Microsoft turns on new Xbox music service

Xbox Music launches this week.(Photo: Microsoft)

Story Highlights

• Free streaming of tracks from 18 million-song library
• $9.99 monthly service has cloud storage and no ads
• Individual tracks to cost 99 cents to $1.29

12:01AM EDT October 15. 2012 - Microsoft is pushing the play button on a new music initiative to take on iTunes and streaming services, such as Spotify.

Under the umbrella of Xbox Music, Microsoft will launch a streaming service, that is free on Windows 8 PCs and tablets, a music subscription service and a pay-as-you-go music store that sells individual tracks and albums.

Microsoft's music play coincides with the Oct. 26 launch of its Windows 8 operating system for computers and Windows RT for tablets and the arrival of new Windows phones later this fall.

As the service expands over the coming weeks ? from the Xbox 360 to Windows 8 and Windows Phone 8 ? its cloud-based connectivity will allow access to playlists and music collections across devices. "We went from saying, 'Let's not do a device-specific thing, (to) let's really create an all-in-one solution," says Jerry Johnson, Microsoft's general manager for Xbox Music.

Despite Microsoft's attempts with its Zune devices and music player and, before that, MSN Music, Apple remains dominant in digital music sales. In the second quarter of 2012, Apple accounted for 64% of digital music sales, according to market research firm NPD Group. Apple also sells nearly one-third (29%) of all music, digital or physical. While Amazon commands 16% of the digital market, Microsoft and others, including Google Play, had market shares of 5% or lower, NPD says.

Digital music sales are expected to increase 10% this year, NPD estimates, while interest in streaming and on-demand music is on the rise.

ITunes, Internet radio services such as Pandora, and on-demand music purveyors such as Spotify all are "strong players," says Johnson, but none represents a one-stop musical shop. Integration of music across Windows devices, he says, "really solves a consumer problem that exists out there."

When Xbox Music hits the Xbox 360 video game console Tuesday as part of an overall system update, users can apply for a free 30-day trial of Xbox Music Pass (after that it's $9.99 monthly). That will give them access to on-demand streaming playback of a library of 18 million songs in the U.S. That's comparable to streaming services such as Spotify, Rdio and MOG, which top out at about 18 million.

Owners of computers and tablets upgraded to Windows 8 ? and new Windows 8 device purchasers ? will have an ad-supported free Xbox Music streaming on-demand program on board. Upgrading to the $9.99 monthly service allows ad-free streaming across devices and offline play.

Playlists and music bought through the new Xbox Music store, which launches on PCs and tablets Oct. 26 (tracks cost 99 cents to $1.29), are also stored in a cloud-based music locker. The store will also be found on new Windows phones.

Also hitting that day (Oct. 26) is Microsoft's Smartglass app that lets you move music from Windows computers, tablets and phones to the Xbox 360 to see on the TV and hear on a home stereo. The tablet then offers a second screen experience with artist information, art, photos, lyrics and related artists. Microsoft plans to develop music apps for iOS and Android devices, too.

Establishing Xbox as its entertainment brand is a good move for Microsoft because in the past "it has been all over the place," says Michael Gartenberg of tech research firm Gartner.

The free streaming service that appears on Windows 8 computers and tablets is "a way for Microsoft to break into the music market in a way that consumers understand," he says. "Once you have someone using the service, you have a better chance of getting them into the subscription services and buying music from there. This looks like a pretty complete and thought-out service that encompasses the entire Microsoft ecosystem."

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