Universal Music Group CEO calls iPod users thieves

“Microsoft [has] agreed to share revenue from Zune sales with record labels and artists. Forcing the issue was Universal Music Group, which at deadline is the only label named in the program. UMG refused to license its music to the Zune unless it could receive a percentage of each device sold, in addition to standard music licensing fees for downloads and subscriptions,” Jonathan Cohen and Brian Garrity report for Billboard.

“These devices are just repositories for stolen music, and they all know it,” UMG chairman/CEO Doug Morris says. “So it’s time to get paid for it.”

Cohen and Garrity report, “Microsoft is working with all major and independent labels to establish similar revenue-sharing agreements. According to published reports, UMG is expected to receive more than $1 for each $250 device and sources at UMG have confirmed that half of all the proceeds from the device’s sales will be shared equally among all its artists.”

Full article here.

[Thanks to MacDailyNews Reader “Michael Y” for the heads up.]
As there are no Zunes out there, it’s obvious that Universal Music CEO Doug Morris has basically just called iPod users thieves while accusing Apple of aiding and abetting thieves the world over by making 70+ million iPods that each come with “Don’t Steal Music” stickers. Morris has just joined a unique group of iPod thievery accusers that includes Microsoft CEO Steve Ballmer and Real CEO Rob Glaser. Good luck snagging a doughnut at that group’s weekly propaganda planning meeting, Mr. Morris.

JupiterResearch on September 14, 2006 released a report,” Portable Media Player Owners – Understanding iPod Owners’ Music-Buying Habits..” The report’s author, JupiterResearch analyst Mark Mulligan, has blogged (see: Straightening the Record) the following regarding the report:

So this report got a lot of attention in the media, which shows how much interest there is in the topic. However some of the coverage has been quite selective in which parts it has highlighted and some have even used it as evidence for Apple-bashing. So for the record here are the key thrusts of the report (all of the below refer to Europe): MP3 player owners of all types (iPods included) don’t regularly buy much digital music. iPod owners are actually more likely to buy digital music than other MP3 player owners. Free online music consumption significantly outweighs paid, significantly more so for owners of non-iPod MP3 players. Device owners are much more likely to buy CD albums online than digital albums.

The facts: Most tracks on a typical iPod are not tracks that were purchased online. Most tracks on a typical iPod come from CDs that users have legally purchased and already own and ripped via iTunes. Tthe truth is that iPod owners are significantly less likely to steal music than also-ran MP3 player owners. iPod owners are “substantially less likely to download using filesharing software with only 7% of iPod people downloading illegally compared to 25% on average. And they’re more likely to be buying CDs, with your everyday iPodder buying 2.3 albums a month compared to the average of 1.8,” XTN Data reported in a January 2006 report. XTN Data surveyed over 1,000 UK and US music buyers to arrive at the data. XTN Data also found that 50% of iPod owners regularly download music from Apple iTunes Music Store.

Microsoft was either stupid, desperate, and/or sleazy by signing that awful deal with Universal. Imagine someone buys a Zune (farfetched, we know, but play along), but they never listen to a second of Universal-controlled music. Guess what, under Microsoft’s idiotic deal, Universal still gets paid for absolutely nothing; they just take the money anyway… kinda like stealing, huh? Who’re the real thieves here? The music labels do not deserve a cut of MP3 player revenues any more than television networks deserve a cut of TV sales. It’s stupid, illogical, and wrong. Microsoft’s real tag line for their Zune debacle should be: “Welcome to socialism.”

It’s time for Apple to start eliminating the middlemen.

Universal Music Group contact info:

email: communications@umusic.com

2200 Colorado Avenue
Santa Monica, CA 90404
(310) 865-5000

1755 Broadway
New York, NY 10019
(212) 841-8000

Related articles:
Did Microsoft have no choice, but to sign bad Zune royalty deal with Universal? – November 11, 2006
Following Zune deal, Universal expected to demand iPod royalties from Apple [UPDATED] – November 10, 2006
Microsoft attempts to poison Apple’s licensing deals with music labels – November 09, 2006
Microsoft to pay Universal for every Zune sold – November 09, 2006
Study shows iPod owners significantly less likely to steal music than the average person – January 13, 2006
Warner’s Middlebronfman: ‘We sell our songs through iPods, but we don’t have share of iPod revenue’ – October 05, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005
Real CEO Glaser calls Apple iPod owners thieves – May 11, 2006
Microsoft CEO Ballmer: ‘Apple iPod users are music thieves’ – October 04, 2004


  1. I think Steve Job should tell Universal, fine Apple will pay the royality on every iPod sold, starting next year. By the way, we will stop paying iTune sales royality, since that will be double dipping on same songs.

  2. The music labels do not deserve a cut of MP3 player revenues any more than television networks deserve a cut of TV sales. It’s stupid, illogical, and wrong. Zune’s real tag line should be: “Welcome to socialism.”

    Something like this on a economic scale is exactly what the Socialist Democratic Party is all about.

    People who play by the rules; they buy their music, cars, clothes and other needs from their hard work and efforts have to pay a tax for those who refuse to.

