Preston Gralla

Microsoft's new cloud music service can't compete against Apple's Beats

May 12, 2014 2:20 PM EDT

Reports say Microsoft is building a streaming cloud-based music service like Google Music, but if true, it won't help the company compete against Apple and Beats music. What else can Microsoft do if it wants to thrive in the streaming music business?

The Chinese site LiveSino reports that it has examined the source code for Microsoft's OneDrive storage service, and that has found a new Music folder that can be used to upload music to OneDrive -- and then use OneDrive to stream music via Xbox Music to a variety of devices. The Verge reports that the site found this text:

Meet your OneDrive Music folder. Upload your music files to this folder, so that you can play them via Xbox Music from any of your devices. You can also add files to this folder using the OneDrive app for your computer.

That capability is much like what is found in Google Music and the Amazon Cloud Player. I use both services, and they're both quite good. But they don't compete against Beats music, which Apple is said to be negotiating to buy, or against Spotify, because they only let you access your own music, not many millions of other tracks. For that matter, they don't compete against Microsoft's Xbox streaming music service, either.

The combination of a streaming music service with a cloud-based streaming music locker is a very good idea, especially if they can be integrated well. No one has done that yet. Spotify lets you listen to music stored on you computer, but it's not a particularly simple process to do. Integrating the two kinds of music services would be a winner.

But even if Microsoft does that, it's still not good enough. If it's going to compete against Apple in the music business, it needs a high-profile streaming music service that's been around for years, has forged relationships with the music industry, understands people's streaming-music behavior, and has a sizable installed base around the world. And that means Spotify.

Microsoft hasn't publicly expressed an interest in buying it. But you can be sure that if Apple buys Beats, some other company will look at buying Spotify -- and Microsoft would do well to be that company.