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Zune Profits Go To Record Label
Posted by
kdawson
on Thu Nov 09, 2006 10:44 AM
from the how-to-bleed-the-iPod dept.
from the how-to-bleed-the-iPod dept.
genegeek writes, "The New York Times reports that Microsoft has a new deal with Universal to share profits from Zune player sales. David Geffen, the media omniboss, is quoted: 'Each of these devices is used to store unpaid-for material...' The new business rationale is that stolen music should be paid for by profit sharing of newly sold Zune music players. Does that mean if you are not stealing music, you should get a discount on the players? Universal expects a similar deal from Apple when their current contract expires." Reader Gallenod adds, "Microsoft appears willing to spend millions and defer any potential profitability of the Zune simply to weaken Apple's bargaining power with recording companies and set a precedent for hardware manufacturers paying music companies."
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Hardware: David Pogue Takes On the Zune 99 comments
necro81 writes "The NYTimes' widely read technology columnist, David Pogue, has devoted his weekly product review to Microsoft's Zune. He does an even-handed job of describing what Zune has over the iPod, as well as some product-related letdowns." From the article: "Competition is good and all. But what, exactly, is the point of the Zune? It seems like an awful lot of duplication — in a bigger, heavier form with fewer features — just to indulge Microsoft's 'we want some o' that' envy. Wireless sharing is the one big new idea — and if the public seems to respond, Apple could always add that to the iPod."
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Great (Score:5, Insightful)
Yeah, remind me to thank Microsoft for all this 'innovation' they've done for the customer the next time I'm up in Redmond.
'Each of these devices is used... (Score:5, Insightful)
WTF.
Expects to cut the same deal with Apple? (Score:5, Informative)
Didn't Jobs spank them back into submission?
Can't see it any different this time.
What do customers get from this? (Score:5, Interesting)
The other record labels don't get any money so they seem to be losing out.
What about European/rest of world customers? Does this mean that the Zune will be a different price in each country due to licensing requirements? What about not available?
To me this looks like honest customers being charged for music twice. The RIAA has been quite vocal about p2p piracy. Does this mean they won't go after Zune owners? I don't think so.
I'd want money from Universal then... (Score:5, Insightful)
Re: (Score:3, Insightful)
It's one thing to institute inventory loss controls, as a retailer, and completely another thing to demanding that some other company subsidize your failing business model while implying that all customers of that other company steal your product and as such should be billed for it. Directly compounding operating expenses is one thing -- yes, we all pay a little more at best buy and CC
Here's hoping Apple will hold strong (Score:5, Funny)
What a pantload. (Score:4, Insightful)
Yeah right... (Score:5, Insightful)
This will go over like gangbusters with Apple and consumers alike. To think that the record industry will try to leverage a deal with another business with regards to consumer goods (music) is ridiculous. Nevermind the fact that Apple will simply leverage their massive iPod fan base against the labels, customers just won't stand for it. Especially when the market for digital media players is already supported by people who have proven they are willing to pay for music, a label-imposed "tax" on those players to cover "stolen content" won't fly.
Both Ways? (Score:5, Interesting)
What they expect and what they get are different. (Score:5, Insightful)
Not Good. (Score:3, Insightful)
The concept of paying RIAA companies because they are selling something that COULD be ussed to infringe on their copywrites is just a horrible idea.
Even assuming that this is a good idea, the problems are still obvious:
Do unsigned bands get a share? what about companies not part of the RIAA?
Do gun manufacturers have to proffit share with police (after all, guns could be used to commit crimes), what about with regular citizens, quikymart owners (after all, they are at a higher risk)?
Just because somethign CAN be ussed to to commit an offence does not say that it WILL be.
and as TFS says, if I only use my MP3 player for legitamite purposes, can I seek a refund? (as I am sure that MS is not going to just hand over part of their proffits, they will just include the price in the player).
pissing in the pool (Score:5, Funny)
Great strategy, if you lose, then wreck it for everyone.
