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Microsoft is hoping that this will make Apple pay royalties to Universal, but MDN's take is right on. Universal needs Apple more than the other way arround. Just one more nail in the Zune coffin.

In related news, Apple expect to laugh in their face while trying to find a diplomatic way of saying "fsck off!"

Ummmmmmmmmmm............... ok, ok, ok, lets all calm down now ok?

So if I have one track that's not been paid for, that falls into 'Up to 95% of music tracks on a typical iPod has not been paid for." Wot a load of rubbish.

BTW-All my tracks are paid for.

Freddy: Pretty calm over here. Just laughing a bit at the audacity of Universal expecting royalty from the sales of iPods. Even if people who use iPods listen to pirated music on them, exactly why does that mean Apple should pay compensation for it? Do gun manufacturers pay compensation to families of people murdered using their products?

I use my iPod as a diagnostic tool. I've got an OS on it, dozens of disk images, and every utility I need to boot and troubleshoot the Apple's I service.
MW "music"!!!
Music? What music?

Its clear that MS wants to take the iPod down with the Zune during 2007, that's all this is about. I want to believe that Universal sees this for what it is.

Pog

I think apple with take the simple route and just say . . . fsck off!

Quote MDN take ; "The facts: up to 95% of the tracks on a typical iPod are not tracks that were purchased online. Most tracks on an iPod come from CDs that users have purchased and ripped. "

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Actually, many people in the music industry consider tracks that have been transfered from the original purchased medum (CD) to another medium (iPod) to be 'un-paid for' ..

Carefully read the link below to understand the legal aspect of this idea.

http://en.wikipedia.org/wiki/Audio_Home_Recording_Act

The law actually considers such transfers to have value to the copyright owner. We will likely see the industry become more dilligent in enforcing their implied rights to charge for such transfers, including more fees on hardware.

Microsoft - in a pathetic desperate move to gain credibility.

Pretty soon tire manufactures will demand a cut of car sales - even though you never buy their tires.

That is just the lamest business plan ever. I hope MS pays a LOT of cash to Universal.

They are gonna Zune themselves.

Let's all sit back and watch Microsoft crash and burn.

It's going come to a showdown, at high noon.

It will be Apple vs. Universal and this is one fight Apple must win. I hope that when the showdown happens, Steve will have all his guns lined up and unleash them before the twits at Universal even know what hit them.

Because this fight is unavoidable, and necessary, in order to run out the greedy bastards from town once and for all.

I still buy cds and rip them more than I download from iTunes, but I like the idea of digital downloads best, if done right. I wish we could choose the quality of the downloads, plus have digital booklets with the same lyrics and artwork as you would find on the (physical-format) cd.

When the recording companies agree to place their music on iTunes Store, they are very well aware of the FairPlay DRM being used by Apple. If they don't like the established DRM of iTS, then they can take their online music sales elsewhere.

After such a successful iTunes/iPod system, Apple isn't about to change the user's restrictions.

Perhaps Apple should start using a Microsoft-like point system where 1 song = 79 points and you must buy at least 400 points at a time ($5.00) before you buy the song. Some marketing dweeb convinced his Microsoft bosses that people will be so confused and think the song appears to be $.79 when in reality it is $.99.

Like everything else, Microsoft obviously doesn't have the brains to actually create innovative products, so they just try to buy their way into the music industry by offering a share of the dead-before-it-hits-the-shelves Zune. I see no reason why Apple needs to share it's hardware profits with the music industry.

M$ and the music labels are scared of Apple and they see that Apple's growing stronger. How did that strength develop? A straightforward approach to customers: this is what we offer, take it or leave it. No need to dupe anyone. A known, certain quality for a consistent price.

This is in contrast to 40 different versions of Windows and Office and "flex" pricing for music. Oh, you like this little extra thing, well, you're gonna' pay!

Apple seems like they charge a premium price until you realize they don't try to sell crap, then up-sell you the good stuff.

