More Microsoft Zune BS, Secret Goal=Make Ipod Cost More

Discussion in 'iPod' started by mdntcallr, Nov 9, 2006.

  1. mdntcallr macrumors 65816


    Aug 1, 2000
    Microsoft is trying to change the portable music player market. With Xbox and xBox 360, they have lost 4 billion dollars. Now they plan on not only losing money with each unit sold of Zune, but they want to make it industry standard to pay a royalty to record labels for each unit sold. Weird... but you know this strategy is decidely to try and make apple pay money for the ipods. thus raising their costs. and our price to buy the players.

    Microsoft is devious!!! and decidedly evil. wish they would just let apple be.

    They may want to justify this as labels have been paid money by Sirius and XM for some players which can save content for later play. ie their ipod like models. but this was hardly a call for industry wide payments. the only reason why they are doing this is to try and sabotage apple's most successful product line for growth. (aside from laptops, but they sell more of these cause ipods are driving attention)

    Universal Music Group has opened yet another revenue stream, and this one’s a biggie, as Microsoft agrees to pay UMG an undisclosed fee for every Zune player sold. The two companies made the joint announcement this morning. This fee is in addition to the standard payments Microsoft will make to UMG for the sale of its music. The software giant plans to offer a similar arrangement to other major music labels and music publishers.

    For perspective, imagine a world in which Apple had paid the majors for every one of the tens of millions of iPods it sold in the last five years. Whoa.

    “It’s a major change for the industry,” David Geffen told N.Y. Times reporter Jeff Leeds, who broke the story. “Each of these devices is used to store unpaid-for material. This way, on top of the material people do pay for, the record companies are getting paid on the devices storing the copied music.”

    Leeds further noted that UMG had plenty of leverage in the negotiations that resulted in this groundbreaking pact: Microsoft couldn’t launch the device and service without content from the #1 major.

    "This agreement with Microsoft around Zune is a significant milestone for our company and our artists," said Morris in a statement. “This move demonstrates there can be a win-win situation where consumers have a great experience while labels and artists are also fairly compensated. We applaud Microsoft for its innovative and consumer-friendly Zune store and device."

    Microsoft Corporate VP of Entertainment & Devices Bryan Lee chimed in: "This is an industry in transition, and we at Zune feel that artists should be paid fairly. The agreement we are announcing today is one of many innovations we plan on introducing to the entertainment industry with our partners and highlights our commitment to growing the digital music space. We believe that the music consumer will appreciate knowing that when they buy a Zune device, they are helping their favorite artists get paid."

    The Zune device and online store, which launch next Tuesday (11/14), will include content from all of the Big Four as well as most of the indies.
  2. Queso macrumors G4

    Mar 4, 2006
    Even if it's $10 per Zune, it translates to nothing if the unit does not sell. If Zune fails as we all expect it to, the labels have no more leverage against Apple than they had six months ago.

    The writing is on the wall for the major record companies. Artists are selling their music directly from their MySpace sites. They aren't going to be making billions via this route, and if anything they are alienating their customers further with their pronouncements about "not paid for" content.
  3. Blue Velvet Moderator emeritus

    Jul 4, 2004
    This 'undisclosed' fee is something that Apple apparently drew the line at... but if the labels can get a revenue stream from elsewhere, that doesn't bode well at all.

    Personally, I find it outrageous. Especially because my iPod is full of content, every single song paid for. It's like paper manufacturers wanting a cut from ink suppliers...
  4. Loyalizer macrumors newbie

    Jan 16, 2003
    Zune's Deleterious Affect on iPOD Future ?

    This I read today @ - this can be very disturbing...

    Microsoft to pay Universal for every Zune sold

    Thursday, November 09, 2006 - 12:24 AM EST

    "Microsoft Corp. has agreed to pay Universal Music Group a fee for each new Zune digital music player it sells when the iPod rival launches next week, the companies said on Thursday," Yinka Adegoke reports for Reuters.

    "The groundbreaking deal could redefine the digital music business pioneered by Apple Computer Inc.," Adegoke reports. "Microsoft is trying to break into an industry closely aligned with archival Apple, which is credited with nearly single-handedly building the legal Web music world with its iPod players and iTunes music store."

    Adegoke reports, "But Apple does not give a cut of sales of iPods to music companies. It only pays labels for songs sold on its iTunes music store."

    "'We felt that any business that's built on the bedrock of music we should share in,' said Doug Morris, chief executive of Universal, owned by French media giant Vivendi," Adegoke reports. "He did not disclose the amount of the fee for the Zune, which launches next Tuesday."

    "The iPod has a nearly 80 percent share of digital media player sales, and its iTunes music downloads site is also the dominant online music store," Adegoke reports.

