updated 08:45 am EST, Thu November 9, 2006
MS Pays Universal for Zune
Microsoft has entered into a controversial agreement to pay Universal a royalty fee for every Zune player sold, Reuters reports. While neither Microsoft nor Universal has publicly revealed the amount per player, the music label indicated that it believed it had a stake in the Zune's success.
"We felt that any business that's built on the bedrock of music we should share in," Universal chief Doug Morris says.
Significantly, the deal is not directly linked to content shipped with the player: its preloaded music is provided through music labels with no clear connection to Universal, such as Sub Pop and V2, indicating that Universal no longer feels satisfied with music sales themselves. Microsoft is reportedly in early discussions with other labels for similar fees. The change in approach towards music revenue may have future ramifications for Apple, whose deals with music labels have so far extended only to profits from iTunes content sales and have not affected iPod hardware.