Microsoft breaks off talks with big four global music labels

Microsoft Corp. has broken off licensing talks with the four global music companies, and, by doing so, raises queries about the software giant’s plans to start a subscription-based music service, according to the Wall Street Journal, which cites unnamed sources.

The Journal reported negotiations broke down Friday over what Microsoft considered high royalty rates sought by EMI Group, Warner Music, Universal Music, and Sony BMG.

Microsoft has not announced a subscription music service, but it was widely expected to make such an announcement soon. However, the company said the breakdown in its talks with the labels would indefinitely postpone a launch, according to two of the people close to the situation, the Journal said.

Full article (subscription required) here.
Perhaps it’s not the proposed rates at all. Maybe Microsoft has simply realized that its music service is a nonstarter due to lack of interest in subscription-based, Windows-only, Apple iPod-incompatible schemes with millions upon millions of iPods flying off the shelves each quarter. Complaining about rates publicly and ending talks is either a face-saving move or weak negotiating tactic.

(Note on negotiating tactics: Steve Jobs is not complaining publicly about rates Apple doesn’t have; he’s complaining publicly about “greedy” record labels attempts to change those prices. Jobs is doing so in order to preserve a rate structure that’s already been established by his market-dominating iTunes Music Store. Microsoft can’t even seem to get a music deal off the ground. Hence our position that Apple is negotiating on strength vs. Microsoft on weakness.)

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49 Comments

  1. MDN is right on the money here:
    – non-iPod compatible DRM
    – Subscription model
    – Windows only

    The top three things people DON’T want all rolled into a Microsoft Solution – no thanks!

    MDN word: Thirty

  2. MDN take: ’nuff said.

    MaWo, ‘trying’. As in, ‘Mafiasoft is trying to be seen as an innovator, but since they can’t come up with anything original, they continue to use Apple as their R&D department.’

  3. Could it be that Microsoft is just starting too late this time? Apple got in early and negotiated a good deal which it customers like. Microsoft is starting at the same point where Apple is telling the record companies to pound sand on higher royalties. In a twist of fate, Apple has leverage. Microsoft does not – at least in this realm.

    This may be good news for Apple and Microsoft because the record companies are looking greedy yet again.

    MDN says “Complaining about rates publicly and ending talks is either a face-saving move or weak negotiating tactic.”

    So, is Steve Jobs trying to save face or making a weak negotiating tactic? Because the last I read, he was complaining about the record labels asking for too much.

  4. Why o why do people still insist on going different ways than our mighty apple; MSFT should know already that there is no place for them on that market it is ruled by apple and they are not going to make the same mistakes of the past, friends, apple is keeping this market no matter what.

    Secondly on dvd formats, several companies including apple announce that they are going the blu-ray way and then just to pick a fight MSFT goes the other way.

    Its not that hard to admit that you are not an innovator, Shick says that they wait for Gillette for them to copy their products, got a hit with quattro but thats it no more…

    Se let Apple innovate and let redmond buy new copiers…

  5. I don’t know about Microsoft backing off because they can’t win. Microsoft loves recuring payments for no output on their part. Subscription music is something they would embrace eagerly.

    I just think the labels are too greedy.

    That should shock no one.

  6. …or just maybe the high royalty rates that MS is complaining about are the same high royalty rates that the labels want from Apple.

    Just maybe MS stopped negotiations because they didn’t want to charge an insane rate for their songs. Now if Apple decided to stop negotiations with Warner music because of unacceptable terms, like royalty increases or variable pricing, would you guys be saying the same thing about Apple? Of course not because that would holding your beloved Apple to the same standard that you view MS, which you’ve repeatedly shown you are incapable of doing. Zealotry at its best.

  7. Maybe their business plan was simply

    MS “Leave Apple and come with us”
    to which Label replied with
    “You are kidding, right?”

    MS “Absolutely not. See it our ways: Windows only, no iPod but “Play for Sure” players: more choice for customers. Windows DRM, no need to add. Waddaya say?”

    Labels “WHATEVER”

  8. MDN – Microsoft will be back and the record labels will make a deal with them.
    The record companies hate Apple as much as Microsoft and would prefer to have at least two players to play against each other than just one (Apple).
    Microsoft will bring out their music sooner or later. This is just part of the normal negotiating….not some religious event that MDN thinks, that some god has annoited Apple as the sole deliverer of downloadable music via the internet.

    As usual, MDN looks at everything through the perspective of the Apple marketing dept. viewpoint and not as a logical thinking outsider.

  9. To wow: what a comparison. Apple has over 80% of legal download market already, remember? And Apple already refused to raise prices per download as it was requested by Labels. Microsoft would have gladly agreed to it in no time!

    Wow: you confound pee with champagne.

  10. RC, you are kidding right?! Part of normal negotiating? LOL “the company said the breakdown in its talks with the labels would indefinitely postpone a launch, according to two of the people close to the situation, the Journal said.”

    What do you think the above is going to do to M$ stock?! Is normal negotiating shooting one own’s foot? Never have seen this from Micros*t: ruling themselves out? Be a true Reality Check.

  11. MDNews:::: Regarding your take on Steve´s discussion of rates: “…he’s complaining publicly about “greedy” record labels attempts to change those prices. “

    Hunh??? Greedy? This is from the guy who charges premium prices for everything from computers to ram and you believe that line? Apple knows that there is a fine tipping point at which it is better for the consumer to just get their music from an alternative source.
    And why should all music be priced the same? Are all shoes the same price? Cars? Your ad placement space on your website? Go into a music store – are all CDs the same price?
    Steve is looking out for himself, not us consumers and not the music makers. MDN is looking out for Steve.

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