Laurie J Flynn in the NY Times:
"But music is only part of Microsoft's strategy. The company has timed the store opening with the release of a new version of Windows Media, the software that allows consumers to play movies, songs and other content on a variety of devices running the Windows operating system. With Windows Media and the online music store, Microsoft hopes to further its efforts to make Windows a foundation for its reach beyond the desktop and into the living room.
But regardless of MSN's success, Microsoft will face a strong competitor in the online music market. In 16 months, Apple has managed to capture almost 70 percent of the market for digital music downloads, according to Forrester Research. And iTunes has helped Apple sell its iPod, the portable music player compatible with iTunes. Last month the company announced it had sold its hundred-millionth song - a milestone that did not come as quickly as the company had originally projected.
The rest of the market for online music downloads is shared by Sony, RealNetworks, Napster from Roxio, MusicMatch, the Wal-Mart Stores Web site and a long list of others, "all fighting for the scraps that Apple has left behind," said Josh Bernoff, a market research analyst at Forrester. Yahoo, Virgin Records and MTV, a Viacom unit, are all expected to join the fray within the next few months.
Given how fragmented the market is, MSN's eight million subscribers could quickly allow Microsoft to grab second place, Mr. Bernoff said. That spot has been held for the last few weeks by RealNetworks, a longtime Microsoft adversary that has both a music download store and a subscription-based streaming music service.
Earlier this month, in anticipation of Microsoft's new store, RealNetworks cut the price of its downloads in half, to 49 cents a song, and as a result sold more than a million songs the first week, compared with about 200,000 a week in July. Analysts expect Microsoft to sell its songs for something close to Apple's 99 cents."