Thursday, November 09, 2006

The "un" in Zune is for Universal

Perhaps indicating that Universal aren't expecting the Zune store to be a long-running source of income, the label has cut a deal with Microsoft to get a slice of sales from each player.

This really is some sort of golden deal for Universal; it's getting cash from a media player which it hasn't paid a cent towards developing, and which may never see any track by any of its artists ever go anywhere near some players. In effect, Microsoft have stuffed Universal's mouths with gold.

In discussing the rationale for the royalty, Chris Stephenson, general manager for global marketing in Microsoft’s entertainment unit, said the company “needed people to rally behind” the new device and service.

“It’s a higher-level business relationship,” he said.

Of course, Microsoft has so much cash sloshing about from exploiting monopoly agreements for its office and operating system software it can well afford to bribe Universal in a way that would be unthinkable for any entry-level manufacturer. And it hopes that if the labels have an interest in the player, it might lead them to push consumers Zunewards.

David Geffen tries to justify the labels stuffing their pockets with cash by pointing at - yes - all those unlicensed files:

“It’s a major change for the industry. Each of these devices is used to store unpaid-for material. This way, on top of the material people do pay for, the record companies are getting paid on the devices storing the copied music.”

He added: “It certainly changes the paradigm.”

But doesn't that mean that the record companies are being paid twice for legally purchased music? How is that fair? Why should Terry Honest pay money to Universal for his Zune if all he intends to put on it are tracks he's already bought?

More to the point, if purchasing a Zune includes a tax to cover the cost of illegal downloads, does that mean Zune owners will be exempt from RIAA legal action? Are Zune owners effectively allowed to download what they like from Universal's catalogue for nothing?

Geffen's observation that paradigms have been shifted here raises another question: is it fair for Microsoft to be making cash payments that "change paradigms", seeing as that effectively means "distorts the marketplace"?

Doug Morris of Universal says it's for everyone's good:

“I’m hopeful that technology companies and creative companies will understand how each other’s futures are intertwined,” Mr. Morris said last night. “It can only work if one doesn’t try and take advantage of the other, and so far we’ve come out on the short end.”

But that isn't true at all, is it, Mr. Morris? Record labels' futures might depend on the decisions taken by Apple and Microsoft, but to suggest they're "intertwined" is only as true as it is to say that a dog and its fleas depend on each other. If Universal ceased to exist tomorrow, Zunes would still find content.

What we're also struggling to discover reference to is how, exactly, Universal will be sharing this bounty with its artists. Remember the artists? The ones who actually make the music? The ones whose interests it is that the RIAA always cite when its taking another ass-poor parent to the legal cleaners? If the idea of Microsoft giving cash to a label is as compensation for "stolen" music, shouldn't that money go to the artists rather than the record company?

Meanwhile, a looming problem for Zune is the growing realisation that Microsoft have effectively abandoned their Plays For Sure initiative. In an earlier bid to try and bury the iPod, Bill Gates' music division started to push Plays For Sure, a symbol promising inter-exchange of music from various stores and across various players. Put Plays For Sure tracks won't play on a Zune, and Zune tracks won't work on Plays For Sure Players. In other words: If you put your trust in Microsoft and bought with confidence from the MSN store, you're stuffed.

It also means that tracks HMV and other online stores are flogging won't work on Zune, just as they won't work on an iPod.

So, having failed to crack the near-monopoly of Apple, Microsoft have just tried to create one of their one.

[Thanks to Franco M for the New York Times story]