Microsoft, in a move to bolster the sales and prestige of the Zune brand may dramatically cut the price of music that the service offers. As it stands Microsoft offers the ‘Zune Pass’ for $14.99 a month, a price point that is possibly too high.
Recognizing the weak position that Microsoft finds itself in, the company understands that it has to do something dramatic to boost its market share. Currently Microsoft controls 2% of the portable music player market. The company calls the market “challenging.”
Zune has never had an easy path, with a rough launch due to oddly colored players and a tooth and nail fight with iTunes over content supremacy, it has never been a hit with consumers. That has not stopped Microsoft from releasing excellent hardware and software for the brand. The Zune HD and the Zune music player are strong product offerings.
But that is not enough; Apple also offers a strong ecosystem and already has the users it wants, and that Microsoft lusts after. To attract them over to Zune Microsoft needs to do something that is more than matching Apple. Redmond needs to beat Cupertino at their own game. Enter the possible music price drop.
If Microsoft lowers the price of the Zune Pass or even individual tracks it might provide a different enough experience to attract new users.
Just how much of a price drop will be required is anyone’s guess. In terms of direct competition Apple has no answer to the Zune Pass, but other companies do. Rhapsody which offers a similar service recently cut their price to $10 from $15 a month. These cuts become problematic as a large percentage of the dollar value is earmarked for the labels, leaving skinny if non-existant profit margins behind.
Microsoft could decide to take the hit and lose money on the subscription price to boost device sales, but that is a risky game. Whatever Microsoft’s upcoming move, the company needs to make some noise or step aside. The time for experimentation is over.