Netflix (NFLX) wouldn’t release details about the pact, and hasn’t put out a press release announcing it, as it had with earlier deals with Time Warner’s (TWX) Warner Bros, GE’s (GE) Universal and News Corp.’s (NWS) 20th Century Fox.

But spokesman Steve Swasey confirmed that Netflix and Sony have reached another “28-day” arrangement, similar to the ones Netflix has reached with the other three studios.

Swasey wouldn’t release other details, but we can guess that the deal follows the pattern established with the precedent Netflix set in its January deal with Warner: Netflix agrees not to rent Sony’s (SNE) movies for the first 28 days after they go on sale. In return, it will pay the studio a reduced fee when it does rent the discs, and will get more movies to offer via its growing Web streaming service.

This seems like a win-win for the both sides: The studios get to wring every last penny out of their DVD business, and Netflix gets to build up the business it really cares about–delivering movies to your home via the Web.

But analyst Rich Greenfield, who wrote about the Sony deal in a note published Tuesday (registration required), says these deals have only been good for Netflix: Its costs have gone down, and its subscriber base has increased, but the studios have continued to see their DVD sales slip. “Clear victory for Netflix,” he writes.

His logic:

“* The studios have essentially played right into Netflix Founder and CEO Reed Hasting’s plan to reduce DVD costs to fund his company’s aggressive digital media rights acquisition plan.
* Netflix is rapidly bringing down its physical [cost of goods sold] by reaching delayed release window deals with studios and using fresher digital content to shift consumer behavior to streaming, reducing the number of DVDs utilized per customer per month (lowering its mailing costs).
* We suspect the Netflix window needed to be substantially longer than 28 days to justify the price reduction the studios have given Netflix – meaning a six month window might have impacted Netflix subscriber trends, whereas 28 days simply has not. Unfortunately studios were more focused on bolstering sell-through, which is largely complete within the first month of a DVD’s release, rather than damaging the long-term prospects of Netflix.
* Netflix continues to aggressively purchase digital movie rights having recently acquired rights to Relativity Media content and EPIX content, with Starz content increasingly important for Netflix to renew (at far higher costs) when their current agreement ends in 12 months.

Is this a big deal? Sharon Waxman, who broke the news tonight, thinks so, arguing that it positions Netflix as a bona-fide competitor with the likes of Time Warner’s HBO (TWX) for online movie rights. Waxman’s rival Nikki Finke pooh-poohs the pact.

Feels weird to type this, but I’m with Finke on this one. But not for the reason she states–that Relativity makes lots of stinkers. Unless I’m missing something, the bigger problem is that Relativity doesn’t have the licensing and distribution rights to many of the biggest movies it puts out. Those go to Sony, Warner Bros, Universal, etc.

Still, Waxman is on to something here–Netflix does want to gather streaming rights to as many movies as it can, as it transitions from a DVD rental service to one that rents out bits.

That doesn’t mean it’s likely to challenge HBO et al. for the biggest and most expensive catalogs out there. And Netflix is still going to have make subscriber-unfriendly deals like the one it made with Warner Bros. if it wants access to their stuff. But it will be able to pick up a few titles here and there. And over time, those can add up.

Is this a big deal? Sharon Waxman, who broke the news tonight, thinks so, arguing that it positions Netflix as a bona-fide competitor with the likes of Time Warner’s HBO (TWX) for online movie rights. Waxman’s rival Nikki Finke pooh-poohs the pact.

Feels weird to type this, but I’m with Finke on this one. But not for the reason she states–that Relativity makes lots of stinkers. Unless I’m missing something, the bigger problem is that Relativity doesn’t have the licensing and distribution rights to many of the biggest movies it puts out. Those go to Sony, Warner Bros, Universal, etc.

Still, Waxman is on to something here–Netflix does want to gather streaming rights to as many movies as it can, as it transitions from a DVD rental service to one that rents out bits.

That doesn’t mean it’s likely to challenge HBO et al. for the biggest and most expensive catalogs out there. And Netflix is still going to have make subscriber-unfriendly deals like the one it made with Warner Bros. if it wants access to their stuff. But it will be able to pick up a few titles here and there. And over time, those can add up.

Big music label folks say Apple (AAPL) has long complained about their involvement with Amazon (AMZN). But recently, Billboard reports, those complaints have become more specific. The trade magazine says Apple is asking the labels not to push new releases via Amazon’s “Daily Deal” promotion, which offers new records at cut-rate prices.