David Geffen of all people... (Score:2)
Or did he forget all that blanket isolation and persecution of gay men as little more than disease vectors.
On the flipside... (Score:5, Insightful)
The amusing thing here is that the 'prepaid pirating fee' doesn't go anywhere near the artists. Ever. It's just an inter-company corporate bribe. Between monopolistic organisations. Man, can't you feel that capitalistic efficiency?
All you can eat (Score:3, Insightful)
But I suspect that just like with the "blank cds tax" it means you are paying for being suspect of doing something that's still illegal and which you might get sued for. Brilliant... a tax that you shouldn't be paying, either because you don't download illegal MP3s or because accepting the tax as rightful means admitting to doing "copyright violations".
What about no theft? What about no Universal? (Score:2)
Not only what about no theft... I don't listen to music on my portable player!!! Why should I pay a premium?
I do have a few MP3s on my portable player, even though I rarely listen to them. So the real question is:
But what if the music you listen to isn't on Universal? Why should they get money? I can't think of anything I own that's on Universal, although with the constant buy-outs and catalogs moving, something I bought in the mid 90s. I would never knowingly buy something from them. (If I did steal mu
Consumers are Idiots (Score:2, Insightful)
You mean how consumers won't put up with everything that they put up with? Consumers in general will never care because for the most part they will never know.
Have you ever watched people shop? They buy what appears to be a good deal they don't look into whether it is or no
Selling at cost or loss is hardly new ... (Score:3, Insightful)
Selling at cost or a loss to gain marketshare is hardly anything new, we're talking Econ 101. Apple basically did so with their on-line store, they wanted to spur use of the iPod. Microsoft is doing pretty much the same thing except they are discounting the hardware to spur use of their on-line store. On-line sales is where Microsoft sees the future, take a look at XBox Live, micropayments of add-ons, etc.
With regard to "setting a precedent", more Econ 101. Using a low price point to establish a barrier to entry. Another predictable move as digital music players become mass market commodity items. iPod dominates the current market, but the current market is a small fraction of the potential market. We are only now leaving the early adopter phase. iPod's current success is not unlike Apple's success with the Apple II when the personal computer market was in it's infancy. Apple pioneered the way then and now, but back then failed to capitalize on that early success to dominate the emerging market. Has Apple learned, or will history repeat itself? I don't know. I tend to think Apple has learned, however I think that this will translate into Apple being one of several major players in the future mature digital music player market. I don't think anyone will be able to dominate as IBM did with PC hardware and Microsoft did with PC software.
I've got a deal for you Apple... (Score:4, Interesting)
2 thoughts on the topic (Score:2)
2) OK, so a hardware sale is a one time event compared to actual music sales. It occurs to me the better revenue stream may be in the music. And who decides what the profits are? Microsoft? I think the phrase 'It's a trap' may be appropriate here. Once Apple is crippled watch for the profits to disappear, MS making money on side products and Universal getting screwed.
Hands up! (Score:2)
What a jerk move, setting the bar lower so Apple will have to stoop.
Way to be a team player.
I hate to repeat this annoying phrase, but: "And this benefits the consumer, how?"
In other news... (Score:4, Funny)
what does geffen know that we don't? (Score:2, Interesting)
"Each of these devices is used to store unpaid-for material."
The only way he could be sure of this is if Microsoft is delivering Zunes with something pirated... Hmmmm.
They are going to have to... (Score:2, Insightful)
Not buying one (Score:4, Insightful)
Therefore ... (Score:3, Funny)
RIAA Attorney: Your honor, the defendant admits pirating music
Defending attorney: Excuse me your honor, but the defendant owns a Zune.
Judge: Case dismissed.
Apple has no incentive to do this (Score:4, Insightful)
Apple has stood up to far less ridiculous demands before, like price increases. They're not going to cave on this one.
