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Just days after local rival RealNetworks announced a splashy deal with three major music companies, software giant Microsoft will unveil a new music channel Wednesday that it is touting as a first step toward a full-fledged subscription service.

MSN Music, still in beta, offers a menu of radio stations that play hundreds of thousands of song titles in more than 100 different music genres. It also offers reviews, artist information, and links to buy CDs. Like some other music services, MSN Music also allows listeners to search for music based on everything from a listener's mood to the music's tempo.

While far more extensive than MSN's previous offerings, Redmond, Washington-based Microsoft comes to the digital music market late in the game. On Monday, RealNetworks, based in Seattle, announced a deal with three of the world's five largest record companies to create a platform for online subscription services. RealNetworks and AOL Time Warner, whose Warner Brothers Music Group is among the three record companies, will be the first companies to license the platform later this year.

Initially MSN Music will generate revenue through advertising, but it plans to add a subscription service, says Microsoft Group Product Manager Bob Visse, who declines to give a timetable. Everyone from file-swapping upstart Napster to Sony Music is moving ahead with subscription music services, viewed as a legal alternative to Napster's free-and-easy music sharing that prompted record companies to file a lawsuit against it.

Groovers Go to Work

For now, MSN Music users will not be able to choose the specific song they want to hear. Rather, they can search the site's extensive library by song and find a station that plays that genre of music. A group of 20 "groovers" who moved to Redmond after Microsoft acquired Redwood City, California-based MongoMusic are creating play lists and classifying music. Microsoft acquired MongoMusic in September in a deal reportedly valued at $65 million. Its music search and recommendation technology sets apart MSN Music from competitors, Visse says. Listeners, for instance, can choose a radio station by specifying they're in a groovy mood and want music with a moderate tempo sung by female vocalists.

Other sites are also looking at advising listeners about music. Just recently, Napster reached an agreement with online music technology firm Gigabeat to potentially acquire some of its assets, which includes a recommendation engine.

Competitors such as AOL Time Warner and Yahoo also are ahead of Microsoft's foray into radio. In 1999, AOL acquired Spinner.com, which today plays more 375,000 songs on more than 150 music channels. Yahoo offers links to more than 450 Internet and terrestrial radio stations and songs by more than 180,000 performers. Meanwhile, other online music companies such as Radio Free Virgin and Audio Mill have launched products to enable listeners to record online radio, although they restrict distributing those recordings to avoid violating copyright laws.

Visse says reaching an agreement with record labels to play copyrighted material on-demand is the only step standing in the way of MSN Music's subscription service. Still, he acknowledges, "it's not trivial."

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