Warning! There’s some salty music-label-executive language in this excerpt:

In exchange for a Daily Deal promotion on a new album, Amazon has been asking labels to provide it with a one-day exclusive before street date and such digital marketing support as a banner ad on an artist’s MySpace page and messages on label and artist Web sites and social network feeds.

“When that happened,” [a major-label head of sales] says, “iTunes said, ‘Enough of that shit.’”

Sources say that iTunes representatives have been urging labels to rethink their participation in the Amazon promotion and that they have backed up those warnings by withdrawing marketing support for certain releases featured as Daily Deals.

In response, label executives at Capitol, Capitol Nashville and Jive recently opted against participating in Daily Deal promotions they had been considering for Corinne Bailey Rae’s “The Sea,” Lady Antebellum’s “Need You Now” and Ke$ha’s “Animal,” sources say.

Billboard notes that the labels are still working with Amazon on Daily Deal promotions. But it says they are pulling back on prereleases and exclusives for big records and pushing smaller artists that Apple isn’t likely to shower with promotional support.

Today’s Deal: $3.99 for Sony artist Raheem Devaughn’s new album, which doesn’t appear in iTunes “New and Noteworthy” section.

I’ve asked Amazon, Apple and all four of the big labels–Universal, Sony (SNE), EMI and Warner (WMG)–for comment, but I’m not holding my breath.

But assuming that Billboard is right here–and reporter Ed Christman has been covering music retail forever–it’s interesting to note that Apple is pushing back a bit more forcefully at Amazon. (Industry trade Hits DailyDouble reported something very similar in January).

If I’m Jeff Bezos, I’d take that as a compliment. And then I’d go back to worrying about Steve Jobs’s entry into the e-book market.

Hulu has expanded its content library considerably since its launch a year ago. The Internet video site has grown from 50 content partners to more than 130 and has nearly 40,000 pieces of video.

Now, in addition to the full-length TV shows that made the site popular, it has an expansive, somewhat chaotic library. The site contains everything from two-hour feature films such as Universal’s “Liar, Liar,” starring Jim Carrey, to short instructional Web videos such as “How to Make Stuffed Crust Pizza.”

Andy Forssell, Hulu’s senior vice president of content and distribution, says the goal is to provide users and advertisers with more options. Hulu is a joint venture of General Electric’s (GE) NBC Universal and News Corp., (NWS) which owns Wall Street Journal (and AllThingsD.com) publisher Dow Jones.

Among the newest content partners is Condé Nast Publications Inc., the people behind magazines like Vogue and Wired. Videos from the company’s online destinations, such as Epicurious.com, a site for food aficionados, are now appearing on Hulu. They’ve added content from four sites: Epicurious, Wired.com, Style.com and Men.Style.com.

Read the rest of this post

Try it yourself. Head to YouTube and look up an “official” clip from any of the big three labels that still put their stuff on YouTube–Vivendi’s Universal Music Group, EMI Music Group and Sony’s (SNE) Sony Music Entertainment. Inevitably, you’ll find the embedding code “has been disabled by request.” (This doesn’t apply to Warner Music Group (WMG), since that label’s stuff isn’t on YouTube at all anymore.)

This isn’t the end of the world. I can almost always find an unofficial clip that does the job. But why do I have to do that at all? Don’t the labels, and Google’s video site, want this stuff distributed as widely as possible–either because the clips can help them sell music or sell advertising?

I’ve asked both Google (GOOG) and the labels about this in the past and have never gotten a satisfactory answer. Essentially, both sides point the finger at each other. But yesterday an employee at one of the big labels tried to answer the question for me, via an email. His argument: Both the labels and YouTube are really collaborating on this one.

Meanwhile, he says, the fact that the labels would be much, much better off if they let people promote their products, for free, all over the Web isn’t lost on label employees themselves. Just not the ones that are cutting deals with YouTube.

Here’s his letter, sans identifying details. Below that: An excellent, and unofficial, Beatles clip.

I wanted to point out something that might explain the inability to embed [major label] videos outside of YouTube.

I work at a major label and I’ve been told informally that embedding is disabled on our label’s YouTube clips because the deal terms negotiated with YouTube on our first licensing deal a couple years back demanded such large advance and per-stream payments that YouTube could only come close to the ad rates required to satisfy the terms by selling the advertising around the video, and not just on in-video overlays. So in the negotiation, YouTube told us only way we could get the terms we asked for was to disable the embedding on our videos.

