I won’t read too much coincidence into two recent events: 1. the news today that Microsoft is planning a rival music streaming service to Spotify on the Xbox 360 and 2. my recent breakfast discussion with Don Mattrick, Microsoft’s SVP and global head of the Interactive Entertainment Business (ie Xbox). Two weeks ago, Don had clearly not heard of Spotify when I mentioned it to him. I hope he managed to get to try out the service while he was over in Europe. According to Peter Bale, executive producer of MSN, as reported in today’s Daily Telegraph Microsoft is planning a music streaming service under its MSN umbrella, which “will be a similar principle to Spotify”, and could also make it available through the Xbox360. According to the article Microsoft’s service is due to launch by the end of this month, ie within the next couple of weeks. There are a few oddities in this report. If, as reported, Microsoft is planning to launch the service so soon, it seems unlikely that it is still working out business models, as suggested. Secondly, the company has already announced a partnership with Last FM on the Xbox360 in the US, with the service to be launched later this year. So it’s no secret that Microsoft wants to get into the music streaming business. I have no doubt Microsoft will add music streaming to the Xbox360 in Europe before long. But I suspect the decision has not yet been taken whether to use the new MSN service or to partner with other providers, or, indeed, both. But even when that decision is taken, it will take time before it's ready for rollout to the console. But Microsoft’s strategy is for the Xbox360 to become an all-round home entertainment hub, and music clearly has to be part of the mix. Spotify runs a great service, but if those two can’t do a deal, I’m sure someone else will. Twitter: twitter.com/DavidMercer_SA Client Reading: Global Digital Media Growth Slows to 2.7% in Q4 2008

Microsoft introduced its new Photosynth service yesterday at an event in central London. Photosynth was developed by Seadragon and acquired by Microsoft two years ago. It has been developed under the wings of the company’s Live Labs group and is now available at www.photosynth.com in its 1.0 version. I say “available” advisedly, because it wasn’t accessible from Microsoft’s own demonstration stand because of the site being “overwhelmed”. This morning, however, things seem to have improved. Photosynth creates panoramic or 3D representations from still photos. The technology’s clever part involves stitching or “synthing” different photos of the same object so that they merge seamlessly into a continuous whole, or at least that’s the theory. The examples given are of famous landmarks such as Stonehenge. Using a couple of hundred photos taken from a wide range of different angles, the software creates a visual quasi-3D representation of the monument, filling in the gaps between adjacent photos, and allowing the user to move around, choosing his own angle and zooming in at will. Photosynth is an online service. A software application resides on the user’s PC but the images are stored on the web. At the moment Microsoft is presenting Photosynth as a consumer service and will offer it within the MSN suite of services. The company suggested to me that it had no specific plans for revenues or a business model behind Photosynth – it is a free download and Microsoft hopes to encourage widespread usage. Eventually however it seems certain that Microsoft will develop commercial business models and revenue streams. 3D modelling should to appeal to many online retailers, to take just one example. The technology is certainly fascinating and I’m sure there will be photography enthusiasts out there who will explore its potential. For average users however I’m not so sure this is something that will catch on quickly. Digital photography has been successful because it simplifies what used to be a hit-and-miss affair and makes sharing photos straightforward. Active involvement in Photosynth will necessitate a significant investment of user time, as well as access to a decent broadband upload connection – if an individual user is serious about creating a good synth of a building or location, this could require 100 or more high quality digital photos, and that will involve no small amount of bandwidth. But like so many other emerging applications, we probably haven’t even begun to see what Photosynth will become over time. That will ultimately hinge on the creativity of end users, and given past experience that is likely to take the service in directions that can’t even be imagined today. Visit us at IBC: Web TV and Virtual Worlds Analyst Presentations

The BBC has announced the launch of its iPlayer for July 27th, several months earlier than expected. The iPlayer will be free to use (for UK licence fee payers) and will allow broadband Internet users to watch TV or radio programmes broadcast on the BBC's TV and radio channels in the previous seven days. Programmes will be available for streaming or download up to seven days since first broadcast. Downloaded programmes can be used up to 30 days after broadcast. The iPlayer is only Windows-compatible at launch but a Mac version is in preparation. The BBC says it is in discussions with distribution partners such as MSN, Telegraph.co.uk, AOL, Tiscali, Yahoo, Myspace, Bebo and Blinkx. There will doubtless be plenty of hype around this news for the next few weeks, not least from the BBC news service itself. The real news story is the availability of TV programmes rather than radio, which have been available online for many years. The iPlayer should be a slick application, and it is another step forward for the UK market in the global drive towards web TV. But as I have often pointed out to Strategy Analytics clients, broadcasters in other countries have offered this sort of service for some years. I usually cite NRK, the Norwegian public broadcaster, which offers vast archives of TV programmes available for online streaming (eg here). So while the BBC has been lagging behind other players in recent years, it could now leapfrog competitors with a powerful application and a wide range of valuable content. The concept of "always available" is gradually changing the TV industry as broadcasters wake up to the threat and potential of broadband, but business models still reflect the era of scheduled broadcasting. That will surely begin to change as we learn more about the demand for "catch-up TV" and other emerging digital services.