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Zune Marketplace to Supplant MSN Music

Media reports and multiple sources indicate Microsoft plans to stop selling music through its MSN Music service once its Zune handheld media player goes on sale November 14. Instead of enabling users to purchase songs, MSN Music will point users towards Microsoft’s new Zune Marketplace or to RealNetwork’s Rhapsody music service, which has been granted prominence on MSN Music as a result of the companies’ year-ago antitrust settlement.

The move might be seen as one indication of the importance Microsoft places on its new Zune players and music marketing strategy; on the other hand, it might also be seen as Microsoft throwing in the towel on an online music effort which was never tremendously successful and now muddies the company’s online music offerings. Microsoft launched MSN Music in 2004 as a way to compete with Apple’s iTunes Music Store, but the service never developed significant market share, due in part to the market momentum of Apple’s iPod/iTunes integrated service but also the morass of product offerings and music services competing in the non-iPod arena: Napster, Yahoo Music, Rhapsody, Sony Connect, and eMusic (which, by selling unencumbered MP3 files, has managed to pull up to a distant number two behind iTunes). With the the launch of the Zune Marketplace, Microsoft would have had three online music offerings—Zune Marketplace, MSN Music, and its MTV-branded Urge—which could, at best, be seen as confusing customers and undermining Microsoft’s new emphasis on the Zune.

Microsoft plans to keep MSN Music online as a central hub for music and entertainment news and concert information; the company also plans to keep its MSN Music Present online concert performance series going.

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