(2006-11-08) Microsoft Universal Zune Deal

Microsoft will pay Universal Music a fixed amount for every Zune MP3 Player sold. It illustrates how music companies are scrambling to attach themselves to fast-developing online businesses. The move also reflects Universal's recognition that, for all the runaway success of gadgets like the iPod, consumers are still not buying enough digital music to make up for declining sales of music on compact disk... A recent study estimated that Apple has sold an average of 20 songs per iPod - a fraction of its capacity. The rest of consumers' music files - 95 percent or more - come from ripped CD-s, possibly including discs from their own collections, and illegal file-trading networks, the study said. As a result, music companies have long coveted the revenue being generated through devices like the iPod. But so far, they have had little recourse. In 1999, a federal appeals court ruled that one of the earliest digital music players, the Diamond Rio, was not covered by a federal law that required makers of certain audio recording devices to use anticopying technology and pay a royalty to the record labels.

Fred Wilson likes this model. I hate it. Why should I be forced to pay more for a piece of hardware just in case I copy some music? Even if I never do, I should pay Universal? These deals (just like fees charged to bars and radio stations) always favor the big players (of the Music Industry) at the expense of the smaller guys. I Commented.