Zune and Universal - deal with the devil?

Written by Brett Thomas

November 9, 2006 // 9:13 p.m.

Tags: #microsoft #riaa #zune

In an effort to get a broader support base for its new Zune player and music store, Microsoft may have just landed itself a deal with the devil. I realize that many of you are probably scratching your heads wondering how the company shook its own hand, but let me explain better. Microsoft will pay the record labels that support the new player a fee for every unit that's sold.

The move has come right as Microsoft is looking to launch the player in the US next week, likely realising that its content base is considerably undersized compared to Apple's iTunes. So, MS has decided to sweeten the deal, starting with the one company that is contracting with it so far - Universal. That's right, part of the purchase price for your Zune will go right into the hands of record execs - before you've even bought a song.

Such a move is likely to stir up quite a bit of controversy in the industry, as the idea of the recording industry getting hardware sales has not yet successfully entered contracts in America. The concept has taken off in neighbouring Canada, where all blank media are charged a small royalty fee - but then again, the Canadian government protects the fair use rights of its consumers with incredible ferocity. It is seen there as a quid pro quo - the industry gets the gains up front, but the consumers get to use the media a lot more liberally.

Assuming that Zune sales are fairly successful, the recording industry will no doubt start looking to Apple with its hand out for every iPod sold. At that point, should the company not start to waver on some of its pro-consumer stances (such as fixed, "low" prices per track and relatively generous DRM), it could find itself losing industry support to the rival Microsoft store.

A deal with the devil indeed. Do you have a thought on the issue? Will it keep you from buying a Zune, or does this seem like a justified move to make? Let us know your thoughts in our forums.

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