Microsoft to pay Universal for every Zune sold | iLounge News

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Microsoft to pay Universal for every Zune sold

In a move that could have a future impact on Apple, Microsoft has agreed to pay Universal Music Group a fee for each Zune media player it sells. “We felt that any business that’s built on the bedrock of music we should share in,” said Doug Morris, chief executive of Universal, owned by French media giant Vivendi. “We were very early in working with Steve on the launch of the iPod and he’s been a very good partner and done a lot for the industry,” Morris said in response to questions about Universal’s relationship with Apple. “We have a current contract with him and at the end of that I’m sure we’ll negotiate.” Apple currently only has revenue-share deals with record companies for music sold on the iTunes Store, and does not offer a portion of iPod sales to any company.

Update: The New York Times reports that Universal is expected to receive more than $1 for each $250 Zune sold, and that the deal “comes after weeks of tense talks and averts a standoff that might have crippled Microsoft’s attempt to compete against the iPod.” According to the Times report, Universal apparently threatened to not sell its music through the online Zune media store unless Microsoft paid a royalty for each Zune sold.

“Microsoft ultimately had plenty of incentive to make a deal with Universal,” reports the newspaper. “Microsoft is laying a huge wager on the Zune. If it had not struck a deal, it would have been left in the position of trying to mount a credible challenge to the iPod without Universal, which accounts for a third of new albums sold in the United States. Microsoft also stands to benefit by cultivating a fan-friendly image with the notion that artists—not just corporations—will share in the Zune’s sales.”

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Comments

21

Makes no sense.  Universal is just a part of the music industry.  If you are going to payoff each and every music and motion picture company, you would end up paying maybe $20 or more for each device.  If such a ‘tax’ is to be levied, they should do it Canada style, by government regulation. 

Microsoft pay it, because they know it will hurt Apple more.  Just as Microsoft pay SCO, they are using third-party to stymie Apple.  Sort of back-handed way of doing business.

Posted by WilliamC on November 10, 2006 at 12:16 AM (CST)

22

Microsoft is making so many bad moves it’s like they didn’t want to really challenge the iPod anyway. It’s a sad effort.

Posted by ddsd on November 10, 2006 at 1:00 AM (CST)

23

I will laugh very hard if any of the music labels try the same thing with Apple sometime down the line and get told to screw themselves.

Of course withholding content and thereby undoing any good that has been achieved so far with sales of digital media will quickly go down the drain if other record companies try this same tactic and the masses start pirating en masse.  I just don’t see this working out for very long for Universal or any other recording or media company that tries this same tactic.

Posted by Brian on November 10, 2006 at 7:19 AM (CST)

24

Wow m$ now gets record labels to share in their joke. RIAA should look into this..

Lets see $ 1 out of $250.
Err thats less than .5 %..
That is just like pimping.

Universal loses because we will never be part of that scam.

ipods rule..hands down

Posted by mango on November 10, 2006 at 9:20 AM (CST)

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