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Microsoft pulls music service from wireless carriers

Musiwave goes Zune only

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Exclusive Nearly two years after spending $46m to acquire the Musiwave mobile tunes service, Microsoft has informed wireless carriers they can no longer use the service once their contracts expire, according to a source familiar with the matter.

This source, who requested anonymity because he feared reprisals from his employer, says Microsoft notified operators by letter on Wednesday, September 9.

The Paris-based Musiwave underpins the music, video, and ringtone services operated by wireless carriers across the globe, driving more than 50 million downloads a year for the likes of T-Mobile, Vodafone, and Orange. It serves carriers in the UK, Europe, Africa, New Zealand, and Australia - though not the US.

But reports indicate Microsoft is also incorporating Musiwave technology into the Zune Marketplace, its answer to Apple's iTunes online media store. And according to our source, Redmond now intends to use Musiwave exclusively with its Zune media player and Xbox 360 game console. This would mirror the way Apple uses iTunes only with the iPhone, iPod, and iPod touch.

Presumably, Microsoft's exclusive arrangement will also include Windows Mobile phones. Last fall, Microsoft CEO Steve Ballmer said Zune software would be coming to Windows Mobile, Microsoft's mobile phone OS. And reports indicate this will happen with the upcoming Windows Mobile 7.

It's unclear why Redmond feels the need to remove the service out from under carriers. But this should open up opportunities at the carriers for Musiwave competitors, including RealNetworks and Livewire Mobile. In addition to providing the technology behind mobile music services, Musiwave has licensing deals with the major record labels covering 3.3 million tracks and 250,000 artists.

Despite repeated requests, representatives of Microsoft's Musiwave subsidiary have yet to respond for requests for comment. T-Mobile UK declined to comment. Orange has yet to respond to our inquiries. And Vodafone says it no longer uses Musiwave in the UK. It appears, however, that the company still uses Musiwave in other countries.

As previously reported by TechFlash in December, Microsoft has posted job listings for positions at its Musiwave subsidiary that involve incorporating Musiwave technology into the Zune Marketplace.

"The Zune organization is making a strategic change from a 3rd party content provider to in-house," reads one Musiwave job post. "We need to rebuild, re-architect, and revitalize a content ingestion pipeline that powers the entire Zune business. And we have a very short time to do it."

"We’re building a team in Redmond to help power Zune Marketplace," reads another Musiwave listing. "This job would work towards the overall strategy and collaborate closely with the Zune Redmond team and the Musiwave Paris team."

Presumably, the integration of Musiwave and the Zune Marketplace will involve downloads over cellular wireless networks to Windows Mobile devices running the Zune software. Windows Mobile 7 is expected sometime next year. ®

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