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I can't imagine that Jobs and Co. would cave in and do what Microsoft is doing. That would be horrible.

I wonder how much of MS's miniscule profit is going to Universal (and perhaps others)? I heard that perhaps they are even taking a loss on each item sold just to try and get ahead. This would put them even more "in the hole".


MDN: great; as in, this Zune thingy is going to be a _great flop_.

Does this mean that Whirlpool will have to pay Levi's a cut for every washing machine they sell?

"We felt that any business that's built on the bedrock of music we should share in," said Doug Morris, chief executive of Universal

Chief Operating Officer Kevin Turner said in a speech at the Microsoft Worldwide Partner Conference: "Those people are not going to be allowed to take food off of our plate."

Any connection? Perhaps M$ thinks that certain companies have inalienable rights to profits in their respective industries.

Do AM/FM radio makers share profits with music labels? No.

ehhh, yes they do. They pay a royalty every time they play a song.

But back to the original subject. Who gets hurt the most if Universal, or any other label, pulls their songs from iTunes?

Apple has sold about 60,000,000 iPods and sold over 1,000,000,000 songs via iTunes At 65¢, label's cut, Apple has paid them indirectly over $650,000,000. That's about $11 per iPod and growing. Apple doesn't make money from iTunes music sales.

How long before the Zune can generate that kind of revenue for the labels? In my opinion, it won't happen.

That's why MSFT is paying Universal a fee for every Zune sold. Universal has seen the same surveys that MSFT, and Apple, have seen, and they know that most songs on PCs are illegal. For the most part, the same is NOT true with iPod owners, AND Apple is a major source of revenue for the labels.

Gregg Thurman,

Radio makers do not pay royalties, radio stations do. The radio device profits go solely to the radio makers. Just as Apple does not pay royalties to the labels on iPod sales, but they do pay royalties on iTunes songs sold.

I hate to be a prick, but can we confirm this? That sounds like a really stupid deal that even MSFT wouldn't go for... unless they are making up for it in some way.

After all, this is Reuters, the "Doctored Photos" organization.

I'm just being skeptical here... I just dislike rumors.

"To share hardware profits with the music labels makes no sense. Did phonograph makers share record player profits with music labels? No. Did Sony share Walkman profits with music labels? No. Do AM/FM radio makers share profits with music labels? No. Do TV makers share profits with TV networks and producers? No"

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MDN,

Did phonograph makers sell records that would only play on their phonograph? No.

Did Sony sell cassette tapes that would only play on Walkmans? No.

Do AM/FM radio makers broadcast radio signals that can only be received on their radios? No.

Do TV manufactures produce programming that will only play on their TV's? No

Does Apple sell content (which is owned by the labels) that will only play on the iPod? YES.

But... but, it's broooooown!

"MDN,

Did phonograph makers sell records that would only play on their phonograph? No.

Did Sony sell cassette tapes that would only play on Walkmans? No.

Do AM/FM radio makers broadcast radio signals that can only be received on their radios? No.

Do TV manufactures produce programming that will only play on their TV's? No

Does Apple sell content (which is owned by the labels) that will only play on the iPod? YES."

I fail to see your point. The reason iTunes-purchased songs only play on an iPod is because the labels asked for DRM. And don't forget, the iPod was out before the iTunes Music Store.

So again, what was your point?

I see your point, Advocate. However, cannot iPods also play the same MP3 files that play on ever other brand of mp3 player? The answer is a resounding YES!

Even if a consumer buys an iPod without intending to use the iTunes Store, under a similar deal, Apple would be required to pay a record label money. That seems absurd.

It is true that the content Apple sells will only play on the iPod. However, the iPod is a universal playback device just like all the other hardware you mentioned. It just so happens that it can also play a proprietary format.

My point is that the labels feel entitled to a cut of iPod profits because their content is driving sales of the iPod... Much like Apple feels entitled to a cut of third party iPod accessory manufacturers.

The Advocate:

Does Apple sell content (which is owned by the labels) that will only play on the iPod? YES.

Does Apple share iTunes store profits with music labels? YES

I'm usually against the MacDailyNews take on all the stories, since they're unfairly biased, but this time they do have a point. Why should Apple have to pay a double premium unlike other media device manufacturers?

"Does Apple sell content (which is owned by the labels) that will only play on the iPod? YES."

Thanks to the DRM forced by *gasp* the labels. Oh, the irony.

