Microsoft is throwing in the towel against Spotify and ending its Groove Music Pass. The Groove app for Windows and Xbox will remain, but only for local and OneDrive-stored music.

Microsoft is announcing that its Groove Music Pass is coming to an end, with sales in the Store for music and its pass ending December 31. The streaming portion of Groove Music will continue to function until December 31, after which the service will be turned off for good. Refunds will be issued in a pro-rated fashion from the December 31 date.

To make the transition easier, Microsoft is partnering with Spotify, which will let users import their current Groove playlists to the popular streaming service.

Jerry Johnson, general manager of Microsoft Groove, detailed the change in a blog post today:

With the continued advancement of music streaming today, all the world's music has become easily accessible across a variety of devices, unlocking new ways to discover and experience music. As we continue to listen to what our customers want in their music experience we know that access to the best streaming service, the largest catalogue of music, and a variety of subscriptions is top of the list.

Which is why we're excited to announce that we're expanding our partnership with Spotify to bring the world's largest music streaming service to our Groove Music Pass customers.Beginning this week*, Groove Music Pass customers can easily move all their curated playlists and collections directly into Spotify. Plus, you may be eligible for a 60-day free trial of Spotify Premium.

In notes about the app changes, Microsoft reveals the finer details of the change:

An update to the Groove Music app including the ability to move music to Spotify, will be available for Windows Insiders beginning this week. The Groove Music app update for Windows 10 and Xbox One devices will roll out broadly the week of October 9, 2017 and will enable Groove Music Pass customers to move existing music collections and playlists to Spotify. Groove Music Pass content will be available to move to Spotify until at least January 31, 2018.

Microsoft has also written an FAQ about the change to provide more information.

A losing war with Spotify

The reason for the decision to kill off Groove? The competition is too fierce. Spotify has a presence in over 60 countries, offers a popular family pass, and boasts 140 million active users, of which nearly 60 million are paying subscribers. Groove, meanwhile, sees only a fraction of that usage and subscribers and is still far behind in functionality and user satisfaction.

Microsoft is sobering up to the reality that it will never catch up to nor compete with Spotify. As a result, there will no longer be any significant investment in trying to win a losing battle.

Indeed, it was only recently that Microsoft announced a new Spotify app for Windows 10 and one for the Xbox One, in what may have been a tit-for-tat deal.

See Spotify in the Windows Store

What happens next for Groove?

The Groove app for Windows 10 (PC and Mobile) and Xbox will continue to work and will be updated with normal functionality. However, numerous features will be removed going forward, including:

  • Radio.
  • Explore.
  • Recommended.
  • Store purchases of music.
  • Music video playback.

What will continue is the ability to play locally-stored music as well as streaming from OneDrive, where you can continue to store your music library to reach all your devices. After December 31, 2017 Microsoft will no longer offer the option to stream, purchase, and download music.

The same applies to the iOS and Android Groove apps, which will continue to function with OneDrive but without the radio/explore components.

Undermining consumer confidence

As a fan of Groove and its Music Pass going back to the Zune era, today's news is very disappointing and worrisome for me.

While Spotify is a juggernaut and it makes little sense to continue to throw money away, Microsoft's decision further undermines confidence in its commitment to the consumer space.

RIP Groove Music Pass.

Long term, Microsoft will continue to build the platform and structure for other companies to create products – especially established services such as music streaming – nonetheless, this undoing of years of progress is damaging.

Going forward, should users expect the Movies & TV video-streaming service to continue against Amazon and Apple? What about Mixer versus Twitch in-game streaming, or Bing versus Google for search? These all seem like losing battles and services that Microsoft could cut at any time.

The dearth of Groove Music Pass users is clearly related to Microsoft's failed mobile business. Over half of music streamers do it from their phones. With no phone platform, Microsoft killed any viable chances for Groove success.

While today's decision is likely the rational one for Microsoft's business, it's the wrong one for consumers who invested in Microsoft for all these years. It's hard to recommend a Microsoft service, like buying movies, books, or even game streaming, with this decision. For years, Microsoft undercut and undersold Zune – and eventually Groove – and now that poor management is resulting in another significant loss for the company.