Microsoft: Zune music subscribers can keep tracks

Microsoft Corp. today revamped the music subscription program offered with its Zune players to let customers keep up to 10 tracks per month, even if they later cancel the deal.

Starting immediately, people who subscribe to the $14.99-per-month Zune Pass will not only be able to listen to the library's on-demand tracks, but also be allowed to retain 10 tracks per month. Approximately 90% of the Zune Pass tracks -- that's the percentage not locked with some kind of digital rights management (DRM) technology -- will be eligible, Microsoft said.

The change, Microsoft said, was made possible by new agreements it signed with the major music labels, including EMI Music, Sony BMG Music Entertainment, Universal Music Group, Warner Music Group and a number of independents. Microsoft did not disclose the financial details of those agreements, however.

Those tracks selected for keeping can be burned to CDs or moved to other devices, even if the user drops the subscription to Zune Pass.

"This might have had an impact a few years ago," said Aram Sinnreich, a media analyst at Radar Research. "To really change things at this point, [subscription services] really have to go entirely DRM-free. But this strategy is a step in the right direction; it means that the record labels are thinking differently now about the subscription model."

Rather than letting subscribers keep only a fraction of the available tracks, music suppliers like Microsoft and RealNetworks Inc.'s Rhapsody should open their entire collection to users.

"DRM-free subscriptions would mean some initial hording by consumers, who would download everything they could," argued Sinnreich, "But in fairly short order, I think the greatest number of them would pay to keep their subscription, for access to new material and the value-added things that services offer, like the playlist management features.

"Consumers will quickly learn that it doesn't make any sense to horde," he added.

Another possible route to a DRM-free world, said Sinnreich, would be "tariffs" paid at the Internet service provider level, a concept that he thinks is actually more likely to happen than subscription services opening up their collections.

"I know for a fact that the music labels are in deep discussions with some ISPs," he said. Under a tariff system, the ISPs would pay the labels a set fee per customer, which in turn would indemnify the provider and its users from any copyright infringement actions. "People would be able to file-share and mix and whatever the heck they want," Sinnreich said.

Some kind of authorization and record-keeping would have to take place at the ISP level, he noted, to make it work. "It has to be done in a way to bring the revenues to the rights holders," he said.

Microsoft's Zune Pass move will put pressure on Rhapsody, the leading subscription service, and other rivals, but Sinnreich wasn't sure whether they could respond with something similar. "We don't know what kind of licenses Microsoft has signed with the labels," he said. "It has deep pockets and can afford to spend money to sell hardware. Real[Networks] can't."

Apple Inc., which dominates the music player and track sales business with its iPod players and iTunes online store, does not offer a subscription plan, although rumors regularly pop up that the company is considering doing so.

Also this week, Microsoft dropped prices for the flash memory-based Zune players as much as $20.