I don't think M$ and the music companies realize that iPod isn't successful because of the music store. It's successful because it's really, really good at what it does. Even if the iTunes store closed, the iPod could continue to grow-- people want their media with them. They don't care where it comes from.

Microsoft. Seriously-- you suck. Hard.

Ummm...I beg to differ. If record labels and companies demand royalties as a group, Apple will have to capitulate or close the iTunes Store....what Microsoft did was make a deal with the devil and made a short term great, long term bad business decision for all MP3 players....

Well, there is always one drunk trying to throw a wrench in the party machine.
And they weren't even invited...

and in other news the music industry has demanded portable cd player, home hi-fi, in car stereo manufacturers to pay a fee to them to compensate all the cd-r piracy there is in the world else it would stamp around the fall on the floor crying and kicking it's arms and legs then eventually hold it's breath till they give in


typical m$ move always trying to buy it's way into something with a crap product and force others out

The store makes a small profit. Statistics show that a relatively small amount of songs are legally downloaded-- most are bought and ripped from cds, or stolen. While the iTunes store is the "face" of the iPod system, it's not really the heart of it. Remember, the tv shows are not at play in this dispute right now.

Notice: iPod/iTunes Application Jan 10, 2001
iTunes Music Store Apr 28, 2003

The iPod was successful before iTMS. It will be successful without iTMS.
At this point Pod-casts, TV shows, etc. are driving sales as much as music.

No way iTunes is closing up shop. The record labels are the only ppl making REAL money off iTunes anyway. Greedy, filthy bastards. The artists get jacked as well.

I think record labels are in their death throes. Who needs them, anyway? Get rid of the middle man.

Good riddance.

m

Up to 95% of tunes on a typical iPod has not been paid for???

Apart from the bad English, I resent that comment. Vivendi was taken over by one of the young Bronfman's....the son was a drunk and a crack head. He almost made Vivendi go under.

He is a scabby, pus sucking hedonist. Small wonder Vivendi is the first a t the trough.

If it ever happens, I will boycott all music by these guys (or better still....aim at making that stupid 95% statistic being all Universal music!

Ugh I think I will go shower now, I feel dirty........

Thanks for ripping me, MDN. I owe you my life, as miserable as it may be.

A battle is nearly over (one way or the other) when the complaintants descend to personal attacks. MSFT must be sweating like a pack of pigs.

Heard in the conference room. "This is our second front. We'll squash them with the Zune, and gut their profitability by cutting in the labels."

The elder man listened, digging the vibe. "But won't it cost a load to pay Universal blood money?"

"Sure, but it'll hurt them more."

"Right. Well, we only have to win on one front to be successful."

"Ah...."

It'll be fun to watch. Like knocking an asteroid off its course with a high powered brown pellet rifle.

Essentially MSFT are a small time player with big time funds

You know, it's downright frightening how often these kinds of misinformation stories are found in the media. Makes you wonder about
things you read that you don't really know the subject. Is all media this
bad? When you read these misquoted stories so often, it really makes you wonder. Mark Twain wrote that people who don't read the newspaper are
uninformed, and people who do are misinformed. Guess he was right,
that is if I actually got the story correct.

Thoughts on Nani's comment:
******
Actually, many people in the music industry consider tracks that have been transfered from the original purchased medum (CD) to another medium (iPod) to be 'un-paid for' ..

Carefully read the link below to understand the legal aspect of this idea.

http://en.wikipedia.org/wiki/Audio_Home_Recording_Act

The law actually considers such transfers to have value to the copyright owner. We will likely see the industry become more dilligent in enforcing their implied rights to charge for such transfers, including more fees on hardware.
*******

Why is it we can move an artist's print from our old house to our new house, but we can't move an artist's song from our compact disc to our hard disc. The labels are most certainly out of their skulls, because i own that song, same as i own that print.

i don't support this universal license blah blah that microsoft just let loose on the world, but isn't this a capitalistic version of what they already do in canada? what if the riaa creates a right organization to collect a license fee per player. something similar to ascap and bmi.

Crow,

You can move a print from your old house to you new house, just as you can take any CD that you own from your old house to your new house.

