Microsoft To Give A Cut Of Every Zune Sold To The Recording Industry -- Though It's Not Clear Why

from the how-things-evolve dept

While some folks (especially those at the EFF) have been pushing for some sort of compulsory licensing model for music, and others have pushed for a Canada-style plan of taxing blank media to give to the entertainment industry. However, it looks like Microsoft and Universal Music decided to cut out the government middleman and have come to an agreement to give Universal Music a cut of every Zune device sold. It's just like the tax on blank media, but without the government in the middle. The Zune, of course, is Microsoft's new attempt at an "iPod killer," though there are questions about how successful it will really be. It's not clear how much Universal Music gets, but it's more than $1 per device, and they promise to give half of all money received to musicians -- though, they don't say how they'll determine who gets what. The company will still get a piece of every piece of music sold for the Zune as well. While the deal is just with Universal Music, Microsoft has said they'll offer the same terms to "the rest of the industry" as well. While the NY Times piece talks about how "rare" this move is, it's really not all that different than the deal that Universal Music and others struck with YouTube a few weeks ago (other than the fact that that deal was all equity, none of which needs to be shared with artists).

Either way, this raises the question of whether or not this is the "new" business model for the entertainment industry, where they somehow come to agreements with consumer electronics/technology/service providers to simply get a cut of revenue. It's an interesting model that actually does play into the idea that the content helps to promote the sale of the devices, but it also raises a lot of questions. While Microsoft has said that others are free to join in on the same terms as well, that's obviously limited to the major players. What about the indie labels? Microsoft isn't going to want to cut deals with all of them, nor should they. What about those musicians who just release music to the world directly? Should Microsoft offer them deals as well? It makes for a difficult situation that is based on the state of the content world today -- not where it will be in the future. It's also not at all clear why Microsoft did this, other than it may have been the only way to get Universal Music to offer songs in the download store. With Google/YouTube, the deal was obviously to get away from the lawsuit risk -- but Microsoft isn't going to get sued for selling a handheld entertainment device (especially with all of the DRM it includes). About the only reason Microsoft would do this was because the recording industry just wasn't getting behind Zune and Microsoft was starting to get desperate.
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  1. identicon
    Jeff, 9 Nov 2006 @ 6:42am

    Cool! I'm going to start a recording company and then I'll expect Microsoft to pay me as well!

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