Now the Windows-maker is jumping back into music, but it's doing so in a sensible way. Instead of trying to fight iTunes -- a battle that has already been lost -- the company has launched an app that will offer cheap digital albums for purchase. The Microsoft Music Deals App offers 101 top albums each week for under $2 each. It will also offer some debut albums for $0.99, according to a blog post announcing the launch.
Microsoft's Brandon LeBlanc, who wrote the post, explained just how diverse the app's selection would be:
This week, you'll be able to download Slipknot's latest heavy metal album ".5: The Gray Chapter" for just $0.99. Some of my most favorite classic albums are also available for under $2 such as Phil Collins' "No Jacket Required" album, Prince's "Purple Rain" album and Fleetwood Mac's "Rumours" (Super Deluxe) album. You can enjoy more recent hit albums like Maroon 5's "V" album and 5 Seconds Of Summer's debut album for under $2 too.
That's a pretty diverse selection of newer hits and classics at a very low price point.
It's all about credit card data
When I installed the app on a laptop running the beta test version of Windows 10, I was prompted to associate my credit card (which Microsoft already has on file from my Xbox Live account) with the app. Once I did that, which was a painless process, ordering music was no harder than it is on iTunes or through Amazon (NASDAQ:AMZN), the two places I normally buy music from.
Enrolling from scratch when Microsoft does not already have your credit card on file is a little more laborious, but not so difficult that it would stop someone from doing it -- especially when the launch version of the app offered current hit records by Sam Smith (In the Lonely Hour) and Ariana Grande (My Everything) for $1.99. This should create a powerful incentive for people -- at least the people who still buy music -- to fork over their credit card data.
These are big savings on albums that people want -- not the closeout bin that used to be in the back of the local record store where you could purchase the Vanilla Ice album that did not have Ice, Ice Baby, and the Van Halen record with Gary Cherone singing lead vocals for a cut rate price. Apple and Amazon have done this type of deal as well, but not in such an organized way or on as widespread a basis.
Capturing credit card data makes getting customers to buy in the future infinitely easier. Apple has over 800 million customers with iTunes accounts, most tied to credit card data and Amazon has 237 million active accounts tied to credit cards, Wired reported in late April. Microsoft does not report how many credit cards it has on file, but it's likely less than both its competitors in this space and having more makes it easier to sell everything form Xbox games to apps, TV, movies, and music.
Can Microsoft compete?
Music Deals isn't an iTunes killer, but it's an annoying mosquito that can buzz around Apple's ears stealing away some business. Apple is still selling the Ariana Grande album for $12.99, which means the company either has to lower its price, which sets a precedent it's unlikely to want, or lose some sales.
Microsoft has realized that competing with iTunes, which it does through its Xbox Music App, is a game it's not likely to win. Music Deals though should work like the popular daily deal sites where fans check back once a week instead of daily to see what new (or classic) music they can pick up for less than $2. Once a customer has a collection of music in the Microsoft system, it's more likely that he or she would consider making a full-price purchase in Xbox Music.
This isn't a game changer, but it shows that Microsoft sees the value in nipping at the edges, working subtly to enter a market rather than employing the full on charge it has typically used. It's hard to see why anyone who still buys music would not use Music Deals. That may not be enough to hurt Apple or Amazon at first, but it could over long run.
Daniel Kline owns shares of Apple and Microsoft. He does not care for Sam Smith or Ariana Grande but at one point owned Phil Collins' No Jacket Required on cassette. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com, Apple, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.