What the copyright law does is to make it illegal to make a copy of anything that is copyrighted.

I'm personally in favor of personal use exemtions to copyright, but it really should be clear to everyone that copyright law is about THE RIGHT TO COPY things.

That's whay it's calkled COPYright.

In fact you can't legally make a perfect copy of that artists print just because you own it.

Enforcement of such copyrights is really rare. It obviously can't be enforced if you make a copy for personal use, but the copyright owner has the legal right to persue any means within the law to get compensated for copying of their copyrighted material - as the law stands.

An example of this is the use of licensed graphics in the media. Technically you can't just cut and paste any image you want and use it any way you like. There are copyrights and licenses on just about all media.

There is always a legal difference between something you actually buy and a copy of that thing.



From the US Copyright office

http://www.copyright.gov/title17/92chap10.html#1001

(a) Digital Audio Recording Devices. -

(1) Amount of payment. - The royalty payment due under section 1003 for each digital audio recording device imported into and distributed in the United States, or manufactured and distributed in the United States, shall be 2 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such device shall be required to pay the royalty with respect to such device.

"If record labels and companies demand royalties as a group, Apple will have to capitulate or close the iTunes Store"

If record labels and companies demand royalties as a group, Eliot Spitzer or any seeking-fame replacement, and/or the Dept of Justice will be on them for collusion in a second.

If the labels refuse to deal, Apple will appeal directly to consumers and artists. In selling over 1.5B songs in just over 3 years, Apple has given almost $1B in royalties to those labels. How could 65 cents a song not be enough, when the labels no longer need to pay for manufacturing, distribution, and the margins needed for brick-and-mortar stores?

But if they want to cut off iTunes, no matter, people will then fill their iPods with CDs and pirated music. And the remaining labels will continue to reap the revenues.

In any case, Apple has seen this coming and the iPod is rapidly moving away from being just a music player, thus the leverage of the music labels is decreasing.

Screw getting to the top on my own merits. I'm going to turn tricks the whole way there.

I'd tell them to go pound salt.

Leave it to M$ to mess up a market for everyone else!

If MS can't play in the sandbox then no one can - cause M$ went and crapped in the sand!

And they wonder why there customers are leaving in mass!

In 5 years time M$ will be worthless - can't happen too soon!

Universal trying to extort royalties out of Apple makes me think of the scene in "The Godfather Part II" where the Nevada senator tries to extort a bribe from Michael Corleone. Not a good idea.

If Universal attempts to use their relationship with MS to extort iPod royalty payments from Apple, they may be in for a rude awakening. And not just from Apple.

I don't think the other labels are going to be too thrilled about Universal's arragement with MS, and, for some reason, I doubt MS is going to offer them similar arrangements. MS has got to be figuring the other labels will join Universal against Apple to make demands for royalty payments on the number one selling music player.

This will work only if the labels engage in collusion. Personally, I think the labels are showing signs of falling out with one another. But, be that as it may, if the labels do collude against Apple and pull their music from iTunes, Apple has an ace up its sleeve.

Licensing FairPlay to all of MS's Plays For Sure partners. Or I should say former PFS partners, as most will probably desert MS in droves and the labels wouldn't dare pull their music from them as the Zune would surely hit the fan if they did.

The RIAA, speaking on behalf of music labels, believes that transfer of music, via an audio device, to the brain, via the ear is an infringment on their copyright. They will require individuals that purchase music to have a small chip implanted in the brain that will automatically deduct funds the individuals bank account. Further, manufacturers of all devices capable of producing audible music from any media, such as CDs or vinyl, should give some portion of the revenue from such items to the content providers. This is to partially compensate "the artists" for people aside from the purchaser that have heard the music. Several studies have shown that 95% of the enjoyment from music was stolen by individuals that did not pay for the music.


Nani - you make many good points. One question is: if taken to court, would/could the courts decide that ripping CDs is fair use. The other is: why the fsck haven't the copyright laws been updated to account for the technology of today. There are several examples of copyright law being updated for the good of consumers.

