Universal Music short on ideas to take on iTunes

Universal Music has plans to allow vendors of digital music players to bundle unlimited downloads of its music for free to users, according to a report in BusinessWeek.

Universal will make its money by charging the device makers for the monthly subscriptions to the music. Makers of music players and mobile phones may then have a decent chance to overthrow iPod’s dominance of the digital music player market, as they can package downloads from Universal’s vast inventory of titles, as well as potentially from Sony BMG Music Entertainment and Warner Music Group, the report suggests.

But the deal is not likely to be a threat to the iPod any time soon. I doubt users are going to buy a second tier device just for the free music, even if it is “all you can eat”. Music fans want the entire experience – that is a good player with excellent music.

Currently the iPod is perceived to be the best player, and a strong iconic brand as well. Users have put up with a lot of crap from Apple Inc., including its various proprietary locks, but that is because they love the iPod.

Consider the figures. Apple had sold over 100 million iPods from the product’s launch in 2001 to April this year. In contrast, for all its marketing muscle, Microsoft Corp. has sold only 1.2 million units of its Zune since November. Will free music downloads change that ? I doubt it.

It is also not clear whether Universal’s Total Music will be free of DRM (digital rights management). If it is, the music is more likely to be downloaded for Total Music devices, and end up getting played by iPods users who never paid for the devices or the music. To avoid that, device makers will certainly insist on some kind of DRM. That will most likely mean that this music won’t play on iPods, and yes the non-DRM music on iTunes will not play on these devices. Once again the outcome will be fragmentation and chaos.

Universal, Sony BMG, and Warner Music are better off setting up an online store for non-DRM music of their own, that offers the basement rates the companies are willing to offer device makers. That way, like eMusic, another digital music download service, the music labels will have access to iPod users as well as users of other devices.

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New Zune players to compete with iPod

Microsoft Corp. unveiled three new models of its Zune player, including two versions with flash, which will ship November for the holiday season.

The company has also launched an online music community called Zune Social. Taking a leaf from Apple Inc.’s iTunes and Amazon.com’s new digital music store, it is also offering more than 1 million songs on its Zune Marketplace that are not protected by DRM (digital rights management).

Microsoft however has an uphill task battling against the iPod. The company has reported sales of 1.2 million Zune devices since November last year. That is a lot less than a total of 100 million iPods sold from 2001 to April this year.

The company announced three new models of the Zune portable digital media players: a black Zune 80GB hard-drive model with an estimated retail price of US$249.99; an ultraportable Zune 4GB which is expected to retail at $149.99; and a Zune 8GB, costing $199.99. The last two models are flash models.

The new Zune devices feature the Zune Pad navigation button, with its touch-sensitive surface, Microsoft said in a statement late Tuesday.

Consumers can flick their thumbs over the pad to fly through lists of songs or albums or to fast-forward through picture slide shows or videos, it said. For those who need to pause, advance or adjust the volume on the device without looking, they can also navigate the Zune Pad using physical cues by pressing on the four sides or the center of the button to adjust the volume or choose the next track, according to Microsoft.

The new devices also offer wireless synchronization over the home wireless network, and new software that automatically imports broadcast content recorded on Microsoft Windows Media Center for Windows Vista Home Premium or Ultimate, so consumers can sync them onto their Zune media player and watch them on the bus, in their car or wherever they want when they’re out and about, Microsoft said.

Existing Zune owners will automatically receive new software features, the redesigned PC and device software and access to the new Zune Marketplace when the products and software are released to the public in mid-November.

The new Zune players have some nice new additions, but is not a dramatic makeover from the earlier Zune devices, according to analysts. Zune also does not have as strong a brand as the iPod.

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