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Universal Music may seek iPod royalty fee

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By LC Angell

Contributing Editor
Published: Tuesday, November 28, 2006
News Categories: iPod

Universal Music Group CEO Doug Morris said today that he may try to squeeze an iPod royalty fee from Apple in their next round of negotiations early next year. As reported earlier this month, Universal, the world’s largest music company, struck an agreement with Microsoft to receive a fee for every Zune digital media player sold. “It would be a nice idea. We have a negotiation coming up not too far. I don’t see why we wouldn’t do that… but maybe not in the same way,” Morris told the Reuters Media Summit, when asked about an iPod royalty fee. “The Zune (deal) was an amazingly interesting exercise, to end up with a piece of technology,” he added.

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Comments

1

damn greedy bastards… i would acctually love for them to ask for it and ipod drop there ###…and see what happens to the online sales..

Posted by Erik Rizo on November 28, 2006 at 3:32 PM (PDT)

2

I think the reasoning is that mp3 players impact on their sales, but if that’s the case we should all be able to steal music without retribution from their legal team.

Posted by _Ethan on November 28, 2006 at 3:42 PM (PDT)

3

Yeah right! Recored companies suck butt. I would hope Apple drops them if it came down to it. Simply amazing how greedy these companies are.

This is nothing but a fee based on the assumption that I will be stealing their music to put on my iPod. So they can recover some of their loss? Not to mention it will drive up the price of the iPod too.

Posted by WJKramer on November 28, 2006 at 3:52 PM (PDT)

4

When MS’s team of idiots cut that deal we knew this was coming.  Luckily the Zune is selling about as fast as a sack of dirty socks.  So Steve has the upper hand. 

I highly doubt Steve would give anyone a cut of apple’s cash cow.  If he holds firm to that Universal has two options…

#1 Bow to apple’s demands
#2 Pull Universal’s content and make it exclusive to the Zune which in turn would alienate millions of ipod users who would then pirate the content or not buy it at all.

Posted by Art Vandelay on November 28, 2006 at 4:05 PM (PDT)

5

If I’m paying them money when I buy an iPod, then I expect that I can get any of their music for free - isn’t that what the charge is for?

Posted by Greedy RIAA Type on November 28, 2006 at 4:41 PM (PDT)

6

“We’d like you to pay us $1 for every iPod sold.”

“No.”

Posted by Spencer on November 28, 2006 at 6:13 PM (PDT)

7

I resent the assumption that my music is stolen. (The Universal guy actually had some quote akin to “these things are just repositories for stolen music”). The only ‘pirated’ music I own is either out-of-print CDs no longer available, or live stuff. Everything else comes from my massive CD collection.

This is the thin edge of the wedge. MS is going to be asked for money from Sony and every other major label next time round.

Posted by Lawrence Mikkelsen in New Zealand on November 28, 2006 at 6:21 PM (PDT)

8

The problem with record companies getting a cut from the Zune is that it has set a precedence. Next they want a cut from the iPod. Then they will want a cut from headphone manufactures since people use headphones to listen to music. Then cars, since people listen to music in their cars. etc and so on.

Music executives are truly greedy bastards.

Posted by Greg Smith on November 28, 2006 at 6:26 PM (PDT)

9

I think that is a horrible idea. What is wrong with downloading music NOT through iTunes or napster? I mean everyone that still has a VCR can easily record a movie. So what’s the difference between that and music/dvds? If the record companies really want to do something good…lower the prices on cds or stop paying the artists way too much.

Posted by JW05 on November 28, 2006 at 8:40 PM (PDT)

10

Again, in its infinite ignorance, and avarice, Microsoft acts the spoiler role when it can’t play fairly through its calculated deal with Universal. I say to turn the tables as Universal is more dependent on the iPod than the iPod is on Universal. As far as Microsoft, they can take a flying Zune f@#k up Ballmer’s and Gate’s arse.

At this point what’s to stop Apple from forming its own music company?

Posted by FahrenheiPod 451 on November 28, 2006 at 8:42 PM (PDT)

11

At best if they’re real polite to Steve Jobs, they might extract some marketing position on itunes for a limited time but an actual % - bwhahahah - even he realizes this - notice how Morris soft pedals it.

FIVE REASONS

First, Apple just has to point out what’s next - a car tax for putting gas in your car - after all, what good is gas if you have no car or why not pay the fridge guys every time you put food into the fridge? If the turntable guys never paid, neither does Apple.

Two, Apple will ask - will they be like MS - reimburse people with none of their music on there? I’m sure there are thousands of people who just use an ipod as a portable HDD - do they get a dollar back? From everyone? I’m sure the labels will be happy to set up a division to deal with that.

Third, who is going to win a PR battle? Apple, Steve Jobs and music consumers or the record labels? The record labels are not exactly beloved now, yea, good luck winning that battle.

Four, if Universal cut us off - who is really hurt? Apple losing a couple hundred thousand tracks or the immediate backlash and furious downloading of ‘free’ Universal tracks? Clearly online digital sales are not driving ipod sales so how many less ipods will Apple sell - 50? But Universal loses access to 80+ million potential customers. Instead of encouraging sales - by not offering them, clearly we know how to obtain tracks elsewhere - it’ll be like the Beatles - who here who listens to the Beatles doesn’t know how to get a Beatle track on their ipod?

