Perhaps another flaw is the fact they are launching with a social factor. "Xbox Music will add unique social features in the coming year that let you share your music experiences with friends and family," the press release said.
This isn't to say that Microsoft's new service will not adversely affect Pandora or Spotify; it most certainly will.
Like Apple's iTunes, Xbox Music offers users the ability to buy music, as opposed to just streaming it. Whole albums and individual tracks can be purchased. Right now there are 30 million tracks on Xbox Music, which Microsoft says is on par with iTunes.
Brian Sozzi, chief equities analyst for NBG Productions, believes Microsoft is looking to do all it can into owning the living room, as it competes with Pandora.
"I find the announcement from one main angle: Microsoft is trying to kick into high gear its ownership of the living room ahead of Apple TV, if that even is to be released in 2013 and beyond," Sozzi said. "Microsoft knows it has impregnated living rooms globally during the current Xbox 360 console cycle, and now it's time to set consumer expectations for what the next device could do for them (rumored to be the Xbox 720)."
Shares of Pandora were lower in early Monday trade, off 2.7% to $9.15, while Microsoft shares were gaining 0.7% to trade at $29.39.
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Written by Chris Ciaccia in New York