In late October, Microsoft will unveil MSN 8, the most recent update to its MSN online service. MSN 8 will be an impressive new release, although its MSN Hotmail-like approach to supplying functionality somewhat tempers its usefulness for many users. Currently, the distinction between MSN's customers and other online users is that MSN customers can dial directly into MSN from anywhere in the United States and have access to MSN email accounts, but that's about the only distinction. However, with MSN 8--for the first time--Microsoft will shut off many services to non-MSN customers, potentially making the paid service more valuable. And with AOL stalling under the weight of its perpetually out-of-date UI, which annoys users with numerous pop-up windows and advertisements, MSN might finally be poised to make some serious gains on the market leader.

MSN 8 will take two approaches to paid services. First, customers who pay MSN for dial-up or DSL services (which range from $22 to $40 a month) will have access to all MSN 8 features. Users with other ISPs will be able to pay about $10 a month to access premium MSN 8 content and other unique features.

MSN 8 perks will include an improved email client with better junk-mail filtering and parental controls; improved Web services such as online investing, money management, and photo sharing; and a special version of MSN Messenger 5. A free version of MSN Messenger 5 will be available to non-MSN users, but the version that MSN 8 customers will receive will include enhanced, server-based parental controls; an integrated MSN Today view from the MSN Messenger UI; an improved address book; a Web-sharing feature called "Browse the Web Together"; and contacts searching and sharing. Windows XP users will also get exclusive access to videoconferencing through MSN Messenger and will be able to install MSN Messenger along with Windows Messenger. This new dual-installation feature will let XP users simultaneously log on to two Microsoft .NET Passport accounts, one through MSN Messenger and one through Windows Messenger, which could be important for users who maintain separate home and work personas. Microsoft will also offer MSN customers a steep discount on the company's recently released Microsoft Broadband Networking products, which include wireless and wired network adapters and base stations.