    I refuse to buy a Zune, Apple provides the devices, it’s people’s actions, and the high cost of cd’s and record label greed that motivate people to steal.

    Socialism has failed before, it will fail with the Zune.

  3. Why do that when we can steal the songs like they are accusing us of anyway? It takes a real idiot to push an idiot’s ideas.

    “Why not pay a Dollar to all music companies?”

    How much of an investment did the music comopanies stick into research and development of the players? Or why only give half of the dollar to the starving musicians when they could really be honest and give it all to them? The musicians are the creators not the executives. This article sound like someone (music execs) else is standing on the platform while the train left days ago.

  4. I agree with MDN’s take.

    I have over 9000 songs in my iTunes library. I have purchased maybe ~ 150 songs total from the iTunes Store. The iTunes / iPod combination has provided me (and I’m sure many others as well) a new way to listen to my music. I began ripping my CD’s into iTunes in Sept. 2001 when I bought my first Mac. I didn’t buy an iPod until almost 2 years later! Even before the iPod, I had forgotten about some of the CD’s that I already owned. Once I had the capacity I needed, I began ripping the entire collection. The iTunes / iPod experience has definitely changed the way I listen to my music! And to this day, I have NEVER downloaded any song from the Napster / Limewire (or equivalent) sites. I just haven’t wanted to or needed to. If I hear a song that I like, I buy it from the iTS.

    The record companies are crying “sour grapes.”

  5. All other considerations aside, which of us personally knows more than a handful of people who have actually spent twenty or thirty thousand dollars on their record collections? That said, which of us does indeed personally know a substantial number of people with double digit gigabytes of music on their hard drives?

    Just saying. I think we ought to at least be honest when we discuss this issue.

  6. Ever since they started making blank recording tape, people been recording music, theirs or someone elses. Nothing new here.

    I remember one recording label big wig talking on TV about people stealing music. “When people play these [blank tapes] all they get is hiss, they’re putting something on them.”

    Kinda chuckled, because all I bought them for was to record music that I already owned, so that I could play it in my car. To buy music on tapes was just a crap sounding medium anyway, so I had to re-record them onto tape to get a better sound than what the record labels provided, no matter how they tried.

    So some of us are truly stealing music, but that is unlikely to change in the near future. They’ll figure something out and we probably won’t like it.


  7. MDN this is a stupid interpretation on your part, yet again, but that’s why I keep coming back.

    He clearly is referring to the MP3 player in general and, as you like to ignore, Ipod makes up barely 50% of the WORLDWIDE market.

    What an inferiority complex MDN has, grow up. There’s another @45-50% matket of OTHER PMP’s.

  8. With this brain dead logic, why stop at iPods and MP3 players? If music players are a repository for stolen music then so are computers. So why not have Dell, HP, SONY, Apple and all the others start paying the music companies a royalty for every computer sold?

    This, I’m sure, makes sense in the empty head of a music executive.

  9. They need to charge automakers, too. And all music hardware makers. And all people with ears for having the audacity to hear their music should it be played out loud. Furthermore, God should pay them because his laws of physics allow the stealing of music by people with ears because he allows sound waves to travel. Oh, and…

  10. MS’s fee paid to the record labels sounds very much like the tax on recordable media (including blank CD’s, DVD, Hard drives and iPods) in other countries (like France) where it is as assumed that people will steal music and put them on the device. The tax then (supposedly) goes to the record companies or artists to offset their losses from theft.

    I do not steal music. If I find a track that I like, I buy it. That’s fair and right. I could have purchased a lot of music from certain Russian music “stores” or just traded them with friends etc. But I don’t. Most of my music comes from my CD collection, some from iTunes.

    HOWEVER, if I am going to pay a fee or tax because I am judged a thief, I will act accordingly. If I am going to pay for music I didn’t get because I am assumed to have stolen it – ok then I will. Why should I pay a record company for music I DIDN’T get, all the while they are condemning me, their customer, as a thief?! If the economic model that the record companies want is for me to pay a fee on the portable device assuming I will go and get my music from others for free, well, ok, but they won’t have it both ways.

    I haven’t really had a negative feeling towards record companies until now. I always believed they were just normal businesses trying to make a profit while providing a service for their customers (the artists and people like me). But now I see this isn’t true. All they are interested in is making as much money as they can while screwing their customers (both the artists and people like me). I also think they are afraid of the future. Soon, very soon, artists won’t need big record companies to get their music into the hands of people who like it, and are willing to pay for it, and who will be appreciated by the artists for their purchase. Digital music, affordable yet powerful recording and editing systems, the Internet and electronic commerce will soon make record companies irrelevant (for current and new artists anyway).

    Record companies are dinosaurs… their extinction can’t come soon enough for me.

    Oh, and I think Steve will tell them to pound sand if they ask for an iPod tax.

  11. here in Canada, there’s an absurd copyright evy on blank recordable CDs – more than 20cents/disc depending on what kind – the thinking is that people are stealing music so the gov’t should collect this money from consumers and distribute some of it back to the Canadian artists (yeah, right…