Microsoft today also released a test version of Windows Media Player 7, which can play both downloaded and streamed music and video. In addition, it overhauled its WindowsMedia.com Web site.
With today's announcements, Microsoft is reiterating its bet that the Windows Media Audio (WMA) codec can rival the dominant MP3 digital music format and increase pressure on its chief competitor in the multimedia arena, RealNetworks.
"Everybody has been trying to replace MP3, and Microsoft is the first to offer a serious alternative," said Malcolm Maclachlan, an analyst with International Data Corp. (IDC). "RealNetworks has done a better job in holding off Microsoft on the streaming front than anyone expected. But music downloads are more troubling for it, particularly as the line between streaming and downloads gets fuzzier."
For its part, RealNetworks said it supports consumer choice among various music formats and sees no competitive effect in the event that more listeners choose WMA over MP3 or other formats. The company in March licensed WMA for use in its own RealJukebox product, along with eight other formats, including MP3.
RealNetworks cited a report from Media Metrix showing that its RealPlayer product increased its lead over rival products from both Microsoft and Apple Computer, logging 28.9 million unique users for the month of March, up from about 21 million the month before.
By contrast, Media Metrix reported that Microsoft logged 18.2 million unique users in March, up from 17.6 million the month before, and Apple's QuickTime product came in a distant third, with 8.7 million unique users in March and 8 million in February.
"This shows continued momentum for RealPlayer software," said Rob Grady, consumer division product manager at RealNetworks.
Microsoft's Windows Media Player allows consumers to "rip," or record, CDs in WMA for storage on PCs and other devices, such as portable players. By offering both recording and portable playback options, the company clearly hopes to spur broader acceptance of the format.
Microsoft is playing catch-up with its new jukebox feature; RealNetworks released its RealJukebox product one year ago.
Dave Fester, general manager of marketing for Microsoft's Digital Media Division, said in a statement that Windows Media Player 7 is easier to use, which should help make digital media accessible to more consumers. The company also touted new features incorporated in the player to improve audio and video quality, including 3D audio using SRS Wow technology from SRS Labs.
Analysts said that Microsoft has successfully cozied up to music labels by offering built-in security features with its format. It hopes to do the same with consumers by touting the superior compression technology of WMA, which allows people to store twice as much music on portable devices and PCs as MP3.
Still, launching a portable player that does not support MP3 is a major gamble, given the popularity of the free format. MP3 has ridden a crest of online music swapping among college students that some believe is unstoppable.
"As the saying goes: 'Copyright protection prevents piracy, and it also prevents sales,'" IDC's Maclachlan said.