“Largely unnoticed in the [Microsoft 30GB Zune for US$249.99, 99-cents more than a 30GB Apple iPod] pricing announcement last week was this little tidbit about how consumers might pay for Zune music. CNET had a pretty decent description in their article, where they accurately noted that Microsoft’s real play is to get people to buy subscriptions for $14.99 a month. But if pressed, they’ll generously allow people to buy individual songs,” Carl Howe writes for Blackfriars’ Marketing. “But you can forget one-click buying; Microsoft has a cuter idea:”
There will also be the option of purchasing individual songs through a system called Microsoft Points. The new Microsoft cash system will work by adding money to an account, as with a prepaid phone card. Points will then be deducted from the account with each purchase. A single song will cost 79 points, “the equivalent of 99 cents,” according to Microsoft spokeswoman Kyrsa Dixon.
The point system is already used in the Xbox Live Marketplace, and Microsoft plans to host other online stores where Microsoft points can be redeemed, according to Katy Gentes, product marketing manager for Zune. In the United States, points are available in denominations of $5 for 400 points, $15 for 1,200, $25 for 2,000 and $50 for 4,000. That makes $1 worth about 80 points.
Howe writes, “Now from a marketing point of view, there are two marketing tricks going on here. First, is the concept of not having 100 points equal a dollar. That would be too simple and easy to understand. Instead, Microsoft sets the song price to 79 points, which most people will perceive as being inexpensive because it is less than 99. Yet, if you do the math, it’s actually slightly more than $0.99. Cute, very cute.”
Howe writes, “The second marketing trick is the use of a new form of currency; yes, Microsoft money has finally arrived, and it has all the charm of an end user licensing agreement — and just as many tricky parts. Note the denominations offered above and think about this common transaction: buying your average, garden-variety album for $9.99. You’ll need probably 799 points to buy that. But notice that there’s no 800 point denomination. Microsoft is betting that most consumers won’t buy two 400 point packs, but will instead opt for purchasing 1,200 points for $15, and will leave the extra 400 points on account with Microsoft. So consumers end up either 1) doing extra work to pay exactly the right amount (i.e., going to the store, purchasing two 400 point packs, returning to the music purchase and then buying their album), or 2) provide an interest free loan to a company that has $40 billion in the bank. Cute, too cute by half.”
Howe writes, “If the company spent half as much effort investing in, say, making a truly elegant hardware device (instead of just re-badging someone else’s) and making the user experience simple and hassle-free with one-click credit card payment (it worked for Amazon, didn’t it?), they’d probably make more money in the end than pinching pennies with tricky pricing and proprietary money schemes.”
Full article here.
MacDailyNews Take: This Zune thing is so bad, and keeps getting worse, it’s almost as if Microsoft wants it to fail. Is there any benefit at all to Microsoft if Zune fails? Some tax benefit or something? Or are they just really that incompetent? The world “chose” Microsoft’s Windows because they didn’t know any better, they thought a computer was a computer, people that had no idea what they were talking about told all their friends to buy a Wintel PC, and people wanted a computer for as cheap as possible. Windows is a mistake that snowballed. We’ll be correcting that mistake for a long, long time.
But, people are more technically savvy today. Note that iPod dominates and it isn’t the least expensive, it just works the best and people know it. Ditto for the Mac slowly beginning to take market share from Windows again. People aren’t as easily fooled with tech nowadays. Either Microsoft wants Zune to flop for some reason or they actually believe their own press clippings and think they can fool the world again, which just isn’t going to happen.
