Microsoft to launch new music streaming service

Valerie | 16 Jul 2009, 17:15


Paul Sakuma, file / AP

Spotify may soon face a new competitor in the guise of Microsoft, which, according to the Telegraph, is gearing up to launch a music streaming service by the end of this month.

Speaking to the Telegraph, MSN executive producer Peter Bale said:

“Music is an important area for Microsoft. We are looking at launching a music streaming service imminently. It will be a similar principle to Spotify, but we are still examining how the business model will work.“

Bale hinted at a possible tie in with the Xbox which the company is eager to promote as an entertainment hub.  As this blog points out, as Spotify isn’t available in the US, if Microsoft uses the service on the Xbox 360, the “software giant can practically guarantee itself a sizeable user base from the beginning”. It could additionally help increase the popularity of the Zune music player, a high definition version of which is due to be launched in the US.

As Spotify’s popularity continues to grow, the question remains of whether it can convert enough free users to paid and whether it can profit from the advertising served to the majority, free users. As CNet notes, Microsoft already has a strong advertising platform to earn money from the site, and, by integrating the new service into the Zune Web site and/or Zune software, it could help upsell customers to the paid version of the Zune Pass.

More details are sure to surface in the coming few days but no doubt the likes of Spotify and We7 will be watching this space closely.