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May 27, 2010 1:33 PM

Microsoft May Cut Zune Streaming Music Price, Executive Says

May 27 (Bloomberg) -- Microsoft Corp., the world's largest software maker, may cut the monthly fee it charges for streaming music on its Zune portable player, senior product manager Terry Farrell said in an interview.

Zune Pass, which features unlimited music streaming and 10 song downloads a month, now costs $14.99. Farrell didn't say by how much Microsoft may cut the service's price.

'It's definitely a challenging business,' Farrell said, referring to competition in online music.

Microsoft is contending with rivals that offer music at little or no charge, while striving to erode Apple Inc.'s lead in the market for digital music players and downloadable songs. RealNetworks Inc.'s Rhapsody service in April slashed the monthly price of a premium music service to $10 from $14.99.

Zune had 2 percent of the U.S. digital music player market in the first quarter, compared with 76 percent for Apple products, according to NPD Group Inc., a Port Washington, New York-based researcher.

Users can access Microsoft's download service on personal computers and the company's Zune players and Kin phones. The company plans to offer the service on smartphones running its Windows Phone 7 software later this year, Farrell said.

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