Microsoft is giving the Universal Music Group (UMG) a per-unit fee for each Zune that they sell, in addition to the money that they’ll make out sell music tracks on it too.
There’s only days left until the US launch of Zune, Microsoft’s last hope to get in a strong position with portable music players. The deal with Universal has only just been sealed, so we’d imagine the negotiations with Microsoft haven’t been that relaxed, because, as we all know, a device without content is in a dangerous position.
In our view this deal is lunacy. Giving the record company part of the value of selling the portable music player is like letting them have part of the profit from selling a record player.
Is Microsoft really that desperate to try and make up the huge gap between itself and Apple, that it’s prepared to give away part of the actual device?
It is possible that this a move-of-genius by Microsoft, creating a new ‘standard’ of deal within digital music deal. The reality is that when Apple’s negotiating with the labels, they have the strongest card of all – OK don’t deal with us, and lose access to the most popular music sales in the world.