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Microsoft Creates Static Over New Radio Feature

September 7, 2004

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Software giant Microsoft took center stage last week when it began selling songs online, but another feature of its new MSN Music service is quietly raising eyebrows in the radio industry.

Microsoft is using playlists from more than 900 local radio stations around the country to create its own soundalike Internet stations -- stripped of local DJ chatter, traffic, weather and commercials.

The new MSN Radio offers Internet stations playing most of the same songs heard on over-the-air outlets like Berkeley's KBLX, "The Quiet Storm''; New York's WNEW, "The Mix 102.9''; or Chicago's WLUP, "The Loop.''

"It results in a more pleasant experience because you don't have the ads or the DJs,'' Rob Bennett, senior director for MSN Entertainment, said during a press briefing last week.

But radio industry experts said creating stations that sound like local radio outlets presents a possible trademark infringement problem, much like selling a generic soft drink that's "just like Coca-Cola'' with the same ingredients.

"I'm surprised they would co-opt the brand names of every radio station in America without permission,'' said Bill Conway, program director and station manager for San Francisco's KOIT-FM. Conway was surprised when he learned from a reporter that Microsoft was using his station's call letters and well-known slogan, "Lite Rock, Less Talk,'' to promote a mimicked version of KOIT.

Tom Taylor, editor of the industry trade magazine Inside Radio, said Microsoft's attempt to compete with local stations "will be threatening'' to some radio companies. "Radio stations will see this as piggybacking on their hard-earned brand awareness and potentially cannibalizing their success,'' Taylor said.

On Thursday, Microsoft released a public preview of MSN Music, which can be found at: beta.music.msn.com, and as a part of the new Windows Media Player 10 software. Most of the media attention was focused on the service's catalog of downloadable songs, which competes with the market-leading iTunes Music Store from Cupertino's Apple Computer Inc.

But what was largely overlooked was MSN Radio, which, like iTunes, provides a wide selection of Internet radio streams with different music genres. The key difference, however, is a section called "Local Stations,'' which provides Internet radio programmed by computer to duplicate the songs found on local stations in major markets.

Microsoft buys its lists of radio songs, called playlists, from Nielsen Broadcast Data Systems, a division of the Nielsen ratings service, which monitors more than 1,200 radio stations in the United States, Canada and Puerto Rico. It is one of two services used by station managers and program directors to track what's being played by competitors and in other markets.

Microsoft, however, feeds the playlists into computers, which automatically generate playlists to create the soundalike MSN station. The song lists are changed to adhere to rules that are different for Web radio casts and to exclude songs that Microsoft does not have rights to distribute on the Internet, Bennett said.

MSN Radio promotes these online channels as being "like'' a favorite local station, "but with fewer ads, no DJ chatter and less repetition.'' The "S.F.-Oakland-San Jose'' section offered 11 stations, including ones designed to sound like KYLD Wild 94.9, Alice 97.3 and K101's Star 101.3.

The free version intersperses brief Microsoft audio commercials for MSN's subscription service, which for $5 per month provides the same Internet radio stations with no advertising and at a higher-quality sound.

When asked about the potential trademark problems, Microsoft said in a statement released through a spokesman that "the use of station names is applied only to indicate the top artists on a station, and we believe it's simply a factual statement about the radio station, similar to many other public radio charts on the Web. If any radio station has concerns about this usage, they should contact Microsoft directly."

John Allers, program director at San Jose's KCNL-FM, known as Channel 104. 9, had two messages for Microsoft upon learning of the KCNL clone. "I appreciate them calling attention to us to those who may not have discovered us yet,'' Allers said. But he added that "if you're trying to take away our listeners,'' the programming that makes a station's personality and connection to listeners can't be duplicated by a computer.

Robert Unmacht, a Nashville radio industry consultant, said Microsoft's attempt to compete with local radio stations is just the start of a new digital entertainment battleground.

While MSN Radio now requires a computer tied to the Internet, there is movement to make high-speed wireless Internet connections widely available.

"I think we're headed toward broadband radio,'' said Unmacht, a founder of In3 Partners of Nashville. Microsoft, he added, "is five or 10 years ahead of where they need to be, which is smart because broadcasters are thinking just 13 weeks ahead.''

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