Microsoft Changes Subscription Plans; Zune HD Fading Away

Netflix (NSDQ: NFLX) isn’t alone in changing its subscription media pricing but the response to this one is likely to be a lot less vocal, in part because current subscribers were grandfathered in and, in part, because it’s Zune.

Effective today Microsoft (NSDQ: MSFT) is sunsetting the $14.99/month Zune Music Pass that allows downloads for offline listening. This may sound appealing because it’s being replaced by a $9.99/month version but there are two key differences:

— The more expensive version includes 10 MP3 downloads a month plus access to 3 PCs and 3 portable devices.
— No free downloads in the new plan and downloads/offline listening is limited to four PCs and portable devices in any combination.

Both plans cover unlimited streaming across multiple devices, including Xbox 360 (with an Xbox LIVE Gold subscription). For users who don’t care about the monthly free downloads and wants access on four or fewer devices, it’s a 33 percent price cut. Those who want to stick with it, can, including the 10 MP3s. (My household setup means we’ll be keeping the current plan for now. If only I could remember to download the MP3s every month.)

The changes coincide with Zune’s long-overdue expansion to Canada, which also started today. Prices run C$9.99 per month or C$99.90.

Is the Zune HD being dropped?: By the time I could check out a report from Gizmodo that the Zune HD had disappeared from the refreshed, it was back — apparently safe and sound after what Microsoft said was a publishing glitch. I came close to tossing my Zune device obit notes in a file for later use, then I clicked on the sales link and realized this could be a temporary stay until the inventory is gone.

What makes me think that? The link goes to Walmart, which is selling the 16G Zune HD with a bonus car charger for $159, down from $279. No other Zunes are being offered there and the only ones that I found at are refurbished.

Zigging & Zuning: Longtime readers know that my household zagged — or should I say zuned — while so many others zigged to the iPod. The overarching reason was simple: I like the flexibility and choice that comes with subscription music. The Zunes also sounded better, even the chunky brown one, and the Zune HD has a clarity that I miss when I give into expedience and listen to music on an iPhone.

My multi-platform lifestyle has kept me from using the Zune software to manage all my music but it has been better than iTunes from the beginning and has improved consistently. (Eventually iTunes started to take on some of Zune’s characteristics.)

Still, I went into it aware that the Zune as a device would have a finite life. For one, it’s a good Microsoft (NSDQ: MSFT) product and in my experience that’s a euphemism for toast. (For evidence, go try to buy an Ultimate DVR or Microsoft-branded networking equipment. I would say go look for music service Urge but much of it, or at least much of what it promised, shows up in the Zune software.)

For another, it started out on the wrong foot, by failing to come even close to the sleeker competitor that already ruled the space. Never mind that Apple (NSDQ: AAPL) barely hit a single with the first iPod; when tragically unhip Microsoft debuted the Zune in 2006, Apple was dusting off after the slide to home.

And what may be the worst item: Microsoft intentionally hobbled Zune from the start, including the potential for WiFi but keeping it disabled. Among other things, they were afraid of “negative brand equity” if users ran into too many problems. By the time Microsoft figured out to produce its own sleek players and how to enable and celebrate the advantages, too much potential had been squandered.

This isn’t the last day for the Zune HD but I’m not holding my breath for an announcement of the next device. It’s already here in the form of Windows 7 handsets, which we don’t use. (I was a Windows phone user but switched to iPhone when I need a new phone and W7 wasn’t ready.) When it gets down to that and the Zunes in our household die or disappear, unless Microsoft produces more players, licenses to others or — unlikely — offers a cross-platform app solution, that will be the end of Zune for us.