Can Microsoft’s New Xbox Music Service Do What Zune Couldn’t?

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Microsoft has big plans for its new Xbox Music service when Windows 8 arrives on Oct. 26 and Windows Phone 8 a few days later on Oct. 29, but if you’re a gamer and you’d rather not wait, it’s actually available on the Xbox 360 starting today.

If you’re just tuning in, Xbox Music is Microsoft’s latest attempt at a music service to rival Apple’s ubiquitous iTunes as well as its new iTunes-in-the-Cloud service. But even more intriguingly, it’ll take aim at the scrappy new (or newer) kids on the block: services like Spotify, MOG, Pandora, Rdio and Last.fm.

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It’s a critical attempt to rally for a company that already tried once to push streaming media through its Zune brand, a brand whose performance in recent years was poor enough that Microsoft eventually axed not only its Zune service and portable Zune player lineup but — as of June 2012 — the Zune brand entirely.

The company opted not to throw streaming music out with the bathwater, however; ergo Xbox Music, a service implausibly named after a core-gaming console and poised to invade desktop, tablet and mobile operating systems that bear little else in common with Microsoft’s Xbox 360.

There’s a simple reason for this: After the original Xbox’s mediocre showing, the Xbox 360 has become Microsoft’s comeback kid, managing to rival (if not soundly thrash) Sony’s PlayStation 3 in unit sales. No one expected the company that sold just 24 million Xbox consoles (compared to the PS2′s record-shattering 154 million) to be a serious contender when the Xbox 360 launched in 2005. Yet here we are, seven years on, with the Xbox 360 celebrating 21 consecutive months as the top-selling console in the U.S.

Above all else, this is because of Xbox LIVE, Microsoft’s formerly blade-like, now sleek, Metro-styled overlay that’s gotten more right than wrong in its annual iterations between its inculcation of game-related achievements and the idea of an all-encompassing “gamerscore,” along with its parade of social and TV/movie applications. In short, the Xbox 360 has morphed from a “mostly video gaming console” into a multifarious media hub — the sort of home theater computing device Microsoft tried and failed to turn the PC into forever ago.

Thus Xbox Music, a name that sounds a little clunky compared to its rivals’ snappier monikers, but it’s as much about expanding as capitalizing on the Xbox brand — a brand that’s viewed as younger and hipper than Windows, which is probably why the service wasn’t dubbed something like “Windows Musicify” or “8dio.”

How does it work? A lot like Spotify, actually. Microsoft is essentially forklifting Zune’s music catalog into the new service, expanded to some 30 million tracks total worldwide (roughly equivalent to Apple’s iTunes library) though only 18 million of those will be available at launch in the U.S.

You can choose between free or paid plans, though you’ll have to endure audio-visual ads every 15 minutes if you opt for the former. Like Spotify, free streaming isn’t all-you-can-eat, either: You’re capped at an identical 10 hours per month after the initial six-month trial period ends.

If you want unlimited streaming and the option to download or sync songs with your PC or a mobile device, it’ll cost you $10 a month (actually down from Zune’s $15 fee). There’s no intermediary option, as with Spotify ($5), say you want unlimited access but don’t care about “premium” features. Microsoft’s making Xbox Music a this-or-that choice, presumably hoping the every-15-minute ads will be annoying enough to drive subscription sales. The company isn’t known for service stratification: After all, on the Xbox 360, it forces users to pay $60 a year just to access services that require separate paid subscriptions like Netflix and Hulu Plus (speaking of, you’ll need that $60 Xbox LIVE membership to access Xbox Music, too).

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You’d think a new streaming music service might distinguish itself by upping audio quality options. Alas, Xbox Music is stream-capped at a slightly disappointing 192 kbps WMA (Spotify, among others, offers up to 320 kbps, and true lossless streaming services are in the offing). Music you’ve purchased and downloaded — a feature that isn’t available on the streaming-only Xbox 360 — will be slightly higher quality, on par with Amazon’s service: 256 kbps MP3 and DRM-free.

For many listeners, compression differences like these are going to seem irrelevant, especially if you’re listening in noisy environments or on-the-go, but I hope Microsoft offers higher quality options soon. It would’ve been nice to see Microsoft take the lead and offer a lossless option, but it seems Redmond and its competition are going to forfeit to players like Neil Young (for now, anyway).

Did I mention Zune was no more? That’s technically true, but vestigially less so. With Xbox Music, Microsoft’s carried over several Zune features, like SmartDJ, which lets you create Pandora-like playlists based on the selected artist. Or take the name for the service’s $10-a-month tier, Xbox Music Pass — a rebrand of “Zune Pass.”

In the “if you can’t beat ‘em, clone ‘em” column, there’s a scan-and-match feature that’ll work much like iTunes Match, letting you access tracks you already own on other devices once they’ve been assimilated, and Xbox Music will also let you match tracks purchased through other services, including DRM-free iTunes songs.

A quick note about streaming: While it’s fair to figuratively call what Xbox Music does “streaming,” technically it’s a technique known as “progressive downloading” whereby the service actually transfers the media to your listening device as it’s played. The difference is academic, but in theory, it could mitigate streaming playback chop (probably more so on 3G or slower connections).

Missing from Xbox Music at launch: support for iOS and Android, as well as social metrics like Spotify’s “what so-and-so just listened to.” There’s also no way to upload and device-share songs Xbox Music can’t match. Microsoft says we shouldn’t look for any of that until 2013 at the earliest.

Xbox Music’s prospects? Xbox 360 owners may bite, and you’re talking a customer base in the tens of millions in the U.S. alone, so even if no one subscribes, Microsoft could pull in significant ad revenue (rates depending). Beyond that, it’s hard to say. You won’t see Mac users jumping ship, and Microsoft’s making the barrier to entry steep: a Windows 8-family device or bust. That’s a tall order, especially if desktop users adopt a wait-and-see attitude after all the stories about Windows 8′s controversial new Metro interface.

More importantly, you have to wonder why anyone, even Windows 8 users, would abandon an app as feature-rich as Spotify — an agnostic service that already works on nearly every modern operating system and smartphone around — just to high-five the Xbox brand. That’s the question Microsoft still hasn’t answered, and it’ll have to do better than marketing blurbs like “Xbox Music does it all,” when it can’t yet go feature-to-feature with its competition.

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