Related articles:
Why Microsoft’s Zune won’t kill Apple’s iPod – October 03, 2006
10 Apple iPod vs. Microsoft Zune myths – October 02, 2006
Analyst: Zune could lead to ‘civil war’ between Microsoft and Windows Media partners – September 29, 2006
Thurrott on Microsoft’s Zune: ‘The makings of a disaster, what the heck are these people thinking?’ – September 29, 2006
Analyst: Microsoft Zune’s as good as dead on arrival – September 28, 2006
Microsoft sets 30GB Zune price at $249.99 – September 28, 2006
How Microsoft’s Zune can kill Apple’s iPod – September 21, 2006
Microsoft’s Zune insanity – September 21, 2006
The Microsoft Zune 1.0 dud – September 20, 2006
Microsoft’s underwhelming Zune a ‘viral DRM’ device – September 18, 2006
SanDisk teams with RealNetworks against new common foe: Microsoft Zune – September 18, 2006
Creative does Apple’s dirty work by immediately attacking Microsoft’s Zune – September 17, 2006
Motley Fool’s Jayson: Microsoft’s ‘just plain ugly’ Zune a meager offering, not an iPod killer – September 15, 2006
What’s in a name? ‘Zune’ a French-Canadian euphemism for penis or vagina – September 15, 2006
Crave at CNET: ‘Microsoft Zune, all the excitement that brown can bring’ – September 15, 2006
Microsoft’s Zune underwhelms – September 15, 2006
Enderle: Microsoft Zune ‘a design mistake’ – September 15, 2006
Microsoft hypocrisy exposed with Zune: What ever happened to ‘choice?’ – September 14, 2006
Analyst: Microsoft Zune with fake scroll wheel ‘hardly an Apple iPod killer’ – September 14, 2006
Analyst: Microsoft Zune won’t spoil Apple’s biggest iPod Christmas ever – September 14, 2006
Microsoft unveils Zune 30GB player, Zune Marketplace; declines to disclose prices – September 14, 2006
Analyst: Microsoft’s Zune an ‘underwhelming’ repackaged Toshiba Gigabeat; no threat to Apple iPod – August 30, 2006
Microsoft confirms brick-like Zune to be made by Toshiba – August 25, 2006
Microsoft Zune is chunky brick made by Toshiba – August 25, 2006
Microsoft to spend hundreds of millions, several years on Zune trying to catch Apple iPod+iTunes – July 27, 2006
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006
Computerworld review: ‘Apple’s new iPods are better than ever’ – September 27, 2006
PC Magazine’s 19th Annual Readers’ Choice Awards for MP3 players: Apple iPod line – September 25, 2006
USA Today reviews new Apple iPod nanos, updated iPods, iTunes 7 (each earns 4 stars out of 4) – September 21, 2006
Time Magazine’s Gadget of the Week: Apple iPod 80GB – September 21, 2006
CNET Editor’s Choice: Apple fifth-gen updated iPod – ‘best, most attractive iPod to date’ – September 20, 2006
Disney’s remarkable 1st week iTunes movies sales should have studios clambering aboard Apple train – September 20, 2006
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006
PC Magazine review: iTunes 7 ‘Apple’s best effort yet’ (4 stars out of 5) – September 15, 2006
CNET Editor’s Pick: Apple’s new 2G iPod nano – ‘sure to be top choice among wide range of users’ – September 14, 2006
Apple debuts new iPod in 30GB and 80GB with Hollywood movies, games and new lower price – September 12, 2006
Apple intros new iPod nano with new aluminum design in five colors and 24-hour battery life – September 12, 2006
Apple unveils new iPod shuffle: world’s smallest digital music player – September 12, 2006
Apple debuts iTunes 7 – September 12, 2006
Actually quite brilliant from a marketing standpoint.
And most people will do what Microsoft says and will believe that 79 points is less than 99 cents.
Just wait for the Creative vs Microsoft, Zen vs Zune trademark infringement suit to decimate the Zen. 43 days til filing and counting…
779 points for an album sounds expesive to me.
