March 10, 2004

Virgin and Microsoft

Virgin hops into bed with Microsoft

Virgin hops into bed with Microsoft: The online music industry is today making room for its latest competitor, Virgin Digital. Developed in collaboration with MusicNet, Virgin Music Club, will offer two services: The first will allow consumers to purchase music on a per-song or per-album basis. The second will allow them to purchase a subscription to listen to all the streamed music they like. The service's format of choice will be Microsoft's digital music format, WMA, and Virgin hopes that will give it an advantage over Apple's iTunes service, which supports an iPod-dependent version of the AAC media format. "We believe Microsoft will eventually define the standard," Zack Zalon, president of Virgin Digital, told the New York Post. "Apple is an innovator, but, because it has a closed standard, it will fall off." Zalon's claim is a brash, albeit transparent one, even leaving aside his suggestion that AAC is a closed format (it's not; it's an open source format that requires no licensing fee and is supported by outfits like Creative Labs, Samsung, Philips, iRiver and Nokia), and WMA is not (it is; in fact, WMA is likely the most "closed" media format available today. It's completely proprietary, and manufacturers must pay a licensing fee to Microsoft to use it). Apple's got a hell of footprint in the digital music market, one whose breadth is only increasing. Apple's iTunes music store has sold millions of songs to date, and the company's iPod mini digital music player has proven a smashing success, despite the predictions of certain industry observers who perhaps gave too little credit to its fashion appeal. In point of fact, the mini virtually sold out after less than two weeks in stores. So, for now at least, consumers seem little bothered by Apple's iPod-dependent music format. Perhaps that will change in the future. But my guess is it won't and Zalon will be eating his words sooner, rather than later.

Good Morning Silicon Valley

Posted by Craig at March 10, 2004 05:56 PM