The decision not to compromise on terms so we could allow embedding has been really difficult to label employees in digital marketing and publicity. The digital business division is rewarded for bringing in big money from deals, but we at the labels are rewarded for realizing profits from breaking artists, and end up being constrained by many of those deals.

We would absolutely prefer the videos to be embeddable to increase the reach of our artists through blogs, MySpace pages, and now (this is a huge detriment, I think) through the YouTube video items on Facebook that people post to their walls.

Maybe it’s not a huge story, but it’s definitely more complex than “major labels are so protective of their content that they disable embedding.” It’s more a result of the complex incentives created by centralizing digital business deals in a division that is not at all responsible for music and marketing. It can be frustrating.

[Image credit: MoonSoleil]

Google’s YouTube has cut a deal with Sony (SNE) to keep the label’s videos on the world’s biggest video site. But it is still haggling with the other big music companies: Warner Music Group (WMG), Universal and EMI.

Here’s one way that Google (GOOG) execs could speed up the process–wave the results of this survey of U.K. youngsters in front of the labels’ faces. And make sure to underline this part:

You Tube has soared into pole position as the default website that this age group turn to for checking out new artists (38%). Myspace (and a band’s own website) come a distant joint second, each scoring 15%.”

A couple decades after the fact, the labels are still smarting because Viacom (VIA) built MTV into a giant business on the backs of their labor. Now YouTube is becoming this generation’s MTV. But this time around, the labels are in a position to benefit–if they can think big.

Right now, the labels and the video site are hung up on the fraction of a penny the labels get when YouTube shows one of their videos. The labels want a bigger fraction; YouTube wants to pay less. But that’s a silly debate: The bigger challenge is figuring out how to turn the intense interest YouTube users already have in music into a real business.

Again, my not-so-modest proposal: The best way to to pull this off is to copy MySpace and create a YouTube Music. As I wrote last month:

What would YouTube Music look like? It’s not that important. Maybe in addition to videos, it would offer downloads via Amazon’s (AMZN) digital media store, as MySpace does. Maybe it would have detailed biographies and a spartan design, like that MTV video site that MTV pretends doesn’t really exist yet. Doesn’t matter.

What is important: Like its MySpace predecessor, YouTube Music would take the large audience that already consumes music content throughout the site and assemble it one place. That might have some benefits for the site’s users. But it’s undeniably useful for the site’s ad sales team: Advertisers like clean, well-lit spaces with lots and lots of bodies, and partitioning off music creates just that.

That’s why MySpace Music was able to launch with an array of blue-chip advertisers last fall. And there’s no reason why they wouldn’t pony up for YouTube music too.”

So. Labels? YouTube? Get to it. You’ve got a huge audience there that’s already consuming your product. Time to turn those eyeballs into dollars.

UPDATE: Several readers have pointed out this data from Big Champagne, which shows that MySpace Music generates many more “music impressions” than YouTube does. That’s interesting, but I’m not quite sure what the point is. For one thing, there’s no reason why MySpace Music and (my proposed) YouTube Music can’t co-exist. Less important point, I think that a YouTube music impression, delivered via a video clip, is worth much much more to an advertiser than a MySpace Music impression delivered via audio.

UPDATE2: Can’t recall what MTV used to be like when it played videos? Here’s an hour-and-a-half-long trip in the way back machine. Thanks to BusinessWeek’s Roben Farzad for digging this one up.

Which is essentially what Qtrax, which claims to be the world’s first free and legal peer-to-peer music service, has done. Qtrax launched over the weekend with the alleged support of EMI, Universal, Warner and Sony. Today, all four labels are saying that while they have discussed relationships with Qtrax, they have not inked any formal agreements. “EMI Music had an initial agreement with QTrax, essentially a license designed to help them experiment with this ad-supported model,” an EMI spokeswoman told Wired. “QTrax didn’t launch the service during the period of the agreement–I think we initially did this two years ago. We’re now in talks with the company about a possible new deal, but as of today, they don’t have a license with EMI Music.”

A source inside Warner told the Times Online a similar story: “Warner Music Group has not authorized the use of our content on Qtrax’s recently announced service.”

