In a radical departure from how record companies have been compensated for the digital sales of their music, Microsoft will pay Vivendi’s Universal Music a royalty not only based on the songs it sells via its Zune music store but also based on the sales of its upcoming Zune music player. Universal, which accounts for about one-third of all digital music sales, will receive $1 for every one of the $250 devices sold.
Although federal law affixes fees to certain recording devices, the funds from which are then redistributed to record companies, MP3 players and other new digital audio players don’t have to pay this fee, a fact that has rankled record companies while Apple has profited from the sale of tens of millions of iPods.
Now, clearly, Universal Music is doing what it can in private negotiations to get its share of the revenue generated by these devices. Microsoft says it stands ready to cut comparable deals with other record companies, a posture dictated by necessity — Microsoft’s Zune has an uphill battle to take market share away from Apple’s iPod and the company doesn’t stand a chance if its music store pales in comparison to iTunes.
Based on the early reviews, Microsoft needs all the help it can get. David Pogue offers this review of the Zune in today’s New York Times and although he likes a lot of the features (rubberized, fingerprint-proof cover, good sound), he finds some of the features annoying (Wi-Fi that doesn’t connect to a router?). Bottom-line: Zune is OK, but it’s just another example of Microsoft’s “me-too” business philosophy.
But what, exactly, is the point of the Zune? It seems like an awful lot of duplication — in a bigger, heavier form with fewer features — just to indulge Microsoft’s “we want some o’ that” envy. Wireless sharing is the one big new idea — and if the public seems to respond, Apple could always add that to the iPod.
Cynthia Brumfield at 9:11 AM|Comments(0)
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