Microsoft Enters Internet-Radio Market to Compete With AOL
Redmond, Washington, July 11 (Bloomberg) -- Microsoft Corp. is pushing into Internet radio as the world's biggest software maker competes with No. 1 online service America Online Inc. in the emerging market for sound and music over the World Wide Web.
Last month, Microsoft unveiled Expedia Radio, a weekly syndicated travel program that complements its Expedia Web site for online travel bookings. In April, Microsoft introduced its own format for music on the Internet that it says offers higher quality and more security than the dominant MP3 format.
Internet radio is part of Microsoft's strategy in streaming media, which is the transmission of audio and video over the Internet. Microsoft hopes the technology will put the company's online businesses in the black by capitalizing on growth in listening, chatting and shopping over the Internet.
''You will see much more,'' said Anthony Bay, Microsoft's general manager of streaming media. ''Expedia shows the leading edge of where you will see more and more Web sites go: adding radio programs.''
Internet radio, which includes Webcasting by traditional broadcasters as well as Web sites, is such a young market that no estimates of its size are readily available. Much of the market will be driven by the downloading of digital music, which is forecast to grow from $1 million this year to $1.1 billion in 2003, according to Forrester Research.
AOL Makes Moves
The growth potential hasn't escaped the notice of AOL.
Last month it bought Internet music companies Spinner Networks Inc. and Nullsoft Inc. to give its 17 million subscribers access to the latest technology for playing and recording music over the Internet.
Spinner's Internet-jukebox service has 1.5 million users each month and broadcasts 2 million songs daily over its Spinner.com Web site. Nullsoft is a developer of MP3 technology, which lets consumers download compact disc-quality recordings for free. AOL is developing music services for high-speed Internet access and will offer live and Internet-only sports and radio broadcasting, as well as music.
''As more and more people are connected via cable modems, it will be easier to listen over the PC,'' Bay said. ''There will be an explosion in new players, new entrants, music Web sites.''
Microsoft is pitting its technology against RealNetworks Inc., which is used by more than 80 percent of radio stations that Webcast, said Peter Clemente, an analyst at Cyber Dialogue.
''Microsoft, it would seem, has a significant hurdle over which to jump,'' Clemente said. ''They (RealNetworks) were first to market. They have a major advantage.''
Competition
Microsoft also is competing with traditional broadcasters such as Chancellor Media Corp., which soon will be the No. 1 radio-station owner in the U.S. Chancellor recently formed business units to promote the company's electronic-commerce Web sites and other Internet business.
''The real category killers are going to be the established radio stations,'' said Clemente. ''Consumers are more easily attracted to established radio brands.''
Yet, Microsoft's effort to drive traffic between its Web sites and traditional radio stations that carry Expedia Travel holds promise, he said.
''As a complement to Expedia, it makes sense,'' he said.
Microsoft has been lining up partners. Last month, the software powerhouse said its Windows Media technology will be included in future Diamond Multimedia Systems Inc. digital-music software and Rio portable players. The Rio players, which will go on sale this year, will play songs in Microsoft's Windows Media audio format for downloading music.
Time Warner Inc.'s Atlantic Records and CDnow Inc., an online music store, on Friday said they would use Microsoft's Windows Media technology to transmit songs on CDnow's Web pages.
Microsoft also has announced plans with Sony Corp. to jointly distribute music and videos over the Internet.
Jul/11/1999 12:28 |