Oh, but it will. Just you wait, says Qtrax CEO Alan Klepfisz, who admits that the “ink hadn’t dried” on some of the company’s claimed deals. “We are not idiots,” he told the Times Online.”We wouldn’t have launched the service in front of the whole music industry unless we had secured its backing. We feel we have been unfairly crucified because a competitor tried to damage us. Everyone is very upset. We do have industry agreements including the major labels. Even today we are working on more deals.”

Partisans of these platforms can argue all day about which is better. But the competitors have some things in common. Windows computers and Apple Macintoshes can both display the same photos and office documents, and play the same MP3 songs and YouTube videos. BlackBerrys and Treos can receive the same emails and call the same phone numbers.

It isn’t perfect. There are some files that don’t play well across platforms. But most common content does.

Yet there’s another technology competition that doesn’t share content well and offers few, if any, benefits to consumers. It’s the fight among two groups of technology companies and movie studios to sell a successor to the DVD. Each has developed a new type of disc that has the ability to show movies in high definition. To my eye, the pictures they deliver are identical.

Neither of these competing new discs, called Blu-ray and HD-DVD, works in current DVD players. They require very expensive new players, and the new players can’t handle both new disc formats, only one or the other.

Adding to the annoyance: Some movie studios release movies only in one of the two formats. Paramount and Warner Brothers support both formats, but Universal supports only HD-DVD, and Disney, Fox and Sony only Blu-ray.

So, in order to be sure you can play any movie released as a high-definition disc, you would have to replace your old DVD player with two new, much costlier players. It would be like having to buy separate TV sets to watch different networks’ programs.

Now, however, one gutsy company, LG Electronics, of Korea, a longtime member of the Blu-ray camp, has broken ranks and introduced a new combo player that can handle three formats: Blu-ray, HD-DVD, and regular old DVDs. It’s called the BH100 Super Multi Blue.

I’ve tested this combo player and found that it plays both new formats, as well as regular DVDs, just fine. But it’s more expensive than most single-format players and has some serious limitations when navigating through the menus on HD-DVD titles. For now, I can only recommend it for serious videophiles with deep pockets, but I’m hoping it’s the start of a trend that will end the foolish war.

The BH100 costs $1,200. That’s vastly more expensive than the newest DVD players, which, for less than $100, can take a regular DVD and “upscale” it so it looks better on a high-definition set. But that $1,200 isn’t so outrageous if you compare it with the price of buying two separate Blu-ray and HD-DVD players, which can reach or exceed $1,000 total. And the new LG takes up only one input on your TV, occupies less space on your component shelf and requires just one remote control.

I tested the LG combo player on my high-definition TV with this year’s Oscar-winning best picture, “The Departed,” and with “Superman Returns,” each of which is available in both of the new formats, as well as on DVD.

All played perfectly. The picture looked great in both formats and was noticeably better than an upscaled DVD image, which the LG unit also can produce. The LG outputs both new formats in a high, but grossly overhyped, resolution called “1080p.”

But the BH100 did a much better job with the Blu-ray discs than with the HD-DVD titles. That’s because while the combo player can play HD-DVD movies perfectly, it can’t display the HD-DVD discs’ menus for selecting scenes or accessing special features.

These menus usually offer the title and a photo to identify a scene, and the title and/or a description of the special feature. But on the LG BH100, the HD-DVD menus have no pictures, titles, or descriptions and look nothing like the original. They only identify scenes by number and duration. That makes it hard to find, say, the deleted scenes from “The Departed,” or the documentaries on the Superman disc.

The BH100 was based on a Blu-ray-only player and lacks the special chips HD-DVD players use to display the menus properly. LG had to concoct its own rudimentary replacements for those menus. The company says a future combo model could include the chips and thus display the HD-DVD menus as well as it does the Blu-ray menus, but it hasn’t decided whether to make such a product.

One reason for that decision may be the competing approach to solving the stupid disc war. Warner Brothers is working on a combo disc, instead of a combo player. This disc would hold both the Blu-ray and HD-DVD versions of a movie, so you could pop it into whichever type of player you own.

Until the electronics and movie companies support universal high-definition players and/or universal high-definition discs, I don’t recommend that most people invest in either technology. Why prolong a war that’s bad for consumers?

Email me at mossberg@wsj.com. See video versions of my reviews at wsj.com/mossbergvideo.