    Adegoke reports, "Like other record companies, Universal has a revenue-share deal with iTunes but no share of iPod sales. 'We have a current contract with him and at the end of that I'm sure we'll negotiate,' said Morris, whose company accounts for nearly one in three CDs sold in the United States. Morris said the deal could set a precedent in negotiations with other device manufacturers, including mobile phone makers, who are increasingly seeing music as important to the future of their businesses."
  5. MacBoobsPro macrumors 603


    Jan 10, 2006
    Its getting easier and easier to make and distribute music. Soon artists will create there own tracks (on a Mac of course) then create their own website to distribute it. Cutting out the middle man and maximising profits for the artist. Whoever comes up with a consumer DRM system will be a big winner as it will allow these new artists to protect their work while still maximising profits.
  6. Porco macrumors 68030


    Mar 28, 2005
    Yes, because I always listen to my CDs at the same time as listening to my MP3s of them. :rolleyes:

    They want it both ways, whether they are talking about copying tracks from a CD or pirated downloads.

    They say that we are effectively buying a 'license' to play the music on a CD, that we own the physical CD, not the rights to the music. But if that is true, the 'licence' is not a physical thing, and so should be transferable to a copy on an MP3 player. If it's not true then we own the CD including the music and we can do what we like with it anyway. It's just about getting people to pay for the same thing twice.

    If he's talking about pirated music, then how do you get the money from people who steal the Zune as well as the music they put on it? It also penalises every person who has never pirated a music track in their lives and encourages the idea that it's perfectly fine to pirate music, after all if that's why they're getting the money what incentive is there to spend an 'undisclosed'[!] portion of the Zune's price on music rather than pirating it instead?

    As for Microsoft, why don't they cut the complicated tactics and just give the music companies a big fat pile of cash to dump iTunes!? It wouldn't be too different.
  7. Loyalizer macrumors newbie

    Jan 16, 2003
    Orwellian Economy

    Microsoft has nothing to lose, they could be giving up insane concessions to music companies to force Apple hand in renegotiations in the future with the music industry. If all the companies demand a cut of every iPod sold then that translates into higher cost for consumers...

    This is a competitor to the iPod that must be defeated, Hopefully going down Zune......

    This is scary - an odd form of Orwellian economics....
  8. OllyW Moderator


    Staff Member

    Oct 11, 2005
    The Black Country, England
    Microsoft must be totally desperate to get in with the music companies.

    Let's hope they don't need to pay them a lot then. ;)
  9. Queso macrumors G4

    Mar 4, 2006
    Not going to make one jot of difference unless they also get in with the consumers. Unless Zune takes off, this is just another "iPod killer" rumour that'll come to nothing.
  10. Spanky Deluxe macrumors 601

    Spanky Deluxe

    Mar 17, 2005
    London, UK
    This doesn't matter. No one's going to buy a Zune anyway. The only companies that will lose out will be Creative and the like who currently offer alternatives to iPods. The small minority that choose to not buy an iPod anyway would consider the Zune. Everyone else will buy an iPod. Because its cool. Microsoft is not cool.
  11. haleyvan macrumors regular

    Feb 26, 2006
  12. OllyW Moderator


    Staff Member

    Oct 11, 2005
    The Black Country, England
    Perhaps Apple can get the music labels to pay a fee for every CD sold because it's possible they may have used Logic Pro in the studio during the recording of the music.
  13. Queso macrumors G4

    Mar 4, 2006
    Most people I speak to haven't even heard of it. When they go look on the web, they all pretty much say the same thing.

    "I'll stick with the iPod."
  14. Toe macrumors 65816


    Mar 25, 2002
    "We feel that everyone should give us money for everything, and that we shouldn't have to do anything in return."

    Typical music industry rep. It's almost enough to make me want to steal music. The friggin' nerve!
  15. Object-X macrumors 6502a


    Aug 3, 2004
    Microsoft is DOOMED!

    "'We felt that any business that's built on the bedrock of music we should share in,' said Doug Morris, chief executive of Universal, owned by French media giant Vivendi," Adegoke reports. "He did not disclose the amount of the fee for the Zune, which launches next Tuesday."

    That is such BS! No one in business does this sort of thing without a financial reason. The reason is that by signing more lucurative deals with the music companies Microsoft hopes that it will encourage Music labels to pressure Apple to do likewise thus cutting into their profitability.

    Microsoft can't win on innovation, product design, or value, so they will throw money at the problem hoping to hurt their competition and make it easier for them to gain a foothold to sell their crap.