Back to the topic, why only Universal? What about the other big labels like Columbia? They should make the same profit off Zune since they own the copyright on some of the music to be sold at Zune Marketplace. The smaller labels should also ask for profit sharing, after all, MS is trying to use indie image for Zune.

Advocate,

You can make the very same argument for all of the hardware devices you named. The music industry drove sales of phonographs, the music industry drove sales of Walkm(e)n, the music industry drove sales of radios, etc.

By that same logic, the music industry is also driving sales of fancy sound cards, speaker systems, and even computers.

The music industry is also driving sales of those rickety compact disc scratch-removal devices.

And don't forget CD carrying cases.

There are a slew of products that would not be on the market today were it not for the music industry. I can understand that the music industry would want to take advantage of a profit where they feel it is available, but I don't think this particular argument is a good one. It sets silly precedents.

Soon, Microsoft will demand a share of the profit from every PC ever sold. It's Windows, after all, that built up that market. ...Oh wait, I guess they do that already!

This is not unlike the fee added to 'music format' CDRs which the music industry negotioated in order to make money off the copying of cassettes and LPs onto CDs using stand-alone audio CD burners.

For more on this see;

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

You may not like it - but copyright law is likely to get more restrictive.

inferno 10, I'm not saying that Apple should pay the labels a cut of iPod profits. I'm simply stating the difference between MDN's examples and Apple's proprietary sales model.

I don't think Apple should be collecting a cut of iPod accesory makers profits either, but they are..

Thanks to the DRM forced by *gasp* the labels. Oh, the irony.

-----------------

Yes, the labels force DRM, but they did not force proprietary iPod only DRM..

Great, if Microsoft pays me $299 I'll buy a Zune, but only a white one!

If the dea lis to share PROFITS then Universal is stupid since it's already been stated the Zune's are already selling at a loss.
And, if MS is still going to pay Universal for every one sold that's an even bigger loss for MS to shoulder.

Must be nice to have cash cows like Windows and Office to buy your way into a market with

Advocate - "Apples proprietary marketing" which MS has decided to copy with Zune.
So ? Don't like it, use another service which works as well, if you can find one, and get a non-DRM laden MP3, if you can find one legally.

The only thing Apple is guilty of at this stage is NOT licensing the DRM to other player makers.
If they wanted to shut Zune down they'd do that.
I'm sure they are talking to Creative and maybe others about that.
iTunes still sells more music than anyone else and being able to play it is a big plus for any device manufacturer. And, iTunes is in many countries where Zune is ONLY opening in the US as far as anyone has stated.

At this point Apple has a big lead and will hopefully make some partnerships and licensing deals to maintain that

Universal no doubt thinks it can get away getting iPod profits because of the little twit Bronfman, who thinks he's a media genius.

But guess what, Apple doesn't need Universal to succeed. By the time the current contract expires, Universal will need Apple much more than Apple will need Universal. And Steve can finally give the labels the bitch slaps they deserve.

I see this Zune ploy as nothing but an anti-competitive move by Microsoft to try to set a precedent which it hopes will spread and infect the iPod.

The Advocate - Oh and I see that that "Plays for Sure" plan worked really well didn't it.. That is why Zune will also sell content that will only play on Zune.. I still don't get you point..

Universal needs iPod and not backwards. iPod is the best selling music player in Latin America countries and there is no iTunes on those countries, you can put any music in your ipod (i put some from my old CD's) so if universal does not get with iTunes, you can alway get it in other way where universal does not get any compensation. If any record label wants to survive to the digital era, they have to be on iTunes.

Advocate - Name another service that plays on both Windows and Mac? Not very proprietary now is it? You don't have to carry your music with you? Just burn a CD and play it on your Diskman® if you want to - You can't do that with a Plays fro Sure® subscription now can you????

I hae a better Idea,
"'We felt that any business that's built on the bedrock of music we should share in,"
Why not Universal and other companies pay a fee to Apple and zune because heir music is going to be played in their hardware? To liste to music, you need a player, if you do not have a hardware manofacturer to build those players, you can not sell any music, that is more fear.
iPod can be use to watch moviens, play games, liste to podcast. So, if I do not use my iPod to play universal music, should apple pay a fee to universal? That is crazy!.

"Do AM/FM radio makers share profits with music labels? No."

ehhh, yes they do. They pay a royalty every time they play a song.


--

HAHAHA .. that's radio _stations_ you smart ass.

The Advocate said: "Yes, the labels force DRM, but they did not force proprietary iPod only DRM.."

What's your point? Is there another, better, DRM out there that could have been used instead?
It's not really iPod only DRM - it will play on both macs and peecees. Please show us a more open DRM, oh wise one...

