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Universal Gets a Cut of Every Zune Sale

Thursday, November 9th, 2006 at 9:50 AM - by

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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A guest said: (hide)

Thu Nov 09, 2006 11:04 am

For crying out loud, have they no shame?

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A guest said: (hide)

Thu Nov 09, 2006 11:14 am

Check out this article too:

http://news.com.com/Microsoft+strikes+deal+for+music/2100-1027_3-6133901.html?tag=nefd.top

There is nothing like a parade of overpaid music company executives claiming that everyone who owns an iPod is a thief, a position mandated by their lack of vision and inability to adapt to change (not to mention the sad state of music being produced today). Funny how over the years I've purchased the same albums on LP, then cassette, then CD, and now digitally, yet I'm supposedly the cause of the problem. Seems like they've figured out how to make me pay four times for the exact same product. The real injustice is there is no high profile way to tell these record executive loud and clear that not all of us are thieves and some people find it annoying to be accused of criminal activity without due process (that pesky 14th Amendment thing).

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jfbiii said:

member since 06 May 2004 with 109 posts, unranked, send him a message or view his profile

Thu Nov 09, 2006 11:37 am

If you can't beat 'em, screw up their business model.

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A guest said: (hide)

Thu Nov 09, 2006 12:14 pm

The music execs sound like the bad bankers on the Wa MU commercials.

: )

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Bosco said:

member since 03 Jun 2002 with 1002 posts, unranked, send him a message or view his profile

Thu Nov 09, 2006 12:22 pm

I dunno. This could be a lot of money. Let's say it's $1 per Zune. If Microsoft sells 20 of them this year, they'll have to send an Andrew Jackson down to Hollywood. That could break the bank. Maybe Microsoft gets a better deal on the brown Zunes.

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dhp said:

member since 22 May 2003 with 182 posts, unranked, send him a message or view his profile

Thu Nov 09, 2006 12:45 pm

This deal must have given Microsoft a bit of deja vu.

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gslusher said:

member since 13 Nov 2002 with 2088 posts, unranked, send him a message or view his profile

Thu Nov 09, 2006 1:09 pm

From the CNet news.com article linked by a guest:

Quote:
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.

They must be kidding--or they think that fans are idiots. Where in the article (can't tell about the contract) does it say that any of the money goes to artists? Will Universal be keeping most of it? Fans are not very enthused about the major record labels, to start with.

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A guest said: (hide)

Thu Nov 09, 2006 1:15 pm

To me this looks like a gambit to hurt Apple/iPod (and really any other music player maker that doesn't have MS's deep pockets)... It seems that if MS makes this deal with all of the studios, then they will all want to make similar deals with other sellers... How many companies can absorb the costs and continue selling their players? MS's coffers make it much easier for them to sell the players at a loss now as a means of locking other companies out later (and then changing the rules)...

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Biff said:

member since 08 Apr 2004 with 1479 posts, unranked, send him a message or view his profile

Thu Nov 09, 2006 2:06 pm

Guest wrote:
To me this looks like a gambit to hurt Apple/iPod (and really any other music player maker that doesn't have MS's deep pockets)... It seems that if MS makes this deal with all of the studios, then they will all want to make similar deals with other sellers... How many companies can absorb the costs and continue selling their players? MS's coffers make it much easier for them to sell the players at a loss now as a means of locking other companies out later (and then changing the rules)...
LOL. Did you figure that out all by yourself?

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jadeleary said:

member since 07 Jun 2005 with 20 posts, unranked, send him a message or view his profile

Thu Nov 09, 2006 2:06 pm

This is an abomination. MS should be boycotted outright for opening the door to this. It's basically payola, giving the record industry what it wants in exchange for for what? what's the end deal exactly? not renewing with iTunes next time around? pushing the Zune through Universal outlets?

A few years ago I started a project in response to this sort of behaviour from the record industry. The project has since folded but Magnatune and others have given alternatives. And we can b**tch all we want about Apple, but the fact remains that they've at least had the courage to stand up to the most extreme demands of these crooks. I can't begin to express how angry I am.

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A guest said: (hide)

Thu Nov 09, 2006 4:37 pm

Do they get a cut of every Radio sold? Or a cut of every TV sold? Although they both play music, they only get a cut when thier specific product is being played. This is the kind of snot slobber that'll get on everyone, not just Apple. Do you suppose this is in fear of them losinf thier DRM? Has John scared them much much?

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