Microsoft To Self: Why Aren't Xbox Owners Paying For Zune Music Service?
Microsoft To Self: Why Aren't Xbox Owners Paying For Zune Music Service?

Despite the popularity of Microsoft's Xbox games, its users are taking a pass on its Zune Pass

Subscription services have one a big problem. It's not Apple's 30% cut of in-app subscription revenue. It's not the friction created by other billing processes. It's not piracy. Their main problem is that consumers don't think they're worth the price.

Case in point: Microsoft's Zune Pass subscription is offered through the company's popular Xbox gaming unit. But people are not signing up, said Christina Calio, director of music relationships, strategy and business development, at the Digital Music Forum East on Thursday.

"We've seen really tremendous trial on the Xbox. We're not seeing the conversion numbers that we'd like, and so there's a lot of internal conversation about 'What do we need to do to get people to sign up?' Our service is $14.95 a month, and you get to keep 10 MP3s, but for a consumer that maybe has an XBox but not a Windows Phone or a Zune device, that's a pretty steep price to pay, especially when XBox Live is five bucks a month."

Remove the friction from billing, keep Apple's 30% cut, and you're still left with a product relatively few people want. Spotify, heralded as the future of music, converts about 7% of its users to the paid version. Everybody else opts for the free, ad-supported version, which does not support the mobile app. Clearly mobile access -- in its current form, at least -- is not such a priority for Spotify users that they will part with their money to get it.

So, subscription services will require constant tweaking. Add to the living room experience compelling, must-have mobile and PC-based products and a subscription service could have a higher perceived value. That three-screen availability provides for a better, more ubiquitous service. Focus on consumers' desire for music in their cars and the service may have a better chance connecting with the mainstream.

And they will need to wait for technology to catch up. Uncertain, interrupted streaming-based services are still no match for the certain, fluid playback of downloads.

"It's still a difficult concept," Calio continued. "Not all of the music is there all of the time. I think we're getting closer, but we're not quite where we want to be on subscriptions."