]]> http://allthingsd.com/20070308/dvd-combo-player/feed/ 0 http://allthingsd.com/20070301/web-videos/ http://allthingsd.com/20070301/web-videos/#comments Thu, 01 Mar 2007 00:01:00 +0000 Walter S. Mossberg http://ptech.allthingsd.com/20070301/web-videos/ I love YouTube. As a pop-culture junkie, I watch its videos daily, whether goofy amateur productions or clips — often of dubious legal status — lifted from TV shows or movies.

But, while YouTube is sometimes seen as synonymous with the Internet video revolution, there is a lot more to Web video. In fact, some of the most interesting video on the Web isn’t even the type of stuff that’s most popular on YouTube — short, one-off clips.

In various corners of the Web, people are producing real, episodic TV shows, including news, drama and comedy — sometimes with real actors and professional production values. Some of these longer-form, episodic shows are called video blogs, or vlogs, but others simply call themselves shows. Instead of lasting just a few minutes, they can run up to half an hour. These programs have more in common with regular broadcast and cable shows than with those emailed clips.

One of these days, a real hit show will emerge on the Web.

To be sure, such Web TV shows aren’t brand new. Ever since Apple began offering free video blogs on its iTunes store, people have been making them. One of the first to achieve popularity was a cheeky daily newscast called “Rocketboom,” which made a star of its first host, Amanda Congdon, who has moved to the ABC News Web site. (“Rocketboom” continues with another host.) Another was a comedy called “Tiki Bar TV.”

But the trend has accelerated and deepened lately, and a number of interesting sites have sprung up. My favorite is blip.tv, run by a team made up of a former systems administrator for the NHL, and a former TV news reporter and producer. Blip.tv (not to be confused with a similar-sounding site called bliptv.com) hosts a bunch of these new Web TV series, and also helps them attract funding, sponsors and advertisers. Anyone can upload a show.

One of my favorite shows available on blip.tv is called “Goodnight Burbank,” a comedy series about the squabbling that goes on behind the scenes at a local TV news show. Another is “Alive in Baghdad,” news reports from Americans and Iraqis on how the war affects average Iraqis. “Cube News 1″ is a series about life in the office cubicle. Other shows I’ve enjoyed on blip.tv include “HotRoast,” “The Ministry of Unknown Science” and “Josh Leo.”

Each show on blip.tv is accompanied by a profile page, comments from viewers and sometimes a blog. Many aren’t exclusive to the site. Some have their own Web sites, and episodes can also be found on YouTube and downloaded from iTunes and other sites. In fact, blip.tv provides links that make it easy to subscribe to shows on iTunes and other sites. But blip.tv does a good job of gathering a whole bunch of these Web TV series in one location.

Another good place to find these kinds of video blogs and Web TV series is at the iTunes Store. Unlike the music, commercial-TV shows and movies that Apple sells there, these Web video series are free. And because they are on iTunes, you can easily download them for viewing on a Windows or Macintosh computer, or on an iPod. You can even watch them on a real TV if you plug a computer or iPod into the set, or buy Apple’s forthcoming Apple TV product.

There are way too many Web series and video blogs on iTunes to list here, but if you go to the podcast page in the iTunes store and scroll down to Featured Video Podcasts, you can get an idea of what is available. iTunes includes several Web-only video series produced by the big TV networks, including a fascinating series from ABC called “The Day It Happened,” with historic footage on events such as the Kennedy assassination, the fall of the Berlin Wall and the wedding of Princess Diana.

Another site worth watching is brightcove.com, from a company whose main business is selling the technology for doing Web videos to big media concerns, including Dow Jones & Co., the publisher of this newspaper. But brightcove also hosts Web video from average folks and small outfits. It will soon introduce a feature to allow average users to record video directly to its Web site and then mix it, legally, with clips licensed from big media companies.

Yet another worthwhile site is Network2.tv, which attempts to aggregate a wide variety of Web videos in one place.

I’ve only scratched the surface of the available video sites, but if you like YouTube, you may love what else is out there.

• Email me at mossberg@wsj.com. See video versions of my reviews at wsj.com/mossbergvideo.

