Digital music and amplified announcements were fit to be featured this past week. Let's take a closer look.
Unplug the boom box -- we're going home
In a move that may signal the first casualty in the digital-music subscription sector, Microsoft
In May, Yahoo!
Microsoft would love to attract music fans. It's already reaching out to them with software, online sites, and the Xbox video game system. However, given the recording industry's lofty demands, Mr. Softy was stuck with either losing money on the subscription side or pricing itself out of the market.
But the story doesn't end there. Yes, Yahoo! puts out a cheap service, but that's not the only revenue stream it's paddling. If a subscriber wants to buy any given track, in order to burn it to CD or transfer it to non-compatible players, it costs just $0.79 a shot. You also can't dismiss the importance of the access itself. People willing to pay for a music service may be open to more online purchases. At the very least, hungry sponsors surely hold this group in high regard.
That's why Microsoft could be making a big mistake here. The company's flagship operating-system and productivity-software businesses live off fat margins. However, with the Xbox, it learned that it sometimes has to sell the initial product (the Xbox itself) at a loss only to make it up in the future (software, baby, software).
Maybe the major labels flinch. Maybe their licensing demands will come down. With online delivery of digital music being such a perfect alternative to pressing, shipping, and stocking CDs, it's in their best interests as well to make sure that their digital revenues are growing at every possible outlet.
Thanks to Apple Computer
On second thought, plug that boom box back in and pour me another
The actual announcement was anticlimactic. Sun would be selling some servers to Google, which in turn would be promoting Sun's software solutions. It was easy to see why investors felt that their wildest imaginations were cheated. However, there is no reason to believe that this relationship can't blossom into a more dynamic duo, especially now that Microsoft and Google seem to keep bumping into each other on their way to expanding their empires.
Anything is possible. Well, except for that share-price swap. That would be too bizarre even for a reality television series.
The headlines behind this week's stories:
Until next week, I remain,
Longtime Fool contributor Rick Munarriz would be willing to license his music to Microsoft for far less than $6 a month. He does not own shares in any of the companies mentioned in this story. The Foo l has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.