Jordan

Microsoft Online Music Store?

According to a recent CNET article, Microsoft is planning to launch a music store later this year.

"Microsoft said Friday that the second half of the year will see the launch of its online music store, a long-expected entry into an increasingly crowded business dominated by Apple Computer's iTunes."

Click Here for Full Article

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Jordan M. Wigley
Dell DJ Site

CluckChicken

This could make for a very interesting market. The most recent "Money" magazine has an article on Apple. Part of the article talks about iTunes and even though it is the most successful of the online music stores there are serious questions about whether this type of store can survive. It's very interesting to read that Apple has sold over 30 million songs (as of writing of the article) and had made only $2.7 million, what does this say for the rest of the market?

MusicMan

We've kinda discussed this topic before when we talked about codecs. Microsoft are not interested in making money directly from their music store, the profit comes further down the road when WMA becomes the industry standard and they start charging licenses for it. For them, this is again about control. Please people, wake up and realise what their game is. Go and read about Palladium (now renamed 'Next-Generation Secure Computing Base for Windows');

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If that doesn't satisfy you, go do a Google search and become informed before you buy into it.

Regarding the iTMS and revenue earned from it by Apple, simple mathematics - (2.7 ÷ 3) x 5) - would now put it at $4.5 Million from 50 Million songs sold.

MM

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Have iPod mini, will travel

CluckChicken

Now subtract the tens of millions spent on advertising.

MusicMan

But Jobs did say right at the start, this isn't about making money from the iTMS, it's about selling more iPods.

MM

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Have iPod mini, will travel

Jordan

Exactly.....

I honestly think iTunes will remain #1, regardless. Even if Microsoft's portable multimedia player is a hit, I think it will be more video customers purchasing it than people looking for an MP3 player.

Also, even Microsoft would have a hard time overtaking iTunes this late into the game. The only way they could do it is if they began having a Microsoft Music Store pre-installed in the next version of Windows.....but that just brings about a whole mess of legality. And with the legal problems they already face for similar things, I doubt they would be dumb enough to try and pull that one.

Sure, as stated in the article, MS would not have to spend much on advertising because they have MSN as a practically free resource to utilize. But I still don't think there will be enough interest from audio customers. If MS wants to set up an online service to help sell their upcoming portable multimedia players (video and audio), they should be looking at the video side. Instead of concentrating solely on record labels, they should be looking at film/tv studios. They could be the first company to have the resources needed to make a good online video service (recent tv shows, fairly recent movies, etc.) for a slightly discounted price. I know plenty of people, especially frequent travellers, who would easily pay a couple bucks to get the latest episode of their favorite TV show while they're on the road. This wouldn't take away from DVD sales of TV series, because the quality could be fairly low for a portable device....rendering it to be bad quality on a larger screen such as a standard TV.

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Jordan M. Wigley
Dell DJ Site

MusicMan

Oh this is isn't late in the game, this is just the beginning. The landscape will continue to evolve, new players are still entering the market (Virgin, MTV, Coke, Sony). In the end, I do not believe the iTMS will be the winner, not with all the false propaganda so-called independant sources keep slinging at it.

MS are already giving Napster money to keep them afloat and will not give up until WMA is the standard format.

Is it so bad for someone to kick MS up the arse every now and again to remind them that they've got to stay on their toes and not just chase after and try to monopolise markets once someone else has created them?

MM

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Have iPod mini, will travel

mahughesnh

Isn't it a shame that it is the way that Microsoft runs it's business? One by one their competitors fall, are bought out, or just become shadows of their former selves.

Personally, I think iTunes will remain #1 for sometime to come. As MM says, the landscape is still evolving. But they have a tremendous headstart. While it is not likely to happen ever, I think iTunes would really take off if it supported players other than the iPod. True, they haven't had to so far but the market is going to become more difficult with time. Of all the online stores, I like iTunes the best by far. But it is more difficult for me to use without an iPod.

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Mike

Rio Karma 20Gb
Dell DJ20

CluckChicken

MS is the prime example of a company that follows capitalism, like them or not. If your company's goal is not to completly dominate every market you enter, whether it's a new market or old, you shouldn't be in that market.

You should really try to find a copy of "Money." The iTunes project is doing so bad that it has made that division of Apple unprofitable. The artical does not say what type of deal Apple made to get their smaller HDs (for both mini & reg iPods) but the iPods have a 1-3% profit margin which does not leave much room for a slow down in the market. If Apple's competion does end up being companies like Sony, Coke, MS and Walmart, Apple just doesn't have the resourses to compete long term with these guys.

MusicMan

So where did all the stories come from saying that Apple was ripping people off and making $175 from each iPod sold? Was that another independant/trusted source or someone else just trying to put the boot in again?

MM

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Have iPod mini, will travel

Jordan

I've read some of those stories as well, but I'm still skeptical of the stated figures.

I would be very surprised if Apple really is making $175/unit. If so, then I actually admire them for it....heck, everybody else does good to practically break even on small consumer electronics. Most companies have very little profit from a device like an MP3 player, with most of the profit coming from accessories to go along with it (cases, remotes, etc.).

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Jordan M. Wigley
Dell DJ Site

mahughesnh

I think there are a lot of unsubstantiated rumors about what Apple makes on the iPod. I bet they would be doing good to make $30-$40 on each unit. Maybe it is more, but they have the market leader that everyone wants so they can charge what the market will bear. Which is fine too. Gives everyone else something worth shooting for.

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Mike

Rio Karma 20Gb
Dell DJ20

CluckChicken

I don't see how Apple or anyone else is making $175/unit off of any small consumer electronic. Over all the industry reports I've seen the only people that make good margins on electronics are those that make the specialty components not the final product. Apple PCs are considered to have extremely high margins at nearly 10% but 35-58% for the iPod is ridicules.

MusicMan

I agree totally but $175 is the ridiculous figure that someone started spreading around, no doubt to make Apple look bad. I'm sure that it won't be the last time that someone talks shit about iPod though.....

MM

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Have iPod mini, will travel