]]> http://allthingsd.com/20070301/web-videos/feed/ 0 http://allthingsd.com/20061109/zune-challenges-ipod/ http://allthingsd.com/20061109/zune-challenges-ipod/#comments Thu, 09 Nov 2006 23:59:00 +0000 Walter S. Mossberg http://ptech.allthingsd.com/20061109/microsofts-zune-challenges-ipod/ Next week, Microsoft Corp. will launch the most serious challenge ever mounted to Apple Computer‘s iPod and iTunes juggernaut in digital music. The software giant is introducing a portable player called the Zune, an online music store called Zune Marketplace and a new music software program called Zune that links the two. It plans to put plenty of marketing muscle behind Zune, and promises to expand and refine this new product line in coming years.

This isn’t Microsoft’s first effort to stop the iPod, but it’s the first for which the software giant is adopting Apple’s own business and design model — where one company makes and controls the hardware, software and online component, and tightly integrates them. The Zune is produced by Microsoft’s Xbox group, which builds game consoles on that same end-to-end principle.

Microsoft’s Zune comes in black, white or brown.

In its first incarnation, the Zune comes in only one version, a big, chunky $249 model that can hold 30 gigabytes of music, videos and photos. I’ve been testing the Zune for the past couple of weeks and comparing it with the most similar of Apple’s six iPod models — the smaller of the two full-size iPods, which also holds 30 gigabytes and also costs $249.

Zune has several nice features the iPod lacks: a larger screen, the ability to exchange songs with other Zunes wirelessly and a built-in FM radio. It solves the worst problem that plagued earlier Microsoft-based music players — frequent failures to synchronize properly music and videos between the players and personal computers. Synchronization on the Zune is smooth and sure.

Also, the Zune player and software have a very good user interface, different from, but in some cases easier to use than, the iPod’s. While it lacks the famous iPod scroll wheel, instead using a common four-way navigation pad, I found song lists easy to navigate on the Zune. It has only a few buttons and is quite intuitive to use. To my ears, it sounded as good as the iPod.

But, this first Zune has too many compromises and missing features to be as good a choice as the iPod for most users. The hardware feels rushed and incomplete. It is 60% larger and 17% heavier than the comparable iPod. It has much worse battery life for music than the iPod or than Microsoft claims — at least two hours less than the iPod’s, in my tests. Despite the larger screen, many album covers look worse than they do on the iPod. And you can’t share music libraries between computers like you can with iTunes.

Zune’s online store offers far fewer songs, just over two million, compared with 3.5 million for the iTunes store. In fact, as of this writing, songs from one of the big labels, Universal, were missing from Zune Marketplace, though Microsoft says it is confident it will have all the major labels when it launches Zune on Tuesday. Also, despite the player’s capability, Zune Marketplace offers none of the TV shows, movies or music videos that iTunes does, and has no audiobooks or podcasts.

Even worse, to buy even a single 99-cent song from the Zune store, you have to purchase blocks of “points” from Microsoft, in increments of at least $5. You can’t just click and have the 99 cents deducted from a credit card, as you can with iTunes. You must first add points to your account, then buy songs with these points. So, even if you are buying only one song, you have to allow Microsoft, one of the world’s richest companies, to hold on to at least $4.01 of your money until you buy another. And the point system is deceptive. Songs are priced at 79 points, which some people might think means 79 cents. But 79 points actually cost 99 cents.

Unlike iTunes, Zune offers subscription plans, where you can get an unlimited numbers of songs for $15 a month. However, Microsoft is de-emphasizing this option and mostly positioning Zune Marketplace as a source of individually purchased songs and albums.

Some consumers may well choose Zune for its big screen, which looks great with photos and videos, for its wireless song swapping, or for its FM-radio capability, which requires a $50 accessory on the iPod. Others may favor Zune because they are as tired of Apple’s dominance in music as some folks are of Microsoft’s dominance in computers.

But Zune has only around 100 accessories at launch, versus 3,000 or more for the iPod. If you have any iPod-specific accessories, they won’t work on the Zune. Also, none of the songs you may have purchased from Apple will play on the Zune, unless you undertake a laborious conversion process. Apple is rumored to be working on an all-new iPod with a screen as large or larger than the Zune’s.

Zune marks an unusual turn for Microsoft. The company is abandoning its favored business model, where it builds software platforms and then lets other companies make a wide variety of products that use that platform. Instead, Microsoft is building and totally controlling the whole chain associated with the product: the hardware, the software and the online music store. Songs sold on Zune Marketplace are intended to play only on the Zune, and Zune players won’t be able to play copy-protected songs bought elsewhere, even at other online stores that use Microsoft music formats.

