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Universal Gets a Cut of Every Zune Sale
Wednesday, November 8th, 2006 at 2:00 PM - by Jeff Gamet
Microsoft and Universal Music Group have inked a deal where Microsoft will pay the record label a fee for every Zune media player sold. According to InformationWeek, Microsoft may be using the tactic to help the Zune hold its own against the iPod. Microsoft's handheld music and video player is scheduled to be released next week.
Doug Morris, chief executive of Universal, commented "We felt that any business that's built on the bedrock of music we should share in."
He also noted that his company's deal with Microsoft could set an industry precedent where other media player and cell phone manufacturers have to negotiate fee deals with the record labels.
Apparently, Microsoft is negotiating with other record labels, too. Microsoft Entertainment's general manager for global marketing, Chris Stephenson, said that the fee concept isn't something new. He said "It's been out there in the industry for a while. We've been careful in thinking about it from an economic point of view from day one."
Currently, Apple doesn't pay kickbacks or fees to record labels for iPod sales. Instead, it pays a licensing royalty for each song sold. But Universal may want to change that. Mr. Morris stated "We have a current contract with [Apple] and at the end of that I'm sure we'll negotiate."
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