Interesting analysis of the Universal deal here: http://digitalmusicnews.com/#111006parting

It appear that this is less about MS wanting to be artist friendly and more about MS not wanting to launch Zune Marketplace without the world's largest music company's catalog in the store.

Doug Morris has done similar things in the past. Earlier this year he pulled all Universal's music videos from AOL's site until they agreed to pay for their usage.

in what way is this FOR the artists?  We are subsidizing record companies for illegal activity?  Does this give us a discount on albums from Universal when we buy from zune marketplace?  This sounds like it will promote more illegal downloading!  Does a share of money go to record labels when I buy a cd player or a car stereo since I might listen to music on it?

Although I do not like the music company that much, its important to understand their logic.

According to them:

1. The whole PMP market is based upon their content. iPod/Zune will not exist if it was not for their content.

2. Most of the music on PMP are illegal. This is true as survey after survey has showed.

So they want in. I don’t know if its right or wrong though.

Ultimately this comes down to the record labels calling Zune owners thieves, and assuming that we're going to load up our Zunes with stolen content. That's insulting no matter how you look at it. If a dozen labels come at you asking $1 each, what happens to the price of the Zune? The consumer ends up paying more in the end. How can this be good for anyone but Universal? It's bad enough that I have to pay a "guilt tax" on blanks CDs and DVDs here because my government thinks that only reason I buy blank media is to burn pirated songs...now this?

But the fact is...peoples mp3 players ARE mostly filled up with STOLEN music. SO why wouldnt they want to protect their property.

BlaQ - a fact should be supported with data. No one has proved this to be true and I don't think a blanket statement like this is fair.

I have over 9,000 songs on my iPod. 200 of them I have purchased from the iTunes store. The rest came from my collection of 400 CDs and my downloads from eMusic.

Rohit, According to this logic, Universal should get a cut of CD player sales as this market couldn't exist without their content. And then movie studios should get a cut of DVD player sales as that market wouldn't exist without the movie content. I don't buy this argument AT ALL!

I love giving money to the artists approach. What makes me skeptical of Universal (and other record labels) is that they won't say HOW MUCH is going to the artists.

You see, if they were being super awesome and giving a very significant chunk of the dough to artist, then why do they not want to disclose it?

I dunno... it just always makes me weary when someone claims, "We're doing something rally great here", but then they won't say what the great thing is.

If anyone from the Zune team is listening, I know a lot of this stuff comes down to business decisions. For the record, I own over 2,000 CDs, subscribe to Urge, am addicted to Shoutcast and Songbird, and run SONAR and Ableton Live on my Windows PC to make my own music. I don't pirate music.

But what bothers me about the Zune is that it restricts control over music I own. I love the idea of using the Zune as a Wi-Fi music server at a gig. But, not only will it not connect to Wi-Fi other than on other Zunes, it won't allow me to distribute music I own -- that I made -- without subjecting my content to the same DRM restrictions as the other music.

This isn't some kind of theoretical argument about DRM. It's a matter of having your electronics decide for you what you should and shouldn't do with music you've created. That's where I get off. I really like the Zune, so I hope these limitations get addressed in a future update.

Many apologies Cesar for the negativity in my previous post and this post but this idea struck a chord in me.  This absolutely in no way makes any sense.  Every record label/movie company/etc. now has the right to ask for a cut... this will only result very very negatively on a business that has just lately started to make a positive legal movement.  This one issue breaks me from buying a zune.  Maybe I should research the deal more but in my opinion MS should be extremely careful about doing something of this proportion.

I find this deal outrageous.  If you are going to ask us to support Zune because it helps to support artists, and not tell is how,  then I find this extremely insulting. Especially, given the history of the music industry.

What about independent artists???  At the very least there should be a pool of Zune revenue set aside and all *paid* downloads/streams should be subsidized accordingly...by a fixed percentage.  This is the only fair and accountable way.  Anything other than this would be extremely **nasty***    but not as nasty as the fact that iTunes Japan has not paid our distributor since August and doesn't seem to care.

here we go again.

signed,

David, The Belligerent.

