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View Full Version : What Microsoft Thinks of the Universal Deal

Darius Wey
11-10-2006, 12:50 PM
<div class='os_post_top_link'><a href='http://zuneinsider.com/archive/2006/11/10/on-the-universal-deal.aspx' target='_blank'>http://zuneinsider.com/archive/2006/11/10/on-the-universal-deal.aspx</a><br /><br /></div><em>&quot;Today we're announcing that we'll pay UMG a per device royalty for every Zune player sold &ndash; a first in the industry. Why? We're about supporting artists, and ensure they continue to prosper with the emergence of the digital music model. The distribution of digital music isn't that old, and the current method isn't really doing a lot to compensate artists fairly. We worked closely with Universal to create this revenue opportunity for artists, as the industry transitions to a time when it can fully take advantage of new opportunities that digital experiences offer, both for consumers and for artists and labels.&quot;</em><br /><br />There were more than a few eyebrows raised yesterday when it was <a href="http://www.zunethoughts.com/news/show/216/universal-gets-a-cut-of-zune-sales.html" target="_blank">revealed</a> that Universal would be getting a cut of Zune sales. Unfortunately, Microsoft and Universal couldn't talk specifics, but the former did <a href="http://zuneinsider.com/archive/2006/11/10/on-the-universal-deal.aspx" target="_blank">raise a couple of points</a> today that I thought were worth sharing. Firstly, a portion of the cut goes to Universal's artists. Now who the artists are and how much of that cut they get is still a question mark. We did say they couldn't talk specifics, right? ;-) Secondly, Microsoft is talking to other labels (indies and majors) about the opportunity to participate in a similar manner. Yes, we'll give you a minute to get your head around that one. It's a &quot;power to the labels&quot; approach that not everyone is going to want to embrace. The upside of all this is that there'll be more tracks pre-loaded on the Zune than first announced, and there'll be more tracks available for purchase in the Marketplace (yay to choice). The downside is that over time, the strong-arm tactics of the labels is only going to worsen (nay to money-grubbing). They'll make money off the songs. They'll make money off the hardware. Soon, it'll be your clothes, and your soul.

11-10-2006, 02:37 PM
"Why? We're about supporting artists"

Yeah, right. And if you believe that, I've got a bridge to sell you. More like "Why? Because Universal forced us into it and we had no other choice." It is cool that Universal is giving some of the money to artists, but don't believe for a second that MS agreed to this out of benevolence and generosity. It will be interesting how this plays out in the DAP industry.

Vincent M Ferrari
11-10-2006, 05:39 PM
The speculation can officially end now. Microsoft's obvious allegiance is not to its customers, but to the labels. A deal like this will never be good for consumers no matter how much they spin it. Now the DRM on the squirting makes sense.

And, because Microsoft is now buying off labels, you can bet labels are going to expect the same out of other manufacturers which means so long small guys if you can't afford to play.

It's only a matter of time.

11-10-2006, 06:22 PM
I get the model. Hey Labels will pay you that way your artists will owe us and you and your artists will propel us to the tip top. It is an interesting strategy that we really haven't seen much, if at all.

However; I worry that such a precedent will only result in gouging of hardware and music as labels decide that they are integral to sales. <O:p</O:p

I mean I do feel for the artists who are losing money in this digital world. To me it is the whole love of money or love of what you do issue, but that is a whole 'nother rant. Hopefully this will only benefit customers. <O:p</O:p

Janak Parekh
11-11-2006, 10:57 PM
The speculation can officially end now. Microsoft's obvious allegiance is not to its customers, but to the labels. A deal like this will never be good for consumers no matter how much they spin it. Now the DRM on the squirting makes sense. Actually, I don't think Microsoft actually likes the labels. I think this is just marketing spin on Microsoft being between a rock and a hard place.

But yeah, I don't trust the next steps MS might take in this direction either.


11-13-2006, 04:51 PM
This may be the slippery slope' that everyone worries about, but in the short run this may be a good thing. Microsoft has got it's work cut out for it going up against the iPod, so they are trying to play catch up. If Microsoft starts offering this deal to the labels, which player do you think the labels will want in the hands of every consumer.

Now you may think that the labels can't influence consumers that much but think about it. There are tons of iTunes exclusive songs, or songs released there before anywhere else. That could be easily switched to the Zune Marketplace. Next up could be playlists for TV shows owned by Universal. And the Artists could get involved too.

All in all, it might help them catch up quicker than relying on their own marketing.