To take on Apple Computer in the digital audio market, Microsoft is playing favorites, tying its latest effort to dethrone Apple on the soon to be unveiled URGE music service. URGE, due May 17, is a product of Viacom's MTV Networks. MTV Networks includes the youth-oriented MTV properties, the older demographic VH1 offerings, and the country music CMT brands. Announced last December, the service will not provide the only digital music store that can be used with Microsoft's forthcoming Windows Media Player 11 (WMP 11) music manager and player software, but it will be the most widely promoted by the software vendor. For example, in its current marketing efforts, Microsoft notes that:

"URGE, a new digital music service from MTV Networks, is deeply integrated into Windows Media Player 11."

Currently, the digital music market is largely divided into the Apple and Microsoft & partners camps. Apple offers the iTunes music manager and player software for Mac OS and Windows computers, the iTunes Music Store (ITMS), and the iPod line of digital audio players. The Microsoft camp is based on those products and services that support Windows Media Audio (WMA) technologies for music files and digital rights management (DRM). To date, the Microsoft camp offering, consisting of Microsoft music management software, third-party stores (like Napster and Yahoo! Music), and third-party players and devices has not been able to stop Apple from dominating the growing digital music market.

So, will WMP 11 + URGE + third-party players finally entice consumers to forgo the Apple combo of iTunes + ITMS + iPods? The market might change as:

• WMP 11 will be the default player for the next-generation Windows Vista offering, and will be available for Windows XP users. As Netscape found out during the 1990 browser wars with Microsoft, it's tough to beat a bundle included or easy to get from the dominant software provider for computers.
  
  Caveat: However, before you crown WMP the winner by default, remember that so far Google and Yahoo! have both managed to keep the various iterations of Microsoft Web search from becoming the dominant search service despite heavy and continuous Microsoft promotion.
  
  
• MTV will promote URGE on every channel and in every channel. According to the press release:
  
  "URGE will be promoted across a broad range of MTV Networks platforms, including the MTV, MTV2, mtvU, MTV Hits, MTV Jams, VH1, VH1 Classic, VH1 Soul and CMT channels, as well as being fully integrated throughout MTV Networks Web sites MTV.com, VH1.com, CMT.com and the new URGE.com. Promotion for URGE will be woven throughout MTV Networks' on-air and online programming..."
  
  Caveat: Despite the power of the combined MTV Network outlets, the URGE service will not work with Apple's incredibly popular line of iPods.
  
  
• Microsoft will tie WMP 11 and URGE to the Xbox 360. While the 360 game console is still in its early roll out phase, Microsoft will make sure that it is relatively easy to link music content between computers running WMP 11 and its new consoles.
  
  Caveat: Of course, while the 360 has the early lead in the next generation console battle, both Sony and Nintendo plan to take it on late this year.

Still not enough

The two biggest obstacles to taking back share from Apple remain: 1) the popularity of iPods, and 2) Apple's Fairplay DRM. And remember, back in February the 1 billionth song was downloaded from the ITMS, and each of those songs is wrapped in Fairplay DRM.

Since Microsoft DRM won't work on iPods and Apple DRM won't work in WMP players, the WMP 11 + URGE package will not dethrone Apple. In fact, Microsoft's biased promotion of URGE will antagonize existing digital music retailers that rely on Microsoft technologies. While the latest Microsoft effort won't be a complete flop, it will only keep the WMA camp treading water.

The big change is in Apple's hands: Rebranded ITMS offerings from other retailers

Software and consumer electronic company partnerships and strategies, government regulations, legal actions, record label initiatives, and other activities are likely to combine in some form to ultimately dilute Apple's current dominance unless at some point the company opens up the Fairplay world of iTunes and the ITMS to others.

New Rowley continues to believe that the most dramatic and long-term change to the industry could come from Apple broadening the Fairplay DRM market by allowing other retailers to brand their own versions of the ITMS (think of Target with its own Target-branded ITMS), much as colleges and universities can with the iTunes U program. Opening up the field to other retailers -- just as Microsoft is limiting the access of those retailers to the WMP 11 world -- would help Apple dominate digital music for years to come.