If MS is going to pay the recording industry, Zune buyers should get something more generous than the very restrictive "three times in three days" wireless sharing scheme. That restrictiveness is going to be a deal breaker for some potential Zune buyers.

Ridiculous. Please don't insult our intelligence. This has nothing to do with Microsoft's heart feeling that the artists aren't getting paid enough. It's simply an incentive that was needed for Universal to allow its content on the Zune marketplace.

Ultimately it's our money that is going to Universal, so what if I don't own any music from Universal, why should my money go to their artists?

Unless you're paying them for the content that comes with each Zune, then it makes 0 sense other than being an incentive.

I like MS's idea with wireless sharing, I think it creates a new market that the labels will appreciate.  Here's some ideas I think it creates:

1) MS could compile and then sell to marketing companies the demographic data gained from the downloaded and wifi shared content.

2)MS could implement a reward system for the Zune user. Prorate it to the number of wifi shared songs or downloaded content.

3)Offer free or reduced concert tickets when an artists full catalog is downloaded or present on the Zune.

4)Have artists offer discounts to their online stores where T shirts, hats, posters are sold to Zune memebers that have subscription accounts.

5)Attach commercial segments to video downloads.  The commericals will be deleted from memory after they are wifi shared, and then the music video is free.

Want to add a lot of music AND truely support artists!

Make a deal with CD Baby! Get 156,148 artists on Zune marketplace and the money will really make it to the artist!

All what this MS-Universal deal does is shortcut the official rights-management societies (e.g. the American Society of Composers, Authors and Publishers in the USA aka <a href=http://www.ascap.com target=new>ASCAP</a>), and therefore the ones it represents: the musicians. Cesar, do you really believe what you're writing here? We don't... ;-)

i find this post as more of an "official" statement.  cesar, there is no way you honestly feel this way.  i know its business. and is cliche is the sounds, this is totally something microsoft would do.  im not mad, im disappointed.

Pedro nailed it...

Paul Thurrot nails it in his column in WindowsITPro:

http://www.windowsitpro.com/windowspaulthurrott/Article/ArticleID/94188/windowspaulthurrott_94188.html

I think a lot of people are a little pissed because this smacks more of PR rather than truth. We know that there are deals to be uncovered. There are reasons for this other than the what has been said.

People should understand that in many places, blank CDs, hard drives, or other media is or could soon be taxed for similar reasons.

If this new 'tax' goes over with out many hitches, it can also place MS in a good position to ask computer hardware makers/vendors to do much the same... MS could charge not only to purchase MS Windows XYZ but also 'tax' for your hardware based on the fact   that something like 90% of the world outside of the US uses pirated MS Office and other MS related software.

I know you said that you are looking into paying indie labels as well... But like most things, if this was solely about paying artists, etc., then it won't work with out a more direct approach. I.E. perhaps we get a discount with our players in order to upload Zune track data back to MS (much like those error report windows you see once in a while) so that MS can track what people -are- listening to and compensate musicians/labels more appropriately. What would be needed aside from a bit of software? Better track identification (i.e. MS will have to actually find those rare tracks, records, underground bands, etc. - which won't happen just to deliver $20-$100 in 'commissions').

Oh well. I was thinking of buying a Zune. Really, I've been counting down the days since September when I told my wife that I'd rather get a zune than a present on my birthday... But now I'm not so sure. I might just get an iPod or find a alternative hard drive player. I wouldn't think much about this dollar 'tax' if I hadn't of found out that this was completely voluntary. This is not a required tax. MS may set off a chain reaction of related taxes for other bits and pieces of hard ware. And I'm sure that should I choose a Zune, all of those local bands whom I've bought CDs from in the Portland, Ore area... Well... They'll never see a penny from MS. It is simply PR to cover potential changes to the music/hardware/computer industries. /Sigh.

Unfortunately, I can no longer support the Zune.

I would not surprised me that Microsoft offered to pay Universal, just to create conflict between records companies and Apple. Record companies do not want a share of Zune, they are dying to get a part from iPod sales.