Don't forget, DRM only applies to iTunes Store - Rip your own music without DRM. If DRM bothers u so much, get off your fat arse and go and buy the CDs. Or sit on your fat arse and order the CDs online from amazon or something. Keep in mind that you can't do this with the Zune, as it will apply DRM to even your own music.

And meanwhile, David Pogue of the NYT has given his verdict...

Zune has no adavantages, is not cool, is a load of hassle, awkward to use, and is the result of a lot of wasted effort by Microsoft because it is green with envy.

Oh, and the iPod has a list of advantages that go all the way to Steve Ballmers house and back again.

His review will stop about 50% of Zunes prospective 5,000 sales in its first year.

How anyone feels the need to support anything done by Microsoft beats me.

Guys, guys, (and Gals), Microsoft is only following its OWN model.

Did the vast majority of PC makers pay Microsoft (a content provider) a fee REGARDLESS if Windows was installed on the computer or not?

YES!

The hardware makers paid MS a fee per system sold even if the system did not ship with a Windows OS or any other MS product indstalled. Microsoft thinks that all hardware makers should pay them this fee... and now they are a hardware maker and it is only reasonable to pay Universal (the content provider) a fee for their hardware, even if it doesn't ship with any Universal content. It's the way things are done... the Microsoft way.

How would it work though? How do they fairly split the amount they pay between everyt record company on earth? What if you're a classical music fan, does your share only go to classical labels. It's ridiculous.

What's being missed here is that Universal's cut will come straight from the users pocket. And sure enough, the other labels will want 'in' on this little scam too.

Now it begins to make sense why Microsoft is putting out a uninspiring, lumpy, old-tech Toshiba box - rather than developing a cutting-edge challenger to the iPod. Microsoft will get this stuff dirt-cheap, ramp up the price-point to match the iPod, with the difference - of, say, $50 a unit - going directly out the backdoor into the label's bank accounts. I'd be pretty annoyed if I learnt that possibly a fifth of the good money I paid for this product had nothing to do with its value but was a private 'tax' for the labels.

The Zune is a DOG. We have to admire Microsoft's advertising agency for making the association that only two things in this world come in shades of black, white and brown... Zunes and dog shit.

It seems that the music companies are trying even harder than Microsoft to kill the legal online music business.

It's a wonder they sell anything at all.

Guys, I think you're missing the very simple explanation for this fee MS is willing to pay:

If I remember correctly, the Zune is supposed to come with some music pre-installed at delivery - and of course the label who owns those pre-installed tracks will want to see royalties for them.

Simple as that.

Not that I'd want to have my player clogged with unwanted music out of the box (which I'd have paid for through the price of the player in any case), but as far as I can see, that's the reason.

Maybe the labels should pay APPLE for every iPod it sells, since another iPod in the world is another avenue for the labels to sell a song.

For them to ask an MP3 player maker to pay THEM is absurd and just goes to show there is no limit to their greed.

I think I'll fire up Limewire and collect a dozen more tunes, just to celebrate the MS/labels new deal.

why only pay Universal... what about the other recording companies? and independent labels... and podcasters? they should be getting a piece of the pie too... bad move by msoft... opening a can of worms...

This is the true story

No one's got any sympathy or love for them (the Labels), because they've systematically been shoring up their figures in the short run - squeezing money into Universal to make up for their catastrophies; Warner Brothers have been coping with huge debt; EMI have been desperately trying to hold their stock price up so somebody would buy them; BMG has been wondering how the fuck they're going to pay somebody back money for whatever it was, so they don't go public - and Sony are in a terminal mess.
So all of them have been draining profit. It's "get the money in, boys, get the money in. "
So they've raped them. They've raped their whole business model, and no one's got the time or energy to think about their business.

Microsoft comes along and throws Universal what seems to appear to be a better bone with the Zune, but it's smaller because iPod sales have already sucked the new market almost dry, for computer users that is, the non-computing uing market is being ignored by Apple so far.

Apple needs to come out with a new iPod/PDA device that doesn't require a computer to accces iTMS

Just a "Smart Dock" device that hooks to the phone line with built in DSL straight to iTMS with backup hard drive.

Select the music and let it download overnight, of course Apple doesn't have local phone numbers for DSL. :(

But they better do something, I'm tired of filling up friends iPods for them.

