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.
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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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