Microsoft attempts to poison Apple’s licensing deals with music labels

“Today’s New York Times notes that Microsoft has agreed to share some of the revenues from its upcoming Zune music player sales and services to Universal Music,” Carl Howe writes for Blackfriars’ Marketing.

MacDailyNews Note: Please see: Microsoft to pay Universal for every Zune sold – November 09, 2006

“While this sounds like a simple ‘we wanted to get a major music label on board deal,’ it’s really an attempt to poison next year’s licensing contract renewal between Universal and Apple. After all, Microsoft is unlikely to sell more than two million Zunes in the next six months to a year, so this costs them little. But I estimate that Apple will sell nearly 20 million iPods just this quarter (more about that tomorrow), and hundreds of millions of songs as well. And if Apple has to forfeit a dollar of every $79 iPod shuffle sale to Universal (and presumably to Sony, Warner, and EMI as well), well, that’s a nice way to make Apple pay for Microsoft entering this market,” Howe writes.

Howe writes, “This is classic Microsoft: crafting deals to attack competitors instead of spending the time and energy to positively market the product uniquely and powerfully. The problem: Apple already pays Universal millions of dollars in licensing fees for music it sells, so it has huge leverage with the labels that Microsoft just doesn’t have… I don’t rule out Apple negotiating a device/song revenue split, but let’s just say that Jobs knows he has invested a lot more in digital music than Universal has, and fully expects to keep most of the profits from creating that market.”

Howe writes, “We’ve said it before, and we’ll say it again: Zune is just the last in many attempts for Microsoft to buy its way into the music market without doing the hard work of creating a unique and defensible niche. But until they figure out that good marketing is as important as the technology and deals behind the product, Microsoft won’t succeed.”

Full article here.

[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
The Microsoft sleazebags aren’t going to be able to pull this one off either.

Let’s go to the scoreboard! Apple iPod: 72,000,000+. Microsoft Zune: 0.

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29 Comments

  1. Zune will be dead before that deal comes up for renewal, and the fact that they made this deal with Microsoft should piss off Apple enough to not do a new deal with them, and let them squirm for a while. Maybe Apple will drop the price that they get on each song sold on iTunes by a few cents.

  2. Just a matter of time before MS pulled some dirty trick to try and bring down Apple.

    Fine, time to start spreading FUD about the Zune.
    Gloves come off.
    Lie out your ass if you have to.
    Or tell the truth, that should be enough to scare people from buying it.

  3. It’s easy for MicroSlop to promise payments for hardware and music sold, they’re not selling any. If Zune goes bye bye it’s no skin off Ballmers head.

    Leave it to the French to need a “leave behind”

  4. Jobs should simply start his own record label offering to split the profits equally with the artist. All artists music would be sold exclusively through iTMS and CD’s. He just could not call it Apple because of Yoko and the Gang….

    Perhaps he could make a deal with Yoko to become part of the new label in exchange for Beatles songs on iTMS.

  5. To say that Microsoft is unlikely to sell more than 2 million Zunes in 2007 is an understatement. I doubt they will sell more than 200 thousand. Less even, if they keep the price equal to the iPod.

    /the bigger they are the harder they fall.

  6. Microsoft’s evil gamble will actually strengthen Apple’s negotiating position next cycle. When the Zune fails, it will be a double affirmation that the iPod/iTunes ecosystem is the correct business model, and that there is no way they can coerce Steve to cut the record companies in on a piece of device sales.

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