There probably isn’t an easy way to redeem your points for cash either. Because of that, MSFT can articially overstate music sales because they’ve received payment, just haven’t delivered as yet. MSFT used to do something similar with sales of Windows and Office. They would sometimes show the revenue when the order was taken, although not shipped. They would bounce back and forth in their practice of accounting for revenue, that resulted in flattening wild swings in earnings, showing steady growth from quarter to quarter.
iZune this much
My favorite part is where they explain$5 for 400 points, $15 for 1,200, $25 for 2,000… as though there was some sort of discount as you got higher. Why not just say that it’s 5 bucks for 400 points and let those 3 guys that decide to buy in to the program do the math to determine that they could get 2k points for $25?!?!?!
And as for subscriptions, I can listen to my Sirius satellite radio in my car (I can also listen to my iPod there) and on my computer for $2/month less than what Microsoft is offering (without the news Howard Stern, and NFL), and thanks to Audio Hijack I can save any of the songs I hear DRM-free.
micro$oft is as micro$oft does, takes something that should be simple and makes it far too complicated by far…honestly whats the point? *de dum tiss*
This company has no respect for its users. They’re in it entirely to line their pockets and not really contribute anything. They stink.
I love M$. They have great customer service.
BURN BURN!!!
Wow. I’m completely shocked that Microsoft would stoop to such a sneaky, underhanded marketing ploy. Absolutely SHOCKED!
/sarcasm
Microsoft is a massive train wreck, happening over 4 years…
Microsoft is banking on getting users who like subscriptions, and then those users will also purchase songs, thus spending more than iTunes users. Plus, no one will understand the points per dollar pricing structure, and will spend more money, some of which will never get used due to the pricing schemes (yes, scheme), and thus MS will bank a lot of moolah.
With a point system Microsoft benefits several ways… plenty of people will confuse points with cents, thinking they’re paying 79 cents for a song, instead of 99 cents.
And later, it will be much easier for Microsoft to do the music industry’s bidding and raise the price to 89 points and then 99 points for a song. People won’t realise they’re paying closer to $1.25 per song.
points are to use its xbox hegemony. You can use the same points you bought on xbox live. That way you have 360 owners buying music on their console and transferring it to their Zune… apple doesn’t have ANYTHING like this.
Magic word: own.
You have to have a laugh at this post – Microsoft the land of free thinkers?!*?
“Zune Superior Portable Audio Player for free thinkers
Reader post by: Maxwell Studly
Posted on: September 28, 2006, 11:23 AM PDT
Story: Zune details unzipped
Zune is hardly an iPod knockoff. By all accounts is superior to the iPod in every way imaginable. Not that it’s hard to make a “better” mp3 player than the iPod. Creative, iriver, Samsung, and Sandisk (among others) have been making better mp3 players for years now.
The iPod is like a Brittney Spears album. Even though it’s absolute garbage and even though there are countless superior alternatives out there, mindless lemmings will still buy it. It’s the same kind of zombie that blows their money on Bose equipment and Monster cables…that’s the typical ipod advocate.
Down with mindless zombies. Long live free-thinkers (future Zune owners)”
These guys who champion Microsoft at any price are hilarious.
Man, I was hoping the songs would go for 78 points. 79 points is just TOO much.
Seriously, did someone forget to tell MS that we have this new-fangled thing now called the MONETARY SYSTEM. I mean, I guess they could have insisted that U.S. users pay up with Euros and Europeans use rupees and Chinese use Swiss francs. That would have been easier to grasp then this system. Reminds me of S&H greenstamps, collect 30,000 greenstamps and get a free bottle of wiper fluid or somesuch.
100 cents = 80 points
98.75 cents = 79 points
Slightly less that 99 cents.
Typical MS, shunning standards in an attempt to own everything themselves. They refuse to even use the same currency! How much do you want to bet that someday they try to make Microsoft Points a standard world currency? Come on, who’ll bet me 400 MS points? : )
Will they access Second Life currency?
” width=”19″ height=”19″ alt=”wink” style=”border:0;” />
Why is that Micro$oft can market….but can’t market?
