MSN Music Giveaway.

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Author: Bruno, Antony

DIGITAL MUSIC

The "Meet MSN Music" campaign includes radio, print, Internet and billboard advertisements, featuring acts including Gwen Stefani, Shakira, Stevie Wonder, Beyoncé and Kaiser Chiefs.

Microsoft, which has spent liberally to market its products in the past, had done little to promote its store, launched in September of last year. Prior to this push, efforts had been limited to such MSN Internet properties as Hotmail and its instant-messaging client. When it introduced the store, Microsoft said it had no plans to follow Apple Computer's marketing example.

"We deliberately rolled out the marketing slowly while gathering feedback from users to make sure the product was delivering what people wanted," says Rob Bennett, senior director of MSN Entertainment. "We've gotten a ton of great feedback, our user satisfaction is extremely high, and we felt that now was the time to start turning up the volume."

Others feel the move is in response to an increasingly competitive digital music environment. Until recently, Apple was the primary evangelist for digital music, with its now-iconic silhouette ads.

With Internet bellwether Yahoo throwing its hat into the ring via an aggressively priced portable subscription service, and Real and Napster spending millions to market their own digital music stores and subscriptions, MSN may be feeling the heat.

The software giant is promoting its service throughout its own networks, as well as via Ticketmaster and CNET online. (Billboard.com is also running the ads.) The print campaign includes newspaper buys in New York, Los Angeles and Chicago, as well as Rolling Stone.

Radio spots will air in those cities and seven others, plus XM Radio and Music Choice. Other efforts include outdoor advertising and concert promotions.

"We've been saying for a while that there are a whole lot more of these services than could survive, and now you're seeing what happens when people get desperate," says Josh Bernoff, an analyst with Forrester Research. "You have to get people to try these things out."

Subsidies are becoming an increasingly popular method for companies to do just that. MSN is giving away five tracks; Real's Rhapsody allows anyone to hear, but not download, 25 full songs for free each month; and Yahoo is charging only $6 per month during the public trial phase of its portable subscription service, compared with $15 per month for similar services.

Analysts estimate these companies pay about 65 cents-70 cents per track for whole track downloads, so Microsoft may be losing as much as $1.45 on the five songs it gives away for every 29 cents it makes.

Subsidizing music to capture mind share is a bit of a double-edged sword for the music industry. "Nobody likes to have their products sold as a loss leader," Bernoff says. "But labels want competition, and that means these types of things are going to have to happen."

However, at least one label source had nothing but praise for the MSN promotion. "If Microsoft is attracting new users by offering some interesting deals, it could help grow the market for digital music," an EMI representative says. "Anything that's going to help educate consumers about the options that are available in the market for consuming music is absolutely something we're going to support. We're thrilled to see it happening."

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By Antony Bruno