Microsoft preps MSN 9, mulls iTunes-like service

Microsoft is working on an update to its MSN 8 Internet software subscription product that will have several new features and, for the first time, be sold worldwide, company executives said.

The product, which Microsoft internally refers to as MSN Premium or MSN 9, is planned to be released before year-end and will be targeted at broadband Internet users, Yusuf Mehdi, the head of Microsoft’s MSN Personal Services & Business division said in an interview Thursday.

Microsoft is also considering launching an online music service to rival Apple’s iTunes, Mehdi said. Such a service would likely replace Microsoft’s current service it offers in partnership with Pressplay.

However, plans for a music service are still in the very early stages, if they could be called plans at all, according to Mehdi. Demonstrating that, Microsoft Chairman and Chief Software Architect Bill Gates said on Thursday that he does not see a music service as a money-making service.

“It’s maybe a feature your platform should offer, but it’s not like you’re going to make some (big) markup,” Gates said in response to analysts’ questions at Microsoft’s annual financial analyst meeting at the company’s Redmond, Wash., headquarters.

Microsoft today sells MSN 8 Internet Software in a handful of countries, including Spain, the U.K., Canada, Japan and the U.S. Pricing in the U.S. is $9.95 a month or $79.95 a year, for that users get spam and virus protection on e-mail, parental controls and online bill pay, according to the MSN Web site.

“MSN 9 will be our first global presence subscription service,” said Lisa Gurry, group product manager for MSN.

New features will include a pop-up ad blocker, improved picture sharing as part of MSN Messenger and a tool called the Outlook Connector that will make an Outlook e-mail client work with MSN e-mail and corporate e-mail systems, allowing users to view their various in-boxes in one client and combine and share calendars, Microsoft said.

Microsoft partners with broadband access providers to deliver MSN Internet Software, but also sells the product direct. This latest model, dubbed “bring your own access” or BYOA, is increasingly important for Microsoft and its chief rival AOL as the number of dial-up subscribers continues to drop and users switch to broadband.

MSN currently claims it has 8.6 million subscribers, the bulk of those are U.S. dial-up Internet access customers. “Over time we will see that shift and the largest bucket will be our premium service customers,” Gurry said.

Existing premium MSN services include Hotmail Extra Storage, which it sells for $19.95 a year in the U.S. and gives Hotmail users 10M bytes of e-mail storage space.