If the Zune fails in the forecast, will anybody hear?
So, Microsoft take your money, puts it in the bank and collects interest while you decide what songs you want to purchase with points.
And there is no option to pay per single purchase?
I can see this idea failing miserably.
These guys are EVIL don’t give Microsoft a dime. Oh, 8 points.
The truth is out there and it ain’t with Microsoft.
Alright math-fans, help me out here:
Microsoft sets the song price to 79 points, which most people will perceive as being inexpensive because it is less than 99. Yet, if you do the math, it’s actually slightly more than $0.99. Cute, very cute.
Does it not work out that the songs cost slightly less than .99?
Apple: Songs cost 99/100 of a dollar.
Zune: Songs cost 79/80 of a dollar.
1/80 is larger than 1/100, therefore Zune songs are cheaper. Right?
Every time someone brings up how they circumvent DRM, I’m reminded of teenagers who brag about how much pussy they’re getting…
Don’t get me wrong, I’m glad you’re gettin’ yours… but boys do us a favor and keep it to yourself.
On a lighter note, I remember reading once that Microsoft also got credit for all hybrid software CD sales. If a software maker developed a game, for example, that contained installs for both Mac & PC, the PC got the credit at the register.
MDN MW: Water… as in time to float-check the Zune. Or, maybe Microsoft’s water bucket has a hole in it and which makes fightin’ fires a little more difficult.
Soft Hearted: I think you’re on the right track, except when it comes time to jack up the prices, I think Microsoft will keep songs at 79 points, and then simply charge more for the points. People (i.e. Windows people) are so stupid they’ll forget how much they cost in the first place, and most won’t bother to figure out how much they’re actually paying for each song anyways. They’ll just feel pleased with themselves that they’re “only” paying 79 points per song, instead of that ridiculous 99 cents iTunes charges.
Needless to say, as far as I’m concerned Microsoft and their brown-loving Zuny Loonies can take their points and shove them up their fake clickholes.
I wrote the article. I’m embarrassed to note that I also did the math wrong. Whoever pointed out that 79 points is less than 99 cents is right. Oops. You’d think I could do ratios (and most times I can).
Sorry for the error. I fixed the original post, but obviously, I can’t fix this one.
Carl
doomed.
I wager 400 quatloos® on the Earth creature.
Yes, the math in the article is wrong (slightly). In MS’s world:
1 point = 1.25¢
1 song = 98.75¢
So a song is a quarter of a cent less through MS than through ITMS. However, it’s much more confusing and difficult to actually buy anything. I see this failing miserably.
lex parsimoniae (law of succinctness) entia non sunt multiplicanda praeter necessitatem, entities should not be multiplied beyond necessity.
Well M$ really thought long and hard how to mess up this. It’s taken them 3 years to come out with something as stupid as this.
I’m glad I can’t type zune with a capital z, because I have shift z for an app.
It deserves to be small (not too small) and brown. Rech–barf.
Apple does the same thing – iTS gift cards are in even dollar amounts, the songs are 99¢. An extra of penny profit per song for Apple.
in dutch zune means kiss (spelled zoen but pronounced the same)
zune my ass
Actually… he did his math wrong. With 80 points to a dollar, 79 points is actually worth .9875 cents. A whole quarter of 1 cent lower than iTunes!!! That will surely attract peope away from iTunes!
n
o
t
wow, was I slow on my comment. Guess I should refresh before I post.
Just what we need, a Microsoft monetary system.
ZUNE DOESN’T EXIST! YOU CAN’T BUY IT! IT’S VAPORWARE! IT’S A GHOST! IT’S A RUMOR AT BEST!
Why all this talk about a baby that hasn’t even been born yet? We need to pay more attention to what “Tommy Boy” says above, for MonkeySoft will be DELUGED with lawsuits the moment this turd hits the market.
