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1. gunnar

   Mac Enthusiast

   Joined: Feb 1999

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   11/09, 10:32am | report spam | close reply

   music tax?

   It just baffles me about how stupid these record companies are. Why would you tax the vehicle that allows people to buy your product? The Zune is dead before it's even released.

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1. Rezzz

   Fresh-Faced Recruit

   Joined: Jan 2006

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   11/09, 10:39am | report spam | close reply

   here we go..

   Monople$oft using its tens of billions of free spending money to make the playing field as uneven as possible. No better way to weaken Apple's position than to attack it at the source: content providers. By attempting to force Apple to follow suit, they cut into Apple's profit margins and strive to break a balanced, fair revenue sharing system.

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1. macnorway2000

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   Joined: Nov 2006

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   11/09, 10:47am | report spam | close reply

   So...

   ...is it time for the music instrument business to start taxing the record labels? This deal is just stupid.

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1. ptkdude

   Fresh-Faced Recruit

   Joined: Feb 2006

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   11/09, 11:02am | report spam | close reply

   Hunh?

   Why on Earth would Microsoft pay a record company everytime they sell a Zune? That just makes absolutely no sense to me. I could understand it if the player shipped with some Universal music on it, but it doesn't. What's next, will I have to pay Georgia Power some extra money that's built into the price of every electrical item I purchase?

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1. iK9

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   Joined: Nov 2004

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   11/09, 11:15am | report spam | close reply

   war

   this is nothing less than a MS attack on the iPod ecosystem. It is no doubt intended to cause friction between Apple and the major labels. When you can't compete on the merits, you look for a way to weaken your opponent's position from another angle -call it a flanking maneuver.

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1. FastAMX79

   Junior Member

   Joined: Sep 2000

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   11/09, 11:20am | report spam | close reply

   re: here we go

   i agree. Record companies will love this idea, and demand apple does the same. MS's motto is if you cant beat them, buy them out! and while they are not exactly buying out apple, they will cause apple to cough up more money to compete with MS.
   
   But how much do you think MS can keep losing?? I mean, wont the stockholders get pissed if MS keeps losing money to get a foothold in a market they are 5 years behind in anyways?

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1. Rincewind

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   Joined: May 2000

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   11/09, 11:36am | report spam | close reply

   So clueless

   Honestly, they think they will cause friction between the music industry and Apple, but even at worst, if the industry pulls a mass exodus from the iTMS, people will STILL buy iPods in overwhelming numbers and people will get their music from where they had been before.
   
   At best, it will just cut into their profit margin, or forced to increase the Zune's price. But even more so, they will be unable to reduce the price due to these taxes that they are voluntarily paying.
   
   The joke's on them tho, because no one is gonna pull out of iTMS as long as they are making money, and collecting Zune's taxes is gonna cost them more than they make =p

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1. fishtech

   Fresh-Faced Recruit

   Joined: Jun 2006

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   11/09, 11:42am | report spam | close reply

   Surely not the same...

   ... Universal Music...
   
   .... owned by Vinvendi, the French-owned multi-national...
   
   ... which campaigned so hard against iTunes & the iPod in France & Europe.
   
   Just how could this be? :)
   
   Erm...
   
   Dear European Commissioners,
   
   Microsoft appears again to be using underhand, monopolitic practicies & anti-market partnerships to try skew an existing healthy market space.
   
   Please continue your good work in ensuring M$ is not exempt from within existing European trade law.
   
   Cheers,
   
   ft.

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1. zac4mac

   Mac Elite

   Joined: Oct 1999

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   11/09, 11:58am | report spam | close reply

   I guess M$ wasn't losing

   ...enough on each Zune, so now they're giving away more. Apple did it to them when they dropped prices by 50 bucks across the line, forcing their prices to follow. We'll see how this affects Apple's deals soon. M$ is in no hurry to make a profit.

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1. loudpedal

   Forum Regular

   Joined: Oct 1999

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   11/09, 12:16pm | report spam | close reply

   Same old M$

   I'd like to share in people's optimism that MS will lose so much money they won't be able to compete but their coffers are so huge that I think they could lose twice as much per player for years before it would become an obstacle to be overcome. They have the Xbox 360 that appears to be selling in good numbers and Vista that is near launch (maybe?). Unfortunately, I think MS will be still rolling in money even with this deal. You know, I almost had forgotten why I have so little respect for MS and its products.

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1. juraiprince

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   Joined: Feb 2006

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   11/09, 01:30pm | report spam | close reply

   Somebody call Elliot Ness

   ...'cause this smells like racketeering at it's finest! I hope Apple doesn't play into this farce!

