How and why Microsoft is breathing new life into MSN

Until recently, when Microsoft execs have touted online services as key to the future of Microsoft, they've almost always meant Microsoft's "Live" services. But recently, I've started to notice Microsoft re-emphasizing the strategic importance of its MSN.com portal to its overall business. Earlier this fall, to the surprise of many, Microsoft opted to brand its […]

Until recently, when Microsoft execs have touted online services as key to the future of Microsoft, they've almost always meant Microsoft's "Live" services.

But recently, I've started to notice Microsoft re-emphasizing the strategic importance of its MSN.com portal to its overall business.

Earlier this fall, to the surprise of many, Microsoft opted to brand its "You Tube killer" as "Soapbox on MSN Video," rather than as "Windows Live Video." Then, at this week's Lehman Brothers Technology Conference, keynoter Steve Berkowitz, Microsoft's Senior Vice President of Online Services, made Microsoft's renewed appreciation for MSN.com even clearer.

MSN.com currently attracts 465 million unique users a month, Berkowitz told attendees of the December 5 Lehman Brothers event. Rather than just abandon these hard-to-attract customers, simply because they prefer a pre-programmed entertainment-portal-style experience to a more geeky Windows Live one, why not try to steer them toward Microsoft's Live platform as it evolves? If you can convince MSN.com users to take the time to enter their contacts into Live Messenger and their address books into Live Mail, you've got them hooked, Berkowitz reasoned.

At the same time, Microsoft is planning to position MSN "as the best partner for media companies" based on the fact that Microsoft "doesn't compete directly with them," Berkowitz said. Premium content, like video "needs to find a way to get aggregated," Berkowitz continued.

"We want to become the distribution point and aggregation point for our partners." Berkowitz used a mall analogy in explaining Microsoft's thinking in the online services space. "Our business model is we will own the real estate for the mall… and we get a fee on the way in and the way out," he told conference attendees yesterday.

Microsoft sees three potential online-advertising syndication channels, Berkowitz said: renting traffic (your ad on their site, a la Facebook); distribution deals (you host and own the traffic); and we build the portal for you (like Microsoft is doing for Quest Software).
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How and why Microsoft is breathing new life into MSN