The sudden emergence of Apple's iTunes Music Store as a successful venture last year caught more than a few people off guard. Though the service has yet to make any appreciable amount of money, Apple has managed to sell over 100 million songs via digital download and establish its iPod portable audio player, with 70 percent market share, as the de facto standard. Competitors hoping to displace both iTunes and the iPod brought various services and digital audio players to market over the past year, but none have made any dent in Apple's formidable market position.

Today, the online music market is a tiny 2 percent of the $1.7 billion music business in the United States. It's even smaller worldwide, and not expected to grow dramatically in the future: Most estimates see online music occupying just 12 percent of the overall music business in the United States by 2007. So why would Microsoft attempt to enter this market with its own online music service, MSN Music? As David Card, the research director of Jupiter Research, told the New York Times recently, "for Microsoft, [entering the online music business] is like Slate, not Xbox. It's a pretty small opportunity right now."

My guess is that Apple's success in online music was eye-opening for the software giant, as was the failure of the PC industry's usual strategy, in which a host of Microsoft partners rally around a common format--Microsoft Windows Media Audio (WMA) in this case--and split up the market. Despite the emergence of WMA-based challengers such as BuyMusic.com, Musicmatch, Napster, Wal-Mart, and others, Apple continues to dominate online music, and the company appears to be reforming itself along consumer electronics lines as a result.

However, if Apple is ultimately successful, Microsoft's wider plans for Digital Rights Management (DRM) and its Windows Media formats will fail, because consumers, hardware and software partners, and services will all want to use Apple's formats. Thus, although sales from online music might accurately be equated to an accounting error in the Microsoft Windows Division, the software giant needs to jump-start acceptance of its own formats if it expects to be a future player in more lucrative markets, such as digital movie delivery, High Definition (HD) film projection, and the like.

So tiny or not, Microsoft is jumping into the fray. Its entry, currently in beta, is called MSN Music, and will likely establish the company as the number two player pretty quickly. Let's take a look and see if it's worthy of that position.

Integrated in Windows Media Player or Internet Explorer

In an interesting nod to integration, MSN Music can be accessed either via Internet Explorer (at this site during the beta only) or through Windows Media Player 10 (WMP 10, see my review). The experience, either way, is identical, but I think it's interesting and positive that Microsoft is giving non-WMP users a choice.

Simple UI

The MSN Music UI is somewhat sparse and iTunes-like. Sections are arranged in vertical columns, which is somewhat unusual (Figure). You can also purchased concert tickets through MSN Music, access Music News through MSN Entertainment (there's that integration again), sign up for newsletters, or try MSN Radio (Ditto). Overall, I'm not overly impressed with the UI. For a Web-based service, MSN Music is nicer than, say, BuyMusic.com, but not as attractive as the RealPlayer Music Store or iTunes.

Simple sign-in and sign-up

In another bid towards making life easier on consumers, MSN Music makes it easy to establish an account or sign in via its logon page (Figure). However, conspiracy theorists should note that your logon account will need to be a Passport account. You can also set the service up to auto-logon in both WMP 10 and IE, which can be convenient but dangerous if your system is ever left unattended.

One-click downloads, excellent sound quality, and impressive selection

They're not allowed to use this term, but MSN Music does support one-click song downloads. Songs are 99 cents and most albums are $9.99, which seems to be the going rate these days. However, Microsoft rises above most music stores by offering much higher quality downloads: Most songs are encoded in variable bit rate (VBR) 160 Kbps WMA (Windows Media Audio) format, but classical song titles can be encoded in up to 256 Kbps, which makes this service a must-try for classical fans. The only services that offer similar quality songs are MusicMatch Dowloads (160 Kbps, but constant bit rate, or CBR) and RealPlayer Music Store (192 Kbps AAC format).

Also, MSN Music will offer over 1 million songs for sale by the time the service is completed in October; that compares favorably to Apple's collection and beats every other service. However, during the beta MSN Music has somewhere between 600,000 and 700,000 titles for purchase, which is still competitive with most services. Music is available from all five major labels and over 3100 independent music labels, Microsoft says.

Device support

Because it's based on Windows Media Audio, songs from MSN Music are compatible with over 70 devices. That sounds impressive, but for two problems. First, MSN Music is not compatible with the iPod, which commands 70 percent of the market. Second, RealPlayer has MSN Music beat: Thanks to the recent release of Real's Harmony Technology, RealPlayer purchased songs are compatible with over 100 different devices, including the critical iPod. On the other hand, those songs often need to be transcoded before they are transferred to certain devices, making the process more time consuming.

Music discovery and selection

One of the big failings of most of today's online music services is that, while they offer a large number of songs for purchase, they don't always make it easy to discover new music that customers might want to purchase. Most services now offer lists of similar music or recommend music, so I won't beat that kind of thing to death. But MSN Music goes beyond these simple database tricks with some interesting and unique music discovery features.

One that's available during the beta is called Senior Year Hits. When you access this section of the service, you're presented with a calendar list (Figure). Select the year you graduated from high school (or some other significant event), and you'll see a list of songs that were hits that year which you can purchase (Figure). (Miami Vice Theme? My goodness). Since music is such a wonderful memory trigger, this feature is kind of neat.

Another nice discovery feature is the service's MSN Radio integration. When you access MSN Radio through the service, and find a song you like, you can purchase it, or other songs from that album, through MSN Music (Figure).

Innovative community features

Microsoft is also trying to bring a sense of community to MSN Music, which I think is laudable. There are a number of aspects to this feature. First, as users rate music on the service, those ratings are aggregated and presented to all customers. MSN Music also provides "listeners also liked" functionality (see above), fan favorite streaming radio stations, top download lists dynamically updated via RSS (Real Simple Syndication), and customer-submitted album reviews. And you can email pages from MSN Music--remember, the service is Web-based--to friends and family, a handy way to recommend music. Finally, like Apple, Microsoft will soon begin offering celebrity-created playlists for download.

What's missing?

OK, MSN Music seems to hit all the bases and offer a few unique features. But the service, curiously, lacks a subscription plan, like the one Napster recently launched, that supports Microsoft's new DRM scheme. My suspicion is that this omission is designed to let its partners make some headway with subscriptions before Microsoft dominates that market as well. Still, it's odd to see the software giant tout technology and then not use it themselves.

Conclusions

MSN Music isn't bad, but it still doesn't have what it takes, in my mind, to steal the crown from iTunes Music Store. That isn't a total defeat, however. Most of today's online music stores are pretty miserable, and MSN Music is at least cleanly designed, widely compatible, and offers a number of unique features. If you haven't yet tested the waters in the digital music download world, MSN Music is an excellent place to start.