Microsoft Hears the MSN Music

In April, Microsoft sent Dear John letters to former MSN Music customers informing them that DRM servers would shut down on Aug. 31. The shutdown would mean that sooner or later—when depending on individual circumstances—former MSN Music customers would no longer be able to listen the tunes. Not surprisingly, Microsoft was sharply criticized for cutting off loyal customers.

Microsoft has changed its tune on MSN Music licensing servers. From a Microsoft statement sent to former MSN Music customers late yesterday:

"After careful consideration, Microsoft has decided to keep the MSN Music license servers running through at least the end of 2011. This means MSN Music customers will be able to transfer their music to new PCs and devices beyond the previously announced Aug. 31, 2008 date and continue to enjoy the music they purchased from MSN Music."

The extension was the right thing to do, but at the wrong time. Microsoft should never have moved to shut down the licensing servers in the first place. The earlier decision generated bad publicity and surely caused customer angst. Microsoft has got to step away from bean counter thinking. I'm sure from a bottom-line, pragmatic perspective, the licensing server shutdown made sense. But from a customer relations and public perception perspective, the decision was a disaster.

I periodically switch between Mac OS X and Windows Vista as primary operating system (I blog Apple Watch as well as Microsoft Watch). I've been primarily using a Mac for about two months, after four months of Vista. On Tuesday, June 17, the hard drive failed on my Mac notebook. After troubleshooting at the Apple Store Genius Bar failed to revive the hard drive, I was given a replacement computer. Now, that is customer service—how a company generates customer loyalty and good public perception.

Microsoft could have made the MSN Music situation a customer service win, as I suspect Apple would have. This is what I recommended in April and will do so again. Microsoft should offer Zune Marketplace tracks to MSN Music customers: It should reward loyalty by replacing their libraries. Make it an offer, not a requirement, so that people listening to MSN Music-purchased tunes on other devices can keep the music.

The replacement offer would benefit Microsoft and MSN Music content owners. Microsoft would move these people to the Zune Marketplace and to a possible future Zune music player purchase. Customers would get tracks recorded at higher quality and more options from Zune Marketplace.

I don't think there were that many MSN Music customers. What would be a few hundred thousand dollars or even couple million bucks to Microsoft? Goodwill money is marketing dollars at work.