.E.  (Napster just signed a big deal with Dell which will no doubt trickle down some lift to the Microsoft media juggernaut.)  Even though it's not a PlaysForSure music store, there will be other music stores like Yahoo's that will also compete in the Windows Media ecosystem because of the way they rely on specific Microsoft media technologies.   Yahoo music is managed with Microsoft's digital rights management technology.

With so much action around its media technologies, it doesn't make any more sense for Microsoft to continue competing with its "partners" over music sales than it does for Microsoft to enter the hardware business and start selling MP3 players.  The company can leave others to the hardware and media feeding frenzies and make its money on the technology licensing fees as well as on the authoring and infrastructure solutions.   So, my guess is that Microsoft's music store will go one of two ways.  Either Microsoft will sell the store outright to someone else (could be just about anybody in the media or entertainment business), or Microsoft will turn the store into a multi-tenant e-commerce architecture that can be private labeled by anybody (yes, that means you might be able to open up your own music store), that is automatically loaded with PlaysForSure music, and that allows "franchisees" to set their own prices and terms and even do their own deals with record labels and artists (some franchisees might even be the artists interested in going direct while offering other forms of music).  Either way, since its music already isn't very competitively priced (most likely to keep from undermining its partners), I can't see Microsoft's music store as being a sustainable business for the long run.  Sooner or later, something will have to give.


Topics: Legal

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David Berlind was fomerly the executive editor of ZDNet. David holds a BBA in Computer Information Systems. Prior to becoming a tech journalist in 1991, David was an IT manager.

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