Zzzzz (Score:2)
Dumbest possible move (Score:4, Insightful)
Policing bad behavior is for the courts. People who make perfectly valid tools don't owe jack to those who are hurt by their misuse. Get a damn grip, Microsoft. You aren't hurting Apple's marketshare, you're hurting your lobbying efforts and things like that.
I am SO F*CKING SICK OF (Score:3)
The more you resist, the more 'old-school' you'll become.
Only thing is... (Score:2)
Nothing like paying twice... (Score:5, Insightful)
Under the deal, Universal, the world's largest music corporation, will receive a percentage of both download revenue and digital player sales when the Zune and its related service are introduced next week.
So let me get this straight: you pay Universal when you buy the device, and then you pay them again for the music you load on to it?
What if I never listen to any of Universal's music?
What really strikes me as ridiculous is that Universal's terms seem to imply that even a legitimate music purchase is still piracy .
At this point, the only moral thing to do is to stop buying music. You aren't going to appease the record companies - they'll call you a pirate no matter what. If we all stopping funding the RIAA lawsuits, maybe they would go away.
Wi-Fi 3 day song sharing? Harder to sue customers? (Score:3, Interesting)
We haven't already forgot about the "feature" that allows you to send your songs to your friend's Zune, which stores them for 3 days (even if it's stored in a DRM lockbox), have we? I think that case may be harder to make with an iPod.
Also, the author's logic is a bit flawed. To say that because Apple did not sell me every song on my iPod means that the rest were either stolen or ripped from CDs is not a valid argument. For example, much of the music on my iPod was purchased through other services, such as eMusic.
I'm also wondering if taxing devices will help to invalidate the consumer lawsuits that labels such as Geffen, through the RIAA, have been launching for the last few years. Or maybe the labels / RIAA have figured out that they can't get away with extorting their customers too much longer.
It doesn't matter... (Score:2, Insightful)
Case in point, their Wi-Fi "borrowing" crap. Instead of using Wi-Fi to do something useful, they simply use it as a reminder that they control what you do with the device.
Universal, the profit on no sales is $0.
Beny
Profit, what profit? (Score:2, Interesting)
Get the labels to bid on fool's gold.
MS just had to drop 50 bucks on Zune price to be competitive with iPod.
What is the profit? -$50? or maybe -$100.
So, maybe Universal will be giving 25 usd to MS for every Zune sold.
Article headline is wrong (as usual) (Score:2)
Initially, reading the Slashdot headline, I thought "joke's on you Universal -- there won't be any profits for you to get a cut of!". But it turns out it's actually a royalty for every sale that Universal received. I wonder how much it is, and how bad Microsoft's losses on these things will get when all the other labels make the same deal.
Cease and desist! (Score:4, Insightful)
So either lift that or I will not even go near a Zune. I am NOT infringing copyright, and anyone who says otherwise should either put proof on the table or face me in court.
Illegal Monopoly money (Score:2, Interesting)
2. If this passes, expect movie studios to sue Sony, JVC, Toshiba, Hitachi, Panasonic, etc. Also expect publishers to sue Xerox, Brother, HP, etc.
So either Microsoft are willing to lose money AND get thrown in court yet again and/or the RIAA expect to b
Getting a discount? (Score:2, Insightful)
Re: Here's hoping Apple will hold strong (Score:4, Interesting)
Apple's current market share won't last, we are at a very early stage in the development of the digital music player market. I'd say we have barely progressed beyond the early adopter stage, the bulk of the potential market has not committed. I'd say Apple's current iPod position is not unlike their Apple II computer position when the personal computer market was at a very early stage before the bulk of the population entered the market. Personally I think Apple has learned from past mistakes and won't become a niche player again, but I do expect them to be one of several major players. Microsoft's positioning also fits in pretty well with basic theory of how a market evolves, I would say they are positioning themselves for digital music players becoming commodity items.