And then where will all the WinFanBoys be when they experience firsthand the 10 Major Myths About The ZUNE?! Yeah, try to play a movie on this turd, WFB’s! Try to play all of your “Plays For Sure” songs on it! Try to find ANY OTHER PERSON ON EARTH TO SEND A SONG TO via the touted Wi-Fi component!
Oh, gawd, but you WFB’s are going to be crapping your pants when the reality of this illusion hits the fan. (Yeah, YOU, Peterson/StockBoy!)
Apple does the same thing – iTS gift cards are in even dollar amounts, the songs are 99¢. An extra of penny profit per song for Apple.
Only if you never, ever buy another song from Apple with a credit card.
With this stupid MS point system you are likely to never to be able to get everything back out of the system.
Every time I here “Zune” I think of that crappy movie “Dune” that had Sting in it…remember…it was a total flop and so to will Zune!…
In my view the word wanted a personal computer standard and turned to IBM to provide it. Instead it got Microsoft and we have paid dearly for the deception.
The Softy corp. was catipulted into orbit by the mighty (at the time) IBM. It is re-entering the atmosphere and things are getting a bit uncomfortable in Redmond. I really hope they burn.
This payment system but one more example what a system baised upon greed and right through might produces. Evil.
“proprietary money scheme” That is classic MicroSoft.
Tennessee Ernie Ford sang it best:
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store.
from Wikipedia: “I owe my soul to the company store” is a reference to the truck system and to debt bondage. Under this system workers were not paid cash; rather they were paid with unexchangeable credit vouchers for goods at the company store (usually referred to as scrip). This made it impossible for workers to store up cash savings. Workers also usually lived in company-owned dormitories or apartment buildings, the rent for which was automatically deducted from their pay.
Sounds familiar don’t it?
Everytime some company comes up with “points” or “rewards” or “skymiles” the end user is suckered into thinking they got a deal….just another swindle move by MSFT.
Unfusking believable. This from a billion dollar company. Must be Ballmer behind this latest scheme. In the age of debit and credit cards the best they can do is points? The buying public hates gimmicks. Apple proves this with a simple 99 cents per song. clean and simple.
The loser who buys into this deserves everything they get.
Microsoft reserves the right to “innovate”: in this case, by finding new ways to corn-hole consumers.
Let’s confuse our customers like when we release 6 versions of Vista. Just another reason to buy and iPod and not even bother looking at a Zune.
They more I read and think about Zune’s music pricing structure, the more I’m convinced it was conceived by MS accountants.
“…Either Microsoft wants Zune to flop for some reason or they actually believe their own press clippings and think they can fool the world again, which just isn’t going to happen.
Well…if Zune tanks really badly, then MS may go whining to the governent that since they (MS and everyone else who has tried) can’t succeed in the mp3 player and digital music business, then Apple must have a monopoly with iTMS/iPod.
And I’m only half joking about it.
Macaday,
Thanks for the hysterical post.
I especially liked this part, “… Even though it’s absolute garbage and even though there are countless superior alternatives out there, mindless lemmings will still buy it.”
Gee, I’ve never heard one Windows user refer to other Windows users as lemmings. Obviously, this doorknob doesn’t know most iPod owners use Windows.
Greg L; “Microsoft reserves the right to “innovate”: in this case, by finding new ways to corn-hole consumers”
I’m so glad you asked. Shouldn’t Korn be touring with Hole?
Zune.
What a Marune.
“Curly”
I heard theres porn on that thar intarweb!
If they gotta have porn we dont need no intarweb!
Microsoft is just dong cheap stupid antics to GET PEOPLE TALKING ABOUT THE ZUNE AND NOT THE iPOD!
And look how we encourage it.
Too bad we dont have a daily show equivalent for everytime M$ shoots themselves in the foot. Please God let a software company with talent and interest in consumer needs take their place.
Gawd, no wonder MS rules the planet.
They may well succeed too, such is their user base.
