How Xbox Music Is Going To Make Spotify Obsolete

Why bother with Spotify when your computer has 30 million songs at your fingertips, right out of the box?

Imagine a music service that gave you unlimited, unconstrained access to basically any song recorded by any artist, anytime you wanted to hear it. It’s not very hard — there are several of them, actually. You’re probably most familiar with Spotify, which lets you listen to basically anything for free on your computer, as long as you’re cool with hearing an ad squished between every few songs.

So Microsoft’s new Xbox Music service might not sound very remarkable at first. It sounds a lot like Spotify, even: It’s a free, ad-supported streaming service on any Windows 8 computer or tablet, with access to over 30 million songs. Using it on your phone (and/or Xbox 360) requires an Xbox Music Pass, which runs $10 a month. (At first the service will just be available for Windows Phone 8, but an iPhone version is coming next year.) Buying the Music Pass also means no ads. And you can still choose to buy songs outright to keep forever, like with iTunes.

But here’s what’s different: Xbox Music is baked into every single copy of Microsoft’s upcoming Windows 8. In other words, free access to 30 million songs is built into Windows 8, as part of the default music player. Remember, we’re talking about Windows. The last version of Windows sold 240 million copies in its first year. Spotify’s most recent official count was 15 millions users, 4 million of whom pay for a subscription. If Windows 8 matches first-year sales of Windows 7, and just 10 percent of those users latch onto Xbox Music, it’ll have a user base that’s substantially larger than Spotify’s. And if you have access to basically all music ever, just sitting there on your computer, why bother hunting down some other service to get the exact same thing?

It’s been rumored for years that Apple’s working on an iTunes streaming service — it bought the cloud service Lala in 2009, and rumors flared up again last month that Apple’s been negotiating licenses for a Pandora-like streaming service. Which, obviously, would be baked into iTunes and every copy of Mac OS X. So an iTunes streaming service would be built into every Mac.

What I’m getting at is that music itself is very possibly going to simply be another commodity feature of whatever software ecosystem you choose. If you buy a computer in the next couple of years, it may just come with access to all the music you could want, for free (well, with ads).

Which sounds kind of nuts — why would streaming music services be absorbed into the basic functions of a computer? Well, actually, computers have been assimilating audio and video stuff into their core for, like, ever. Today, you basically expect your computer to play any video or piece of music you throw at it, no matter what nasty corner of the internet you found it in. But it wasn’t always able to do that! Remember burning CDs? That used to be a complicated thing to do. Now the only reason you can’t burn a CD with one click is that your computer might be so fancy it doesn’t have an optical drive anymore. Even iTunes, which often seems like a relic from ancient history, isn’t something that’s been around since the dawn of time. It started life as a program called SoundJam MP, which Apple acquired in 2000 and slowly built into the monolithic entity that it is today.

As music itself has become insanely commoditized — think deeply about the fact you can listen to 30 million songs for $10 a month — building streaming music into the core of what we expect computers to do is simply the next logical step of this evolution.

Oh, one other point to make: The economics of running a streaming music service are dismal, thanks to insane royalties. Spotify, perhaps the most hyped music streaming service around, suffered losses of nearly $60 million last year on revenues of $245 million. Its business model is unsustainable, according to one report — it needs to convert way more free users into paid users. Even Pandora’s situation is grim, unless the laws change. Guess who wouldn’t have to worry nearly as much about that problem, since users would have already handed over a serious chunk of money for the product they’re using to listen to that music? Apple and Microsoft. Who also happen to have a lot of money in the bank. More than enough to support your obsessive Britney Spears listening habits, no matter how hard the royalties hit. It’s all just a matter of scale. And time.

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