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Universal gets a cut of Zune sales

10 November 2006 7:01 by James "Dela" Delahunty | 14 comments

Microsoft Corp. has agreed to pay a fee to Universal for every Zune payer that is sold. The amount given per sales was not disclosed but this represents how Microsoft is desperately trying to break the dominance of the iPod. Several major record companies have expressed beliefs that they should be paid for the sale of iPods and other devices that rely so heavily on music content.

"Rivals including cell phone makers eventually could pay for hardware sales as well as for the music itself," Universal said. "We felt that any business that's built on the bedrock of music we should share in." Currently the iPod has almost an 80% share of the MP3 player market and iTunes is still by far the dominating legal music download store.

Due to these facts, Apple and Steve Jobs have been publicly credited with almost single-handedly creating the legal music download business. However, Jobs' reluctance to give record companies a share of iPod sales and other disputes they have had over the pricing of downloads could come back to bite Apple now that the competition is going to reach over boiling point.

"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," Doug Morris, chief executive of Universal said. "We have a current contract with him and at the end of that I'm sure we'll negotiate," he added (referring to a possible cut of iPod sales). Universal is responsible for one in three CD sales in the U.S.

Chris Stephenson, general manager for global marketing at Microsoft Entertainment stressed that the fee is not a new concept. "It's not a new conversation, it's been out there in the industry for a while," he said. "We've been careful in thinking about it from an economic point of view from day one." Universal believes that the deal with Microsoft may now set precedence for consumer electronics manufacturers, including mobile phone companies as they now compete to offer better music phones to consumers.

You don't have to look far to find out that the music industry has been fighting for these new "rights" for a long time; just look at the proposed "iPod tax" which was described as a fee paid when an MP3 player is purchased to compensate for lost revenue due to piracy.

Source:
Reuters

Permalink to this article

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Discuss this article!
GrayArea (Member) 10 November 2006 7:25
Leave it to Microsoft to cheese the deal for EVERYBODY. This is a terrible, retarded precedent they are setting. Next the greed kings will demand a cut from DVD players, video displays, computer hardware, everybody who makes a dime off internet infrastructure, and hey, we better charge a tariff on your ears and eyeballs while we're at it... Asinine [ + quote]
21Q (Senior Member) 10 November 2006 7:41
I'll be mad if I have to pay extra for my mp3 players to pay the already rich music people. [ + quote]
ahjukhir (Junior Member) 10 November 2006 9:11
I want those asshole music execs to name me one band/artist under their label that told htem explicitly that they thought ipod was hurting them and wanted a slice of the cake. Ya thats right NONE OF THEM DID! The record companies are just trying to make money for themselves, the artists rarely see a penny from these kinda deals [ + quote]
plutonash (Member) 10 November 2006 9:26
wow this sucks a big one. I been pro microsoft and universal regarding HD-DVD but this isnt good. [ + quote]
ZippyDSM (AfterDawn Addict) 10 November 2006 13:14
FCKING GAWD.... The goverment needs to sept in bitch slap the Media MAFAA and give them a tax 1% tax on net/CD/DVD/tapes/ and setup a law that makes only people that sale in volume copied stuff can be sued.... [ + quote]
Unker75 (Newbie) 10 November 2006 14:05
Greedy Music Exec's always trying to squeeze money from somebody! Money hungry bastards! GREED! GREED! GREED! And the consumer pays at the end with recycled cheap a$$ music. They don't care about the consumer. And they never will... [ + quote]
mm2000y (Junior Member) 10 November 2006 14:25
I don't believe Microsoft would have done this if they weren't going to get something in return. My guess is Microsoft and Universal are working together to apply pressure or leverage over Apple to get them to raise prices or share their DRM technology with others, such as Microsoft, when Apples current contract expires. In the end Microsoft will probably benefit the most, and us consumers will probably have to dish out more cash. [ + quote]
duckNrun (Inactive) 10 November 2006 14:27
Be sure to do everything in your power to squash the Zune then people! I was looking forward to this but think I may steer clear now! All MS has done is to give the music industry another revenue stream that they WILL use (as stated in quote in the article) to try to get a cut of ANYTHING that plays music, and hence make the costs more expensive on the consumer while still crying about how they are losing money! They need to think what they would do with their music if there was no HARDWARE to play it on! The way I see it THEY should be paying the hardware people because without there would be no CD/DVD etc sales! [ + quote]
Ghostdog (Senior Member) 11 November 2006 1:36
And they called it greed... It might be worth notice by our foreign friends that in Finland, we already have something similar to "the iPod tax". At the same time it�s illegal to break copy protection mechanisms. I doubt I�m the only one who finds this strange. [ + quote]
Ballpyhon (Inactive) 11 November 2006 2:42
my only question is WHY would universal want a cut of zune sales? did they help develop it? are they investors? what reason do they have to demand a cut? [ + quote]
ZippyDSM (AfterDawn Addict) 11 November 2006 7:26
Ballpyhon Uni crys foul that people are not buying 2 NEW cds every time they buy music so when MS came to them to deal Uni forced MS to fork cash over so Uni can feel better about it self...think of a gold digger GF that got dumpd and found a new BF to stick her claws deeper into... [ + quote]
jziman (Inactive) 12 November 2006 11:22
Greed. It looks like MS is trying to buy off Universal. Or just get them to drop Apple. Oh well not my issue. I dont buy music. But they still get my money through XM royalities. Oh well Damned of you do Damned if you dont. [ + quote]
ZippyDSM (AfterDawn Addict) 12 November 2006 11:25
The goverment realy needs to step in and put a stop to these corporate shenanigans... [ + quote]
Unker75 (Newbie) 14 November 2006 16:49
by ZIppyDSMThe: goverment realy needs to step in and put a stop to these corporate shenanigans... LOL. Who do you think owns the government? The big media corporations. They finance the politicians. They make the laws. [ + quote]