Microsoft unveiled the new Xbox Music service during its E3 Media Briefing on Monday, confirming rumors that the software giant would be giving the Zune service a long-overdue update. It’s important to note that Xbox Music is the next generation of Zune, not a replacement. Xbox Music is primarily a new name for the same service you’ve come to know and love, but Microsoft is adding a lot of new features as well. Exact details about the service are still scarce, but there’s plenty to read between the lines.

The Music app on Windows 8 is a new way to listen to all the music you love at home or on the go. With a Windows 8 PC or other Windows 8-based device, you get instant access to millions of songs to stream. Select your favorites or create a Smart DJ playlist around the artists you love most. Like what you hear? You can purchase songs in the music store or, with a music subscription offering, get unlimited access to music across all your devices, like your Windows 8 PC, devices or TV. You can even download music to your personal library for offline listening wherever you are. The Music app on Windows 8 makes it easy to listen to music any way you want.

With the release of Xbox Music this fall, Microsoft’s music library will swell from 16 million tracks to more than 30 million. “Zune” is a great name, but the power of the Xbox brand undoubtedly allowed Microsoft to bring on more content partners. I speculated as much in a post last week, when I recounted an experience I had with a representative from a television studio.

The Xbox Music announcement video is decidedly Zune-esque, revealing a number of improvements to Windows 8′s Music app. In fact, I suggested that Microsoft add many of these features in my in-depth look at Music (now known as Xbox Music). The app is getting social integration, allowing you to see what your friends are currently listening to. Whether or not Zune Social features like play counts, badges, history, etc. will also carry over is unknown. Shuffle All and Smart DJ are also being added to the My Music section, along with a handy Most Played list. The app will also let you know if an album or single is new or “often played.” A new section in the Xbox Music app will show you content similar to the current artist that is being played, and the favorites button makes a resurgence. The app has a few other UI improvements as well.

Xbox Music is set to debut alongside its companion app, Xbox Video, this fall on Windows 8, Windows Phone, and Xbox 360. I have a feeling, however, that we haven’t heard the whole story. Microsoft likely has a few more tricks up its sleeve. We do know, however, that Xbox Music will take advantage of SmartGlass to enable such features as the ability to be begin playing content on one device and pick it up on another. The phrase “artist-based radio” in the official description (above) also seems to imply something bigger than just Smart DJ.

So what does all of this mean to current Zune users? Microsoft isn’t quite ready to say, but I don’t think things will change too much. “Zune Music Pass subscribers will continue to enjoy their subscription music collection via the Xbox Music service,” Microsoft says in a notice on Zune.net. “We’ll have more to share on timing and specific product details soon.” In fact, I wouldn’t be surprised if Zune devices and the Zune software client continue to function normally.

Taking a close look at the official press release, there’s a distinct possibility that Microsoft might even make Zune Music Pass a free perk for Xbox LIVE Gold members. Zune Music Pass is currently a $9.99/month stand-alone subscription, but the fine print for Xbox Music never once mentions a separate music subscription service. “On Xbox 360, music is streaming only and requires Xbox LIVE Gold subscription. Compatible devices required for multiscreen access.” This seems to imply that Zune Music Pass–or whatever the next iteration of the streaming music service is–will be free for Gold members or everyone in general. This would actually be a smart move on Microsoft’s part, allowing Xbox Music to swell its user base, decrease confusion, and increase the value of Xbox LIVE Gold.

The Zune branding is going away, but the service itself is alive and well. In fact, this fall, it’ll become better than ever before. Xbox Music is something to get excited about.

[Microsoft]