Content: MSN Enters Music Store Race

MSN Music, Microsoft’s online music store, bolsters the company’s digital media strategy by providing a high-profile distribution channel for content that uses the Windows Media Format and its accompanying digital rights management (DRM) technology. Microsoft has entered this unproven business primarily to meet a threat to its digital media platform from Apple but faces a significant learning curve and risks alienating other online music distributors that currently use the Windows Media platform.

Risky Business

Most of Microsoft’s efforts in digital media have gone into building and evangelizing the Windows Media platform and updating the Windows interface to better support digital media. Although the company has for many years promoted its platform by offering free Windows Media content through MSN and other sites, it has generally stayed away from selling digital media content—audio or video—to consumers.

Even after Apple’s iTunes Music Store (iTMS) launched for the Mac in Apr. 2003 and drew widespread praise, Microsoft said it would not build a music store of its own. Instead, it left this business to Windows Media partners such as BuyMusic.com, Loudeye (which creates stores for third parties and bought European distributor OD2 in Aug. 2004), Musicmatch (which was bought by Yahoo in Sept. 2004), MusicNow, Napster, and Wal-Mart.