Microsoft was driven to this approach because its platform model, so successful with personal computers, has failed miserably in the music category. Apple has simply rolled over all the hardware companies and online stores that were built around Microsoft’s previous music system, called “PlaysForSure.”

Zune comes in three colors: black and white, like the comparable iPod, and brown, a daring color for a consumer-electronics device, but one that has become popular in the fashion world. Each model also has a second color on a translucent band around its edge; the brown one is trimmed in green.

Placing the Zune next to the 30-gigabyte iPod provides a strong contrast. The iPod is thin, sleek and elegant looking. The Zune looks big and blocky, sort of like a prototype for a gadget, rather than a finished product. It is longer, thicker and heavier than even the 80-gigabyte iPod, which has more than twice its capacity.

Zune was adapted from a much-praised but slight-selling music player, the Toshiba Gigabeat, in order to get it to market more quickly.

The word “Microsoft” never appears anywhere on the Zune, only the new Zune logo and a cheeky, “Hello from Seattle” in tiny type at the bottom of the back of the device. The Zune’s tag line, evident immediately when you open the box, is “Welcome to the Social,” a phrase meant to stress the device’s wireless song-sharing feature, and to reach out to the Zune’s target market, young music lovers who build social relationships around favorite songs and artists.

But the wireless music-sharing feature on the Zune is heavily compromised, in a way that is bound to annoy the very audience it is targeting. Each song sent to your Zune from another Zune can be played only three times and is available for playing for only three days. After that, it dies and can’t be played again unless you buy it. Even if you play the song only halfway through, or for one minute, that counts as one of your three allowed plays. In fact, in my tests, a song I sent to my assistant’s Zune expired after only two plays, one of which lasted just a few seconds. Microsoft attributed that to a bug that it said would be fixed.

The Zune’s other big plus, the big screen, is similarly compromised. While it is three inches versus 2.5 inches for the iPod’s screen, it uses the same resolution. That combination can make images coarser and grainier. In my tests, on photos and videos, this didn’t matter much, and the Zune did a good job, even automatically switching into horizontal screen mode. But images of album covers often looked fuzzy, grainy and even distorted on the Zune when compared with how they looked on the iPod.

And for a product that’s all about “the Social,” Zune is curiously lacking a very popular iTunes feature — the ability to view and to listen to another user’s music library over a local network. This iTunes feature works in homes, office, college dorms, hotels, and other places, and it functions in mixed groups of Windows and Macintosh computers. But with the new Zune software, you can share your library only with Xbox game consoles, not other computers.

On the plus side, I really liked the interface on the Zune. In some modes, it allows you to do things with fewer clicks than the iPod does. For instance, if you are browsing through music, you don’t have to go back a step to switch from, say, a list of artists to a list of albums. Those choices are arrayed at the top of the screen and can be selected with a sideways push of the navigation pad.

Also, the entire interface is more colorful and visually satisfying than the iPod’s. Lists of albums are accompanied by thumbnails of their covers. Menus zoom in and out, and some are translucent. You can also select your own photo as the wallpaper or background for the device. But, unlike on the iPod, you can’t customize the main menu or go to “Now Playing,” or shuffle all songs with one click.

The Zune software also has a handsome look and feel. And it allows you to “guest synchronize” a Zune on another computer, something iTunes doesn’t allow. You can load songs from someone else’s library onto your Zune without wiping out your own library, though you can’t then transfer those songs back to your own PC.

But battery life on the Zune was very disappointing. Microsoft claims 14 hours of music playback on a single charge with the wireless feature turned off — the same as the comparable iPod — and 13 hours with wireless turned on. But Microsoft bases these claims on strict and unnatural usage conditions, such as never increasing the default volume, playing only one album over and over, and keeping the backlight on for just one second.

I tested the Zune in more normal conditions, shuffling through hundreds of songs, adjusting the volume where needed, skipping or repeating songs occasionally and using a 30-second backlight. In my test, I got just 12 hours and 18 minutes of music playback, versus 14 hours and 44 minutes from an iPod under the same usage pattern. With the wireless turned on, battery life on the Zune was worse — just 10 hours and 12 minutes, even though I didn’t send or receive any songs.

Overall, the iPod and iTunes are still the champs. Still, I expect the Zune to attract some converts and to get better with time. And this kind of competition from a big company with deep pockets and lots of talent is good for consumers in the long run.

Email me at mossberg@wsj.com.

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