Microsoft Courts `Indie' Music Fans to Crack IPod's Dominance

By Dina Bass

Nov. 3 (Bloomberg) -- Not long after Microsoft Corp. announced in July that it would challenge Apple Computer Inc.'s iPod, Internet blogger Craig Lile found himself on a flight to Seattle to get a first look at the competing device.

Lile, 29, who writes under the pen name Dodge, was one of six tastemakers from the independent-music scene hand-picked by Microsoft -- and given free air fare and hotel -- to check out its Zune player, which goes on sale Nov. 14.

Microsoft says it can crack iPod's monopoly on ``cool'' by harnessing key Web reviewers like Lile and sponsoring band tours to court fans of so-called indie music. Emerging fringe bands on independent labels can sway the larger market, Microsoft says. With Apple controlling 77 percent of the $4 billion U.S. market for digital-player sales, gaining converts may be difficult. Lile's own conclusion about Zune won't make it any easier.

``It's really not anything that impressive,'' said Lile, an Indianapolis-based Web developer who writes My Old Kentucky Blog. ``They're going to do terribly, at least in the demographic that cares about indie music. Apple is so entrenched in the indie music community.''

Microsoft, which will sell Zune for $249.99, is trying to attract 18-to-28-year olds with an FM-radio tuner and the ability to beam songs from one device to another, features the iPod doesn't have. Apple, which sells a $249 video iPod with the same amount of storage, doesn't comment on its marketing plans, said spokesman Steve Dowling.

Michael Gartenberg, a New York-based analyst with JupiterResearch, says Microsoft's focus on less-mainstream music fans may be too narrow.

`Crossover Strategy'

``They are going to have to find a crossover strategy really fast,'' he said. ``If you're not a fan of independent bands no one has ever heard of, this isn't the device for you.''

Microsoft, the world's biggest software maker, sees the strategy as a way into a market in which Cupertino, California- based Apple has already formed partnerships with music icons including U2 and Bob Dylan.

``If we opened on day one with the largest, most popular artists, that wouldn't give us authenticity,'' said Chris Stephenson, Microsoft's Zune marketing general manager. ``You can think of a world where Jessica Simpson and Britney Spears are all your brand is about. Our brand is about that too, but we don't want that to be all we're about.''

While Zune's online digital music store will offer songs from major artists just as Apple's iTunes store does, Stephenson says he first wants to win over ``influencers.'' The Redmond, Washington-based company ramped up marketing efforts this week with the first of more than 15 different television ads. Stephenson declined to disclose the budget.

Blog Feedback

Microsoft isn't putting its name on Zune or the related ads. That distancing didn't give Zune a reprieve among Lile's Web readers. Hours after he posted a straightforward entry describing Zune's features and his Microsoft-sponsored trip, a reader posted a comment complaining that it read like ``an ad.''

Stereogum, another music site that sent a writer to Seattle, also came under fire. ``When did Stereogum become so ... sponsored?'' asked a reader identifying himself as Nick.

Now, Lile says he may decline Microsoft's invitation to a larger Zune event this month after the feedback. Stereogum founder Scott Lapatine declined be interviewed.

When Zune hits stores, about 140 paid college students designated as ``Zune ambassadors'' will fan out on campuses to organize parties and events, Stephenson said. Microsoft is also funding tours from bands such as Brazil's CSS, or Cansei de Ser Sexy (Portuguese for ``tired of being sexy''). The group is known for the profane broken-English lyrical stylings of lead singer Lovefoxxx.

`Nifty Device'

Microsoft's overtures are winning over some. Grant Purdum, managing editor for the Web magazine ``Tiny Mix Tapes,'' said he was suspicious when he went to the September preview event and now thinks Zune is ``a very nifty device.'' He said he's impressed with Microsoft's commitment to lesser-known bands and music sharing. Shared songs expire after three days or three plays.

Zune comes pre-loaded with music and videos from bands such as CSS, Hot Chip and Band of Horses. None of those artists' albums have sold more than 48,000 copies in the U.S.

Other independent artists sell 100,000 or more albums, said Nic Harcourt, host of public radio station KCRW'S ``Morning Becomes Eclectic'' show in Santa Monica, California. He said it's a mistake to write off indie music as a niche market.

``It's a demographic that is going to be receptive to something new and different,'' Harcourt said. ``But having said that, these kids likely already have an iPod.''

Apple Loyalty

Apple pioneered technologies that endear it to diehard music fans, says Dana Bos, one of three women behind Seattle-based music Web site Three Imaginary Girls. Apple popularized the concept of podcasts, multimedia feeds distributed over the Internet, and its GarageBand software simplifies music creation.

Stephenson says many people who want a music device don't yet have one. Microsoft is also targeting the black and Latino communities with Zune, he said.

``Apple is an incredible brand,'' said Stephenson. ``It's a hard challenge even for a company with the resources we have. But we do believe people want a differentiated device. No one brand is going to control a market this size.''