Since I expect responses regarding the lock-in myth I'll address that now. iPods are predominantly used to play music that is completely portable, MP3s and non-DRM'd AACs. iTunes rips to non-DRM'd AACs or MP3s. The only non-portable music files are the purchases from Apple's iTune Music Store (iTMS). iTMS purchases are easily replaced given file sharing, add to this the fact that the psychological barrier to downloading is far lower given that a person "paid for that song" in their mind. Even if that were not the case the music market has a history of abandoning their current investments when moving from one format to another. However this format transition is even easier to make, iTunes and whatever comes next can happily coexist on your computer.
I need a scorecard here... (Score:2)
a) Apple - For pioneering the DRM model of "buying something doesn't really mean you OWN it"
b) MS - for partnering up with this music company and cutting them in for considerations.
c) The music industry - for general asshattery and the RIAA
d) All of the above?
e) CmdrTaco
but there is no stealing involved... (Score:2)
Since nothing can be stolen via file sharing or p2p, why even mention "stolen music"?
Re: (Score:2)
Sounds familiar (Score:2)
This reminds me of my old pa. Whenevers we'd get to misbehavin and all that, he'd take us out back and whip us real good for what we'd done wrong and gotten caught fer. Then he'd whip us again for the stuff we'd done wrong he didn't catch us fer. And then he'd whip us again for the stuff we wuz gonna do wrong later.
I'm glad old Billy Gates and Stevie Ballmer lerned themselves sim'lar lessons from their daddys too.
great (Score:2)
first they tell us : don't download illegal songs
then they tell us : do download illegal songs
Similar to Microsoft's Patent Strategy (Score:2)
I usually try not to hate on Microsoft too much. They're a huge company with both good and bad sides. This, however, is unfortunately typical Microsoft behaviour: Help your smaller enemies so they can go after your larger enemies. It's similar to their patent strategy: Lose a patent dispute so the patent holder can go after other companies who can't just give away money like Microsoft can.
This sets a really bad example. I don't like paying for music I won't listen to. I don't like giving money to the major
It already happened with the "Tape tax" (Score:4, Informative)
Hardware and media taxes are luducrous, and are unfair to those who use such items legally (podcasts, paid-for downloads from Itunes and similar sites, and musicians recording their own songs). The bad news is such taxes are here to stay. This story of a hardware manufacturer paying a "license fee" to a recording label isn't technically a tax, but with the other already existing taxes, this sets an informal precedent and paves the way for REAL taxes on such devices and blank media.
Adaptation (Score:3, Interesting)
"GET WITH THE FREAKING PROGRAM, PEOPLE!!! Technology has found a way around your business model, and IT WOULD BE BENEFICIAL FOR YOU TO ADAPT TO IT."
This is precisely what they are attempting to do. This is exactly why Messr. Geffen is quoted in the article as saying "It's a major change for the industry" and "It certainly changes the paradigm." In short, rather than waiting to make profits on sales via the Zune Store (since buying music is so 20th Century, according to many Slashdotters), they are getting some of the money up-front on the sale of the player. I think that is pretty clear.
When Slashdotters exhort the record labels to change their business model, I think they mean this in terms of "be content with less money" or "don't attempt to make a profit" or similar strategies that one should not realistically expect from a for-profit business with shareholders. The record companies are indeed changing their model... it's simply not in a fashion that many Slashdotters would like.
Strategery! (Score:3, Funny)
2. Unprofitable business model sinks Zune (ill-conceived hardware design/UI notwithstanding).
3. MS pulls Zune, retreats to XBOX and Windows Bloatware Caves of Profitability.
4. Non-Existent Zune = Profit???
5. Jobs laughs maniacally. Deadpans, "No," when RIAA attempts feebly to re-negotiate on the basis of a ludicrous business case built on an eleventh-hour all nighter fueled by energy drinks, Chinese takeout and heavy doses of THC.
Lesson to RIAA: When MS strongly encourages you to drink their Kool-Aid, don't.