What's the real reason Microsoft has delayed its streaming music service?

zuneWell, July came and went and we saw no sign of Microsoft‘s much-anticipated new streaming music service. So I did a little digging around, and over the weekend word reached me through a friend in the music industry that the delay has nothing to do with technical problems, as some have suggested. According to my source, Microsoft “has no label deals”. And a streaming music service isn’t much good without any content.

That’s surprising, if it’s true. It would be strange if Microsoft, having the benefit of observing Apple and Spotify at work over the past year, has been making unrealistic demands on the labels. Strange, too, that the labels wouldn’t realise what a cash cow a deal with Microsoft could be: if Microsoft can match Spotify’s speed and quality it’s difficult to imagine it failing.

Not much is known about Microsoft’s plans for the service, apart from the fact that it’ll be a lot like Spotify and that it’s definitely coming. We do know that it’ll be ad-supported and sit alongside the recently revamped¬†MSN Video.

The service was set to launch at the end of July. Now? Who knows. We’ll get on to Microsoft to see if we can elicit a response.

Update: A representative for Microsoft in the UK declined to comment on this report.