MICROSOFT ENTERS DOWNLOAD FRAY IN EUROPE

Bill Gates and Peter Gabriel are hoping to make beautiful online music together, according to a report in the Financial Times today.

Microsoft is teaming up with the rocker to launch Europe’s first online music store, offering downloads with no monthly subscription fee.

The store will be accessible to consumers in Western Europe on the latest version of Windows Media Player, with technology from Gabriel’s OD2, which has licenses from all five major music companies and several independents.

Downloads will be available in Britain through Microsoft’s MSN Music Club website starting today. Next month, Italian ISP Tiscali will also offer downloadable music through its Music Clubs in Britain, France, Germany, Italy, Spain and Belgium.

OD2 is trying to duplicate the success of Apple’s iTunes Music Store by offering a la carte, pay-as-you-go downloads, offering 200,000 songs at $1.12 a track, compared to iTunes’ 99 cents. Apple, which reported 6.5 million downloads since bowing the service in April, plans to extend the service to Windows PCs by the end of the year, but has not set a date for a European launch.

With 96% of European computers running on Windows, the Microsoft service is expected to appeal to a much wider group of potential consumers. The European Union is currently investigating whether the inclusion of Media Player with Windows gives Microsoft an unfair competitive advantage. Well, duh…