    This has nothing to do with music, and everything to do with the threat OS X is to Windows. Apple's resurragance is being fueled by the success of the iPod, hurt that and you cripple it's halo affect. The problem is that it may already be too late. Apple's market share will soon cross double digits, Vista will be a failure, and the demise of Microsoft will be more openly discussed.
  16. emotion macrumors 68040


    Mar 29, 2004
    Manchester, UK
    Yeah, all my music is payed for. Absolutely nothing is ripped off.

    If this becomes the standard I'd consider it my right to rip off music from any of the companies (Universal etc etc) that get this cut. It's only fair no?
  17. robbyx macrumors 65816

    Oct 18, 2005
    Greedy industry pigs

    Is this for real? So now the music industry automatically assumes that everyone is a criminal? I buy *ALL* of my CDs. But with an attitude like this, why should I?

    What's next? Does the music industry get paid for every CD player sold, every radio, every hard drive (after all, they store music too)? Where does this stop? I applaud Apple's resistance to these heavy-handed tactics. This is one more reason Zune deserves to fail miserably.
  18. interlard macrumors member

    Jun 30, 2004
    Bring it on, Univerasal A**holes!

    I've been buying plenty of CDs and iTunes songs, but if the big record corporations threaten Apple with this crap... and win, I will seriously consider not buying any more music.

    If the companies feel they are getting their money from an iPod tax so be it. Consider yourselves paid. Now go out and find another job, 'cos that's all you're getting.

    It's just the bands I feel bad for. I'll just have to buy their t-shirts. I know they get a share of that money.
  19. jettredmont macrumors 68030

    Jul 25, 2002
    Here's the deal. You're a convicted monopolist sitting on hundreds of billions of dollars in cash. Your competition is either nearing bankruptcy or, at best, has tens of billions of dollars to support themselves. How can you use the cash advantage to support your new music player?

    Use the cash to subsidize your music player, selling it for, say, $100 instead of $250? First, you'll run afoul of "dumping" charges given the presence of equivalent devices already in the market at the non-dumped price; you can provide better features at the same price sold at a loss, but not for a significantly undercut price. Second, though, you will have a devil of a time ever making money from the device; once the competition dies off, you won't be able to raise prices without class action lawsuits. Still, you could stagnate the technology at that point until the cost of producing the device comes down to the price you are selling it, but that's an iffy proposition. You can go this route, but there are limits. Sell the device which costs you $400 per unit for $250. That's about it.

    Use the cash to bribe record companies to not use a competitor's product. This would get you, pretty quickly, into legal troubles. Still, again, you can do it, just not to a huge extent. The main thing you need is a good cover.

    Cover? Did we say cover? How about this: since our new device is useless without music, we'll give a small "fee" to the music producers of the world out of the goodness of our hearts!

    Voila! A way to use mountains of cash to purchase market favorability without directly running afoul of corporate governance laws!
  20. Queso macrumors G4

    Mar 4, 2006
    Exactly what they want. Easy income whilst putting out the same commercialised repetitive sh*t that nobody wants to buy.
  21. narco macrumors 65816


    Dec 9, 2003
    Maybe Microsoft had to pay the fee because of their Wireless song swapping capabilities? That seems like the easiest way to pirate music (speaking of non-DRM files, of course). Either that, or Microsoft is trying to buddy up with the labels so that they can cut better/exclusive deals. Again, Microsoft isn't innovating, they're just using their money to buy popularity. Totally lame.

  22. BoyBach macrumors 68040


    Feb 24, 2006

    I have over 4,500 songs in iTunes, all ripped from my own CD collection or bought from the iTunes Store. If these music companies continue with their current attitude then I'm with you.

    It will be: Bit Torrent here I come = no money for the music companies from me.
  23. balamw Moderator


    Staff Member

    Aug 16, 2005
    New England
    Apple could always make a deal with the labels like the one they made with Creative.

    In this case it might be: We'll pay you $X per iPod, but if you sell more than Y tracks on iTMS it goes down to $X/2 and if it's 2*Y go jump in a lake you've got an established revenue stream.

  24. Toe macrumors 65816


    Mar 25, 2002
    Hm, yes... they should get a cut on every set of headphones and speakers too. Oh, and on every car. And every telephone, 'cause who knows... those might carry music too.

    I think we'd all be better off if we each just sent $5,000 to the music industry every month.
  25. gregarious119 macrumors member

    Oct 21, 2005
    Reading, PA
    New agreement with Steelcase

    In other news...Steelcase Corp. will be paying Sony a small fee for every bookcase and hutch sold in the United States.

    "Steelcase is honored to be able to store Sony CD's on their shelves. We'll be happy to pay them whatever is necessary for this honor"

    On a related note, Pioneer will be paying Arista Records a small fee every time one of their CD players is sold.

Share This Page