Microsoft expands music store in Europe

"If you take all the new countries, we expect to overtake iTunes very soon because we will have a larger user base to tap," an exec says.

Microsoft launched its MSN music download service in eight new European countries on Thursday in an attempt to fend off a recent expansion push by archrival Apple Computer's iTunes.

With the new territories, Microsoft has extended its music download business to 19 market versions in 17 countries, including 13 Western European countries.

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With its iTunes rival,
Microsoft's eye is on
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Apple's iTunes, the market-leading music download service, last week launched in nine new European countries, bringing the worldwide total to 13: the United States, plus a dozen in Europe.

"If you take all the new countries, we expect to overtake iTunes very soon because we will have a larger user base to tap," said Arndt Salzburg, who oversees Microsoft MSN's entertainment efforts in Europe, the Middle East and South America.

Salzburg added the MSN Music store had become a profitable business for Microsoft, but he declined to provide further financial details.

Analysts believe it will take a few years before song downloads become a significant business segment for the struggling music industry. But the lure of storing thousands of songs in a pocket-sized gadget has become promising for device makers and software companies.

A successful music download service is increasingly important to Microsoft's strategy to make its Portable Media Center and Windows Media software the de facto playback technologies for portable media devices and topple the popularity of Apple's iPod.

In its announcement on Thursday, Microsoft said it had launched new MSN download stores in Sweden, Denmark, Norway and Finland through a partnership with, an online retailer owned by Swedish media company Modern Times Group.

Through a similar arrangement with Loudeye's OD2 unit, Microsoft will be launching in Spain, the Netherlands, Austria and two versions for Switzerland--in French and German.

Microsoft, which launched a download service two years before Apple in Europe, has had difficulty keeping up with the popularity of Apple's iTunes, industry observers say.

But neither Apple nor Microsoft have disclosed much detail on download sales, giving analysts only a partial picture of the market potential for Europe and no clear sign of which out of the dozens of online music stores has grabbed the early lead.

Meanwhile, the piracy-battered music industry is anxious to see music download services thrive and derail the popularity of free file-sharing networks.

On average, download prices on Microsoft's MSN in Europe are more expensive than iTunes, with tracks ranging from $1.28 (99 euro cents) to $1.66, compared with a flat $1.28 download fee charged by iTunes.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.

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