Sorry link to Quote "Big Labels are F*cked..."

http://www.theregister.com/2006/11/03/peter_jenner/page2.html

They dare not jump off the iPod bandwagon.

why only pay Universal... what about the other recording companies? and independent labels... and podcasters? they should be getting a piece of the pie too... bad move by msoft... opening a can of worms...

It seems that MS only uses Universal "preloaded" content at delivery...

Zune vs iPod - Which media player is right for you? | ClubZune.net

Just a "Smart Dock" device that hooks to the phone line with built in DSL straight to iTMS with backup hard drive.

Select the music and let it download overnight, of course Apple doesn't have local phone numbers for DSL. :(

But they better do something, I'm tired of filling up friends iPods for them.





This could easily be the stupidest idea ever presented on here.

M$ is trying to ruin the market for everyone and then pick up the peices once everyone's out. This is pathetic and ought to be against the law. They're going to loose money on ever Zune they sell just to destroy the competition just like IE vs. Netscape. Same tactics.

It's not "profit sharing." Zune will not produce a profit for quite a while (If it survives). What M$ are doing is their standard practice: come out with a 1.0 ripoff, slowly buy market share until they own the market. And screw everyone along the way.

Seems like everyone gets money from Zune, except M$.

Hey, wake up man! "Radio makers" as in the hardware, as in the little boxes with wires and speakers and stuff. Not "radio stations" paying for content. Paying royalties for content and paying just to build a piece of hardware are two radically different things.

The average person buys only 20 songs from the iTunes store.
Most music or other things (podcasts) comes from other sources.

Thurmann was partly right. At one time major radio makers were also content providers.

Can you say RCA?

"MDN,

Did phonograph makers sell records that would only play on their phonograph? No."

--they did, however, sell phonographs players that played only phongraphs not other forms of playable media.


"Did Sony sell cassette tapes that would only play on Walkmans? No."

--They did, however, sell walkmans that played only casettes, not other forms of playable media


"Do AM/FM radio makers broadcast radio signals that can only be received on their radios? No."

They do, however, sell radios that only receive radio signals and not other forms of signals.

"Do TV manufactures produce programming that will only play on their TV's? No"

TV manufacturers do not produce programming and neither does Apple. They do, however, sell TVs that only receive TV signals and not for instance a CB signal even though some people might find that handy.

"Does Apple sell content (which is owned by the labels) that will only play on the iPod? YES."

No they don't. The content Apple sells plays on any computer with iTunes on it. Anything sold from iTunes can be put in CD format and played in a cd player and recorded to a casette to play in a walkman.

It seems that instead of restricting content, Apple has opened up new worlds of opportunity.

OK, so true $1 per Zune isn't exactly a ton of money, but it proves just how greedy the music industry has become.

It hinestly makes me sort of glad that Zune is promoting indie artists over big-name musicians. The indies are the ones who deserve it: They are loyal and modest.

So if Microsoft was going to take a loss when the player was at $299, then they lowered the price to compete with Apple, then they pay a fee for each Zune sold, this is going to be bleeding money from Microsoft. But of course, that's only if they sell many Zunes. Way to but into a market for less than 5% market share Microsoft. Way to operate with the interested of your owners in mind. You're fired!

This is a very mob-like deal, kind of like "protection" money. Its bad business, very bad.

Like it or not, and for all of its apparent hassles, the only way to give the consumer and the retailer any kind of real freedom is to make it all pay-as-you-go. Consumers, and now retailers, are more and more getting trapped into these coporate back-door deals that are killing the number of choices we should be experiencing, especially with the technology to do it.

Nope, its bad business very bad, and if Apple is compelled to follow this business model in the long run, we're all screwed.

So if Microsoft was going to take a loss when the player was at $299, then they lowered the price to compete with Apple, then they pay a fee for each Zune sold, this is going to be bleeding money from Microsoft. But of course, that's only if they sell many Zunes. Way to but into a market for less than 5% market share Microsoft. Way to operate with the interested of your owners in mind. You're fired!

Yes, Microsoft will be losing money with every Zune sold. But they are going to make up for it by selling in volume!

Having read all of the above comments, the one that really sticks in my mind concerns the DRM MonkeySoft slaps on every song ripped from one's personal CD collection. I assume this is their attempt to prevent "theft" when two or more iTurds are squirting each other.

If "The Advocate" is still tuned in here, how do you rationalize THIS fact, sir or madam? Apple/iPod doesn't do this! Music ripped from CD's that I purchased is still free and unfettered on my portable device. Can you say the same for the M$ iTurd?

You know, Bugs Bunny was right: Maroons come in all colors.