Most sure 70% of the people who read this article are in fact iPod users and they have been ofended and misinformed by this bozo. He owes his audience an apology: he has labeled them as thieves and pirates.

(sorry for my english).

next up,

Technology develops faster than laws can be put in place - but there are provisions in the existing law which establish a legal basis for what Microsoft is doing - and which could very well result in Apple being forced to do the same.

Ever since the advent of consumer recording devices, going all the way back to the first cassette decks, the music industry has fought for a percentage.

They have attached fees to digital recording equipment since the DAT (digital audio tape) recorder. So this is not a new issue.

I'm old enough to remember when you had to plug a cassette deck into a turntable in order to copy a record album. Back then the music industry was somewhat concerned about people copying music that way, but it was obvious that cassettes were inferior to the original vinyl, so they were mostly silent about such things.

When Digital Audio Tape came out, the music industry made sure that the machines and the tape was too expensive for consumers. A DAT cassette cost more than a record album.

CDRs come in 'Data' (cheaper) and 'Music' (more expensive because of music licensing fee) formats because the RIAA has the legal power to insist that the makers of CDR media provide some compensation for the fact that people are copying music.

Anyone who thinks that the RIAAA will just go away is kidding themselves.

I expect that royalties will be tacked onto all media devices which don't already have them in the next few years. Get used to it.

http://www.law.duke.edu/journals/dltr/articles/2002dltr0023.html

The Audio Home Recording Act

¶10 In 1992, Congress passed the Audio Home Recording Act34 ("AHRA"), an amendment to the federal copyright law. Under the AHRA, all digital recording devices must incorporate a Serial Copy Management System ("SCMS").35 This system allows digital recorders to make a first-generation copy of a digitally recorded work, but does not allow a second-generation copy to be made from the first copy (users may still make as many first-generation copies as they want). The AHRA also provides for a royalty tax36 of up to $8 per new digital recording machine and 3 percent of the price of all digital audiotapes or discs.37 This tax is paid by the manufacturers of digital media devices and distributed to the copyright owners whose music is presumably being copied.38 In consideration of this tax, copyright owners agree to forever waive the right to claim copyright infringement against consumers using audio recording devices in their homes.39 This is commensurate with the fair use exception to copyright law, which allows consumers to make copies of copyrighted music for non-commercial purposes.40 The SCMS and royalty requirements apply only to digital audio recording devices.41 Because computers are not digital audio recording devices, they are not required to comply with Serial Copy Management System requirement.42

¶11 It is clear from the language of the AHRA, and subsequent judicial interpretations of the statute, that Congress did not anticipate ten years ago that the SCMS would be inadequate to contain the impending home digital recording explosion that was galvanized by the Internet. However, the CBDTPA bill and the new anti-piracy technologies appear to be the music industry's effort at making an end run around the AHRA. Instead of passing this new legislation, it would be more appropriate for Congress to amend the AHRA, which strikes an appropriate, albeit outdated, balance between music distributors, electronics manufacturers and consumers.

¶12 Pirated music has become such a large issue that it undoubtedly warrants the attention that it is receiving. However, with so many divergent interests involved, it is not feasible for all of these groups to be left to work this issue out among themselves, which is what the CBDTPA suggests. Congress must take charge to enact legislation that will fairly balance the interests of all of these groups, and the CBDTPA legislation is too partial to the music industry to be the proper avenue for such an undertaking. Rather, Congress should look back to the AHRA as a starting point and further develop that statute to accommodate for the societal and technological changes that have occurred in the last ten years. This new AHRA, in conjunction with the new paid subscription based online music services being offered by the music labels, has great potential to result in an amicable understanding among all parties involved.

¶13 One change that is absolutely necessary for the AHRA is to require PC hardware and software manufactures to also pay a royalty tax and comply with the SCMS requirement. Although the primary function of a PC is not to record copies of music, for all practical purposes, PCs pose the biggest threat to copyright holders because they not only allow users to copy music onto the hard drive for downloading onto a blank CD, but also permit consumers to share music on the Internet.