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1. climacs

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   Joined: Sep 2001

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   11/09, 02:45pm | report spam | close reply

   a plot!

   this is intended to create pressure on Apple - M$ can afford to lose money on the Zune - Apple can't - so this move is intended for labels to go to Apple and say, 'so, are you going to give us a cut of iPod sales? Microsoft is.'
   
   And Apple's response of course will be, 'call us when Microsoft is selling 30 million Zune's a year'

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1. Jeronimo2000

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   11/09, 03:13pm | report spam | close reply

   I am stunned

   This is the most ridiculous thing I have read in ages. Absolutely incredible.

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1. jameshays

   Fresh-Faced Recruit

   Joined: Mar 2003

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   11/09, 03:29pm | report spam | close reply

   Are Music Royalties gone?

   Could this deal allow MS to avoid paying music royalties for each piece of music sold? If so, music companies would no longer care if people paid for their music or stole it. If MS is paying on both sides of the deal, that's stupid, but it could position record labels to start caring less about legal music sales and more about media platform sales which are harder to steal. Think about it this way, if 10% of a hardware sales goes to the music company and the device is 400 bucks, that 40 dollars profit if a song is sold or not. How many songs would a recording label need to sell to each person to make 40 dollars in profit in royalties? I don't know, but at least 40 songs. Then, assume that the average person will buy a new player every 2 or 3 years. From a business perspective, this could make good sense. The real question is, how bad does the artist get screwed? My guess is pretty bad. From MS's perspective, they have a new ally in selling zune's to replace all the third party vendors the upset since producing this product.

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1. CorDog

   Fresh-Faced Recruit

   Joined: Mar 2006

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   11/09, 03:30pm | report spam | close reply

   Isn't this illegal?

   Correct me if I'm wrong, but isn't illegal to sell a product under what it costs to manufacture it while using the resource from another product to maintain it simply to undercut the competition? aka Windows

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1. bigpoppa206

   Fresh-Faced Recruit

   Joined: Jun 2003

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   11/09, 04:27pm | report spam | close reply

   Actually...

   the terms of this agreement are coming to a better light today. Its actually a licensing deal. From BetaNews:
   
   "
   
   UPDATED November 9, 2006 2:00 pm ET In a formal statement issued this morning, Microsoft and Universal Music Group –- one of the "Big Four" music publishers worldwide -– announced they have reached a licensing deal, which would allow for royalty payments to be attributed to the new Zune MP3 player, to be launched next week.
   
   A UMG spokesperson, in a discussion this afternoon with BetaNews, flatly denied elements of a story published this morning by The New York Times, which sought to clarify elements of this deal. While UMG is not willing at this time to discuss the royalty schedule itself in detail, what it did provide to BetaNews does contradict most of what has been published since a Microsoft spokesperson first confirmed the existence of the deal during a Merrill Lynch investment analysts’ conference call yesterday.
   
   Here are the facts as we now understand them: Microsoft has agreed not only to share revenue from songs downloaded from its Zune music service, which is a common deal in the industry, but to also share a portion of proceeds from the device itself. The formula for these proceeds will be calculated based on the number of Zune units that eventually sell through to consumers. This fact is critically important, especially since it distinguishes the type of royalty payments Microsoft will be making, and how they may be regulated under current US law.
   
   The royalty payments, UMG told BetaNews, will not be a percentage of the revenue from retail sales, but instead a flat fee based on the number of Zunes that end up in consumers’ hands. This is also critically important for several reasons. Typically, royalties collected on sales of units –- especially of books –- are calculated based on how much resellers and retailers paid for them, as opposed to 1) the number of units sold, and 2) their sale to consumers at the end of the chain. This means that resellers will not, in effect, be responsible for royalty payments, or that UMG would be responsible for units left unsold by retailers."

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1. bigpoppa206

   Fresh-Faced Recruit

   Joined: Jun 2003

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   11/09, 04:36pm | report spam | close reply

   Microsoft reminds

   me of the ugly guy who couldn't get laid in a w**** house with a fist full of $20's sometimes. Talk about desperate!

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1. Andy Cotton

   Fresh-Faced Recruit

   Joined: May 2003

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   11/09, 04:59pm | report spam | close reply

   so this means????

   that MS gives the record companies a fee per zune irrespective of album/track sales. Why actually bother with artists, songs, at all? Open lots of record labels and hoover money from MS as it tries to break the iPod. This..is ..unbelievable.