Is Bill Gates Behind the Times?

Bill Gates’ music industry forecast seems outdated:

“People are going to listen to a lot more music because it’s going to be easy to find neat new exciting music, it’s going to be easy to have your music with you, in the car, when you’re running,” he told the New York Times last week.

Didn’t iPod do that six years ago? I suppose we can cut the Microsoft chairman some slack. After all, he doesn’t own one.

“It seems like there ought to be a way to translate that into an opportunity,” he continued.

Next month, Microsoft will release the second generation of the Zune player as well as a digital music store and social-networking site. Currently, Apple sells eight times the number of iPods in a quarter that Microsoft sells Zune players in a year, according to the NYT.

To increase sales, Microsoft will sell songs minus copyright restriction software that prevents file-sharing. The NYT also reports Microsoft supports a $15 per month unlimited download plan as part of the Zune release.

But where have we heard this before?

The Zune strategy is reminiscent of an unlimited download offer from eMusic foiled by the music industry. The subscription-based online music store abandoned its unlimited service in exchange for limited subscriptions in 2003. The company cited legal pressures from the music industry as reason for the change.

The change hasn’t made eMusic that popular. In April 2007, the company announced its 300,000th subscriber, compared to iTunes’ reported 10 million. Sales continue to climb, but eMusic won’t overtake iTunes anytime soon.

And neither will Zune. Unless, of course, Microsoft can revolutionize the download market. It seems the company is picking up where eMusic left off. EMusic couldn’t stand its ground when faced with angry industry executives, but perhaps a monster like Microsoft can.

In short, Gates’ plan sounds remarkable in theory, but improbable in practice. If Microsoft can successfully sell, maintain and defend their unlimited subscriptions, then iTunes will have competition. But how can this happen when label executives aren't compliant?