Microsoft gifts Spotify Groove subs; does Xbox face the same fate?

In yet another example of Spotify’s dominance in the music streaming industry, PC technology overlord Microsoft has bent the knee by announcing the closure of its Groove Music Pass service by the end of this year, and imminent migration of Groove subscribers over to the Swedish streaming service.

Microsoft had a decent but halfhearted stab at challenging Spotify, and iTunes before it with the Windows Store, but its services were not revolutionary enough and never really stood a chance. Microsoft made moves such as coming out with its own PlaysForSure DRM for Windows Media Player way back in 2004, but in today’s fierce music market and mobile app battleground, Groove had no tricks up its sleeve, no stand out features or exclusives, to give it the wow factor.

Groove’s shuttering is an unexpected bonus for Spotify and an easy decision for Microsoft to make. Spotify, Apple Music, Amazon Music and Google Play Music are all on par with Groove at the industry norm of $9.99 a month, but Microsoft has naturally decided to entrust its subscriber base to Spotify rather than lend tech rivals Apple, Google and Amazon a helping hand. Pandora was another option, but the US internet radio firm is in dire straits and is rumored to be preparing for a takeover, for which Liberty Media’s SiriusXM has long been the bookies’ favorite.

Microsoft has also decided to stop music purchases in the Windows Store, with the option to purchase or download music on both platforms ceasing at the end of December. Games, videos and e-books will remain available on Windows Store, but this raises the question of whether these three content sources, and the Windows Store as a whole, will eventually face a similar fate to Groove and be swallowed into a more successful streaming ecosystem?

Without the handset clout of Apple and Google, or the Alexa intelligence of Amazon, Microsoft’s content future outside of PCs depends entirely on the future emergence of a viable replacement for clunky games consoles, which are defying many estimations by surviving the test of time. The reason being that game streaming services, such as Steam, are not yet commercially strong to be entrusted to handle new release titles just yet, so Microsoft’s Xbox, which the Windows Store plays an important part in, should have plenty of years left.

The Groove Music app will be able to support playback and management of owned music until December 31 this year, after which it will no longer offer the option to stream, purchase and download music. Groove Music Pass subscribers who move their music to Spotify before the end of January 2018, will receive 60 days of Spotify Premium for free. Microsoft has urged Groove subs to download purchased tracks to personal devices or upload them to OneDrive or another cloud storage service.

There’s a couple of inconvenient catches though, namely that Groove users can only shift their music over to Spotify on up-to-date Windows 10 or Xbox One devices. Only then will the content become available on mobile devices, even if the user has only ever used the Groove Music app on Android or iOS and does doesn’t own a compatible Windows device. Users can still listen to music purchased and downloaded or stored on OneDrive using the Groove Music mobile app, but won’t be able to stream music with the Groove Music Pass.

Some tracks may be lost forever if a match for the song or album purchased on Groove Music cannot be found on Spotify, although there’s a slim chance of that as Spotify has 30 million songs and 2 million playlists available in 61 markets. Playlists created on Groove will move to Spotify, but editorial playlists from the Groove Explore page won’t.

Subscriber figures for Groove have not been made public, while Spotify is already well out in front with over 60 million paid subscribers and 140 million active users worldwide as of June this year. Apple Music announced it hit 30 million paid subscribers last week, adding an impressive 3 million new subscribers in three months, but the momentum is in Spotify’s favor, adding 10 million subscribers between March and the end of July this year.

The next big thing to happen in the music streaming industry looks set to be Spotify’s IPO, rumored for late this year or some-time next year. Despite its subscriber growth success, Spotify is notoriously unprofitable, reporting losses of $601 million last year with revenue of $3.3 billion. Speculation says Spotify could IPO at $20 billion, while investment firm GP Bullhound has projected Spotify could be worth as much as $50 billion in a few years.

“With the continued advancement of music streaming today, all the world’s music has become easily accessible across a variety of devices, unlocking new ways to discover and experience music. As we continue to listen to what our customers want in their music experience we know that access to the best streaming service, the largest catalog of music, and a variety of subscriptions is top of the list,” said Microsoft in a blog post.