More? Steve Jobs is chairman of Apple and Pixar and sits on the board of Disney - what record label exec is going to make Steve Jobs mad at you? Who can afford to be NEVER considered for another job in the industry?

MS tried to roil the waters because they knew at best they’d shell out a couple million or more likely, they’ll shell out a a couple thousand dollars but they figured it might cost Apple untold $100 million - presuming 6 labels get $1 times the number of ipods sold but Apple clearly does not need the labels as much they need Apple. MS is not smart enough to figure out it’s 2006 and not 1992 (as thus was their game plan to embrace and extend in the PC market of 1992 - by buying up suppliers). The labels cannot afford to walk away from not just 80 million customers but a substantial majority of people buying online tracks because unlike other industries, they cannot cut off the supply unless they are also willing to stop selling CD’s during their Apple boycott time ...

PWNED. And checkmate.

Posted by jbelkin on November 28, 2006 at 8:45 PM (PDT)

12

Seriously, Apple has all the bargaining chips here.  Apple can tell Universal “fine, you won’t have any music for sale on the iTMS music store any more.”.  Then Universal can explain to all their artists why their music sales have gone down and their stuff is no longer available on the most popular online music store.

Posted by Zadillo on November 28, 2006 at 9:25 PM (PDT)

13

This is like some serious form of symbiotic relationship. They both benefit a good deal from each other. I think Apple is in the weaker position in this situation, but I don’t think anyone is bold enough to try and leech off of Apple’s iPods directly. Of course there are companies that try and leech of of the iPod’s fame, but that would be ridiculous. Maybe when the iPod debuted, but I’m sure there are many able sources for music for Apple. We’ll really have to see how this turns out, but it’s an extremely greedy move and not very business friendly. Who’d want to work with you after they see you leeching off of those you’re already affiliated with?

Posted by ddsd on November 28, 2006 at 10:01 PM (PDT)

14

Steve Jobs is already on record as calling the record companies “greedy” for wanting to mess with prices at iTMS. Clearly he’s not afraid to let these people know where they stand. Since Apple only takes a cut from music sales and he was so staunch in that decision, who really thinks he’d be any more willing to cough up cash directly from the bottom line in hardware sales?

Posted by Laer on November 28, 2006 at 11:18 PM (PDT)

15

I currently only download illegally to sample or to get live/rare stuff. I always buy if I think an album is worth the money, and if I think it isn’t I delete it, because it’s wasting space. If this comes to pass and Apple takes this stupid step, I’m going to have to either stop buying iPods or stop buying stuff under the Universal label and just pirate it from then on. Although if I really, really felt strong-willed I’d do both.

Posted by Jeremy Mahadevan on November 28, 2006 at 11:46 PM (PDT)

16

Apple should pay Universal.  But Universal shoud pay Apple for any musician/producer that uses Apple hardware or software to create the music.

wink

Posted by taffinito on November 29, 2006 at 4:33 AM (PDT)

17

I think this is a terrible idea.  The ipod is NOT only a music player anymore.  That’s why Apple change the name from iTunes music store to just ITunes store( I personally think it should be call the iTunes Media Store).  Let’s say I buy an iPod but I choose to dowload nothing but TV shows, podcast, and put my photos.  Why would this money go to them?. I thought the reason why Zune is giving them some of their profit from the player is because it comes preloaded with music.  As long as an iPod comes out empty out of the factory there is no reason why to do this.

Posted by gbendana on November 29, 2006 at 5:05 AM (PDT)

18

Why should I pay a tax on my iPods?

I don’t steal music.  Neither do most iPod users, I would guess.  There are many free and legal sources of music out there.  CD sales are falling because people have other choices on how to get quality music.  Some of that is through bands putting their own music up on free sites as a marketing tool.  Ten years ago the only way anyone heard new music was on the radio, now we can find whatever we want online. 

Of course there are a huge number of thieves stealing music, so keep suing them.  That seems to be a growing business model, perhaps the only growth area of the business.

From a little quick research the labels get paid 70 cents per download of the 99 cents Apple collects.  Of that 70 cents only 4.5 cents goes to some of the artists, based on CD sales models.  Less than 7% goes to the artist for a CD sale.  In other words, if I spend $10 for a CD (on sale) the artist gets 64 cents.  The labels are fighting digital music so hard because it squeezes them.  Artists get very little of the money spent by consumers in a store.

Posted by Chrystopher on November 29, 2006 at 6:48 AM (PDT)

19

How ironic that Universal would try this with the one (1) company that turned around this whole digital download thing…single handedly even.  I don’t see anything changing.

Posted by Gordy. in Atlanta, GA on November 29, 2006 at 12:13 PM (PDT)

20

Hope Universal goes for it.  And Steve sez no, and artists say, “Why sign w/ Universal, anyway?”, and big record companies go away….

In a somewhat unrelated note, how sweet would it be for Apple to pull a jujitsu move, and start liscensing the Apple AAC to other sales outlets now?  Let Napster, etc sell songs for iPods.  Hell, let artists sell DIRECTLY to iPod owners.  Apple could still get a fee, and it’s not like iTunes makes them much money, anyway.  Plus all those sites must be pretty pissed at MS and PlaysForSure right now….

Posted by Keith Wolter on November 29, 2006 at 12:27 PM (PDT)

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