As Internet giants step into the crowded online music arena, some are banking on a new weapon to help attack market leader Apple: instant messaging.
Yahoo last week acquired digital music service Musicmatch for $160m in cash in a move that adds a multimedia player, a digital music store and a subscription service to the company's arsenal. Despite the acquisition, Yahoo is on track to launch its own music service, music industry sources said, and eventually combine it with Musicmatch.
Yahoo's plans are still sketchy, but sources close to the company say instant messaging will play a key role. While the popular IM software already lets people listen to online radio, new versions will let people share and interact with one another's digital playlists.
"The whole advantage that [Yahoo] has is using its broad reach to push products and integrate them," said one source familiar with the plan who spoke under the condition of anonymity.
A Yahoo representative declined to comment for this story.
Microsoft has publicly acknowledged similar interests in tying its MSN Music online store into MSN Messenger. In a press conference last month, MSN's corporate vice president Yusuf Mehdi described a scenario in which two IM chatters could listen to each other's playlists and then buy the songs if they wished.
Without any fanfare, MSN Messenger has already begun toying with playlist sharing. The latest MSN Messenger, version 6.2, contains a link to a test application called ThreeDegrees. Among other features, the software lets a person share a playlist with other members in a private group.
Microsoft's Mehdi said eventual MSN Music features on IM will stem from ThreeDegrees development. A Microsoft representative declined to comment further on music integration in Messenger, but offered a glimpse of how ThreeDegrees is being used.
"It's a research product to test IM features," the representative said.
America Online has not talked publicly about its future online music plans. Its latest AOL Instant Messenger, version 5.9, includes a button to a Netscape-branded online radio stream.
Spreading the gospel
For the Web portals, diving into the online music market means playing catch-up to Apple's iTunes, currently the market leader. To do that, the portals will tap every possible advantage, such as promotion across highly trafficked online areas and weaving services into applications like IM.
IM ranks with email and Web surfing as one of the most popular activities on the Internet. Studies show that IM users are loyal and stay connected for hours at a time. Click here for a ZDNet Reviews comparison of the top IM products.
For users at home and at work in August, MSN Messenger led the pack with 28.6 million unique users, followed by the once-dominant AIM with 27.6 million, according to Nielsen/NetRatings. Yahoo trailed at 18.1 million, the research firm said.
MSN users spent an hour and a half using IM every time they launched the software. AIM users spent five hours per session, and Yahoo Messenger users typically logged on for about two hours and 50 minutes, Nielsen/NetRatings said.
Combining IM and music make further sense because people develop strong attachments to songs.
"Music is one of those deeply emotional and personal things," said Mike McGuire, an analyst at GartnerG2. "We all exchange information when we get interested in news stories, but not at the depth of discovering music."