In the end, Microsoft is not the one helping the artists, but those people that buy the Zune. Microsoft will pass the tax to consumers.

Cesar, that's a line of bullsh*t, and you know it.

If Microsoft really cared about the artists, they would be finding ways to circumvent major labels (those vampiric entities that suck the very lifeblood from the real content creators), not support them with a per-unit tarriff.

I once held high hopes for the Zune. No longer. Good luck, you sick weasels. I hope Apple, Google and Linux crush you until you can't breath, and Microsoft suffers a painful, brutal and humiliating demise. Your time is *over*.

http://daringfireball.net/2006/11/buy_that_for_a_dollar

Companies make deals for secret competitive reasons all the time. We shouldn't expect Microsoft to detail what is really going on, for the benefit of their competitors. My hope is that, in exchange for payment, Zune owners will get some kind of "extra goodies" from UMG, that iPod owners won't.

Cesar, If I read this correctly, Microsoft really wants to be artist friendly, but they only want to be friendly to Universal artists - the world's largest music company - but not to all the independent artists you've been touting on this, and other, blogs, correct?

This seems like a load of crap. You're telling me that Microsoft went to all the other record lables to offer to pay royalties off of each Zune sale, but you could only get Universal to accept the money?  Please, who's gonna believe that?

So if the cost of Universal content is included in the cost of a Zune, then all Zune users should get any Universal content at a huge discount since we've evidently paid for it already. I understand if Microsoft wants to get a few cents (or even fewer "points") out of each purchase, they have that right, but if we end up paying the same price for Universal content as everything else, then they should lower the price of the Zune by whatever amount Universal is charging Microsoft per device. Will that actually happen? Unlikely at best.

The worst implication of all this is that Microsoft has automatically labeled every Zune customer as a thief and a criminal. So thanks Microsoft, as if we don't get enough of that already from the RIAA and MPAA.

what on earth is wrong with you people? We have plenty of iPod/Zune competition from China and Korea with no restrictions and no backroom deals with America's oh-so-precious industry.

Put your money (and your time) where your mouth is and leave the Zune to rot.

Ok, a few things. One, of course me (and other Microsoft people) read the comments. Thanks to everybody who left a comment. Pedro, in no way did I mean to insult yours (or anyone else's) intelligence. the fact is, we don't get to success by upsetting before we even start. it's commonly known that the existing model doesn't make the major labels happy.

chris, we're not 'passing the tax' to consumers. price stays at 249.

"find ways to circumvent the labels," coq? are you actually serious? ;)

now, before you knocking universal itself, consider this. do you like gnarls barkley? with universal. queens of the stone age? on universal. sting? on universal. 50 cent? yep. my favorite band right now is tokyo police club. their first EP: distributed by universal. so we're about good partnerships.

Scott, as for this setting a precedent (does this mean that book publishers want a royalty on all copiers sold etc), this deal with UMG and all of our discussions to date have focused solely on the Zune device.

And I say we're about supporting the artists because that's what we're about. if this is your first introduction to Zune, then it's a bit hard for you to believe me. no worries. look through the other posts on this site to see some of what we're doing to support artists. read the interview w/ bitter:sweet. and yes, the artists are getting a cut. it'll start with universal, but like I said, we're talking to other labels, indies and majors. patti, we've got talks in place (we don't discuss the specifics of deals in progress, for a number of reasons).

anyways, thanks for reading this, and please keep the comments coming. - Cesar

I dunno, I mean the price was announced and no one complained, now they see some is going to UMG it's a problem.  Now we all know that not a dime will go to the artists, most artists (with the exception of some massive ones) make their money touring.  Mainly due to the various unnecessary lampreys that suck a cut along the way to production.  Now I am not saying UMG but in the CD business there are any number of ways that the price of music is kept inflated.  Seems to me UMG are just looking for a way to make sure that price fixing status quo can remain with digital media.

