Microsoft Working to Counter iTunes

Microsoft, quietly seething at the success of Apple’s iTunes Music Store, is working to enable subscription services to transfer music to portable music players:

Microsoft is betting that new security enhancements planned for later this year could make renting music, rather than owning it, more attractive to consumers.

….These services now provide unlimited downloads of hundreds of thousands of songs to a PC for a monthly fee, but they typically do not allow files to be moved around much. Microsoft said it will soon address this shortcoming with technology that will allow unlimited downloads to a portable device–a dramatic improvement.

“We can already support unlimited downloads tethered to the PC,” said Jonathan Usher, director of Microsoft’s Windows Media division. “The next step is enabling access to unlimited downloads on consumer devices.”

After years of delays, the record industry is experimenting with services to combat the wide availability of free music brought on by the MP3 file format and file-swapping software such as Kazaa. Record labels and retailers have tried to lure paying customers by offering singles for sale as downloads for less than $1, and also for rent through monthly subscription services.

Microsoft has been a key player in developing the technologies behind many of these trials, but its partners so far have failed to hit on a formula that rivals the early success of Apple’s music store. Record label-backed services such as Pressplay do not disclose their subscriber rates, but estimates for sign-ups hover in the tens of thousands–far short of the numbers that would suggest significant consumer interest.

….Apple’s music product grants permanent ownership of files and relies on relatively light controls, maintained through a proprietary security format called FairPlay, that aim to be invisible to most users. People who buy tracks through Apple’s iTunes music store can burn songs up to 10 times from the same playlist, share access from three different computers, and transfer tracks to Apple’s iPod portable music player.

Subscription services, on the other hand, have typically applied heavy-handed locks that make it difficult to move files from a PC in their downloaded form, and the services may charge extra for the right to burn songs to a CD or transfer them to a device.

As of last week, at least one record label executive was ready to declare closely restricted subscription services a failure already: “I don’t see the model becoming a significant part of the music industry,” he said.

….Usher said the company’s DRM technology is flexible enough to be used in numerous music schemes, including $1 download stores like Apple’s. He added that he’s confident consumers eventually will warm up to subscription services once they support wider copying rights and their value is better understood.

“We already support a couple of business models,” Usher said. “The other part of the business model that gets interesting is, what about unlimited downloads? The Apple store is not looking at or supporting anything like that.” [CNET]