The last generation was ignorant…this is a different generation and they are alot smarter.
“The world “chose” Microsoft’s Windows because they didn’t know any better, they thought a computer was a computer, people that had no idea what they were talking about told all their friends to buy a Wintel PC, and people wanted a computer for as cheap as possible”
In fact, the above statement is not true (since this is a Mac list, after all, I thought I would address this point). Windows succeeded because “no one ever got fired for buying IBM”. Remember that IBM backed DOS and then WIndows and business lived in fear of technology (at least back then). So, psychologically, business chose Windows because IBM chose Microsoft.
The other (economic) reason is that (conservative) businesses didn’t like “putting all their eggs in one basket” vis a vis hardware (yes, they created an OS monopoly, but they could always buy hardware from someone else if their current supplier “disappeared”). They STILL can’t do that with Apple and I’m sure this keeps a LOT of businesses away. If 90% of all computers ran OS X then 90% of all computers would be Macs (i.e., everyone would be dependent on a single hardware manufacturer). Businesses would be afraid that not only would their OS then be in the hands of a monopolist, but their hardware as well.
Obviously, most of us reading this would LOVE for that to happen. I just wanted to set the history record straight…
Does that mean Microsoft has 32 trillion points in the bank?
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
Zune Flooz?
Indeed interesting to notice that M$-monney is aligned to the Euro change…
wtf with the points bs, 1 dollar is 1 dollar, who will want to care for this point scheme? even if you can earn or use those points in xbox live, thats still a vertical market, and it just too much to remember and most likely very slow to collect points, its easier to pay upfront for the points, so why not just pay for a CD with cash, after 6 months, yay i gots me 150 points from xbox live! I doubt they will give away any real free money.
Dear Mike,
What’s the point of the article then, even after all the revisions?
Keep the $1,000 (in US$ I hope) and buy yourself some Zunes, then you’ll have Zunes actually close enough to try out the wireless sharing.
Have fun.
Best regards,
Chris.
On 10/4/06, Mike Elgan <mike.elgan@gmail.com> wrote:
If you can show me one place in my column where I say Zune will kill iPod or even that Zune will do better in the market than iPod I’ll give you $1,000.
Mike
On 10/3/06, chris wrote:
Re : Your opinion piece on ComputerWorld “Why Microsoft’s Zune scares Apple to the core”
How long do you want to give it before this happens? I hope you don’t say version 3 or above …
I’ll keep watch and see about your “predictions”.
Come on Apple – release the iPod AV and drive a stake through the heart of this B*****d child of M$
As an Apple shareholder, I heartily approve of the way Microsoft is handling their “zune” product and service.
Three cheers for Microsoft’s top six levels of management!
-jcr
It should be flat out illegal for a company to establish its own currency.
Oeople…
Do we expect anything LESS from Microsoft. At least they are consistent.
Just my 2.5 points worth…..
Whoops…Oeople are People on my world. Just like Microsoft points are dollars on yours.
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
This is really too good to be true. M$ is pioneering new techniques in advanced stupidity! Go, M$, go! Watching M$ is like watching Al Sharpton run for president. Al wanted to slap donkeys. Ballmer wants to throw chairs. Maybe there’s a connection.
Maybe Bush can replace the penny with Microsoft points and seal his legacy in history.
Hello sir,
I Engr Ayodeji, I am the M.D of Lexy computers, a MCSE certisfied
Engr, I needed ur consignment of laptop of pentium 4 and m, I will
place my order soonest.I needed to see sample of ur latest Technology sent
down to me to show it to our various customers. I hav about 800,000 Dollar to
ship down to Nigeria.But bf this i need u to send us like three sample of
laptop through DHL or UPS ,and i will need am invitation letter to come overther
to pay for our consignment b4 it will be shipped or i can pay it through
western money union trasfer. i will be expecting ur reply as soon as u received our letter .THANKS
M . D OF LEXY COMPUTER LTD .