All of my music is Legal BlaQ, from CDs and dowloads - but I will never be using iTunes or Napster or the likes of them as far as things satnd.  Looking at it I imagine I will be using Marketplace (if it ever mnakes it over to Europe) very little too, which is a shame really.

I think most people reacted badly to this post because the implication is that the fact that Universal now not only want to own music, but the ability to play the music is in any way 'for the artists'.  No artist will see a any of that money.  It's exactly the same scam as was run with Google and YouTube - they gave  a huge lump of cash to the owners of the copyrighted video content, (TW I think?) who then said 'Oh, we've got no idea how much to give each artist as we dont know the proportions of who watched what, so we'll just keep the cash eh?'.

I'm rambling, sorry!  I just think trying to make this out to be anything other than Universal threatening to take their ball home and Microsoft capitulating is a bit insulting. (Whew! getting a bit more lively in here as launch date approaches  eh?)

OK, I'm sorry! I appear to have lost the ability to communicate effectively in English in my last reply.  This is worrying given that it is the only language that i am supposed to be fluent in.  I think I better give up on English altogether and start afresh by speeding up my Spanish lessons....

Matt, thanks for commenting. re: "No artist will see a any of that money." actually they will. please don't assume that not disclosing the details of a deal = artists won't get paid.

I know the tendency is to jump on the bandwagon, assume the worst, and bash "Micro$oft". Sure, some of that is warranted and I want to see you post honest stuff here.

We've got a long ways to go, being a responsible partner to labels, a company who supports artists, and pushes technology forward. we need a new set of rules :)

Thanks everybody for chiming in. - cesar

It is in my opinion that MS got pwnd on this one. No other DAP player that I know of pays this tax/roalty.

All of the reasoning/excuses behind it are paper thin. I would call this a forced partnership at best with artists getting jack in the end. I'd love to see the formual to see which artist gets what cut in the end let's see. Jonh Mayer you get a check for $2.00. Tracy Chapman here is a $1.38 for you.

What next Ahead giving a couple of bucks to the BSA for every copy Nero sold. After all we all know that Nero is only used to pirate software anyway. (Tounge firmly planted in cheek)

TurtleJP

Microsoft's iPod competitor, Zune,

This is weakness and you're just bending to the Music Mafia. Steve Jobs is someone who stands up to the music industry and changed the whole game for everyone. All you can do is pay the music industry they extortion demands? Weak.

Greedy? I'll show you greedy!

Even the 'user' comments here are written by marketing! Awful, awful stuff.

I don't see how the artists CAN see any of the UMG cut, uunless it is evenly distributed to each artist under the UMG label?  I could understand it if they demanded a cut of every tune/video sold, but this way seems unworkable.  As I said, a similar thing happened with YouTube, and the publisher just ended up keeping the proceeds.  It's good that you are in talks with the indie lot too though.  The whole MS bashing I've tried to avoid of late because I genuinely think that they have done great things, particularly with Live, over the last few years.  I still intend on getting a Zune because I'd rather eat my own spleen than use iTunes again.  Sadly there is no nano equivilent as yet so the non-techy girlfriend will be getting one of those for Christmas.

Come on!  You're telling me that 10 months isn't long enough to turn around a complete MP3 package as well as a mini offering? rubbish! ;)

I will now buy a Zune because all of the music I have been stealing by downloading online will be covered by the de facto license Microsoft and Universal created when they added the license surcharge onto the cost of the Zune.

I figure I'm getting off cheap as I think I have in excess of 20,000 songs, all downloaded, all free and all covered!

What's better than that?

Thank you Microsoft and Universal for giving me a guilt free, honorable way to continue adding to my collection all the while insuring that the artists are completely compensated for their time and trouble.

musicthief.

Two things:

<<< now, before you knocking universal itself, consider this. do you like gnarls barkley? with universal. queens of the stone age? on universal. sting? on universal. 50 cent? yep. my favorite band right now is tokyo police club. their first EP: distributed by universal. so we're about good partnerships.  >>>

No, I loathe every one of the aforementioned.

<< we need a new set of rules :)  >>

Sure do. And record companies aren't included.