¶14 An amended AHRA would cover all the bases for the music industry: they would continue to recover from digital recording device manufacturers for music copied on CD burners, which IT manufacturers likely would happily pay rather than install anti-piracy safeguards on their products; they would now be compensated for music downloaded on home computers; and they would autonomously be able to collect from individuals via the online subscription services, a well that will probably not run dry as long as the subscription fees are less expensive than purchasing the music in a store.

@ don't they tax mp3 players in canada?

This was struck down in Court and everyone who paid the levy was entitled to a refund some time last year.

MS is using a common strategy. Where you have market weakness, you underprice, in order to force the market leader to match, thus cutting their profits, which have a greater impact. In this case, MS's royalty payments will be a pittance compared to what Apple might have to pay, given Apple's dominance.

In some ways, this could be payback for Apple setting MS up for a license/royalty payments to Creative for their heirarchical menu system.

Anyhow, in this case, I think Steve has enough ammo to stand his ground against greedy Bronftard.

I am a sales manager at a car dealership. I negotiate every day to put food on the table, and I am very good at it.

One very important rule to remember, for any negotiation, is that he who can say, "No," and walk away, has the upper hand.

M$ < Universal <AppleThe biggest fish in the pond gets to make the rules.

Business Week's Hesseldahl weighs in with another opinion on Zune for Ballmer to consider:

"..by this time next year, it will be considered a dismal failure".

The answer is that what MS does on this issue doesn't stack up to a row of beans.

If only we could just ignore them. Sigh...

I find it ironic that MS was forced by the DOJ to stop charging PC manufacturers for Windows on all PCs made even those sold without Windows, yet now Universal will charge MS for all Zubes sold even if they contain no Universal songs.

It seems that Universal may soon get a phone call from the DOJ!

Maybe everyone is missing the obvious. Since MS is not going to be selling a lot of music downloads Universal may have decided to see if they can't at least get a couple of bucks from the sale of _both_ the Zunes foisted on the gullible public before they are squirted and flushed by the fools who bought them.

This 'market research' report is crap.

It's been funded by Microsoft, so of course it's gonna say the stuff it says - because M$ has paid for the research.

And the rubbish saying that '95% of music on ipods in unpaid for' is total bollocks. How can they say in one breath that '95% of music on ipods is NOT downloaded' (e.g PAID FOR cds that you own) and then say that '95% of music on ipods in unpaid for'???

Doh! - The two statements are hypocritical.

Also, M$ basically 'paying off universal' (giving them a cut of zunes sales $) is NOT a groundbreaking agreement.

The Mafia have been doing this for decades paying off politicans. All it is is trying to get into bed with universal, and therefore putting pressure on Apple to cut its ipod profits and have to do a similar deal with them.

Typical M$ uunderhand business tactics as usual and tactics of a company desparate to get hold of a market that it cannot compete in legally.

Also, not making the zune 'compatible' with the 'plays fore sure' scheme is a great way to piss off every other windows partner who have made digital music players for the scheme.

What this says is M$ have severed their 'partners' and that they are gonna make a closed system.

Do a deal with the devil and u are gonna get burned - it's as simple as that!

What Apple should do is when the itunes contract is up for renewal next year they should just say to Universal "Yep, you can have a $% share of every ipod sold from now on BUT YOU WILL HAVE TO CANCEL YOUR DEAL WITH MICROSOFT AND THE ZUNE".

Apple plays it's trump card!

Unvisersal will go with the Apple Deal as they will make more money.

Job done.

I'd say 60% pirated. 38% bought and ripped onto iTunes. 2% bought online would be a closer estimate of where the songs come from. Numbers vary. But i'd say thats pretty close.

If the record companies want to make money on iPod sales, then they can buy AAPL shares like the rest of us.
-jcr

I'd say 60% pirated. 38% bought and ripped onto iTunes. 2% bought online would be a closer estimate of where the songs come from. Numbers vary. But i'd say thats pretty close.

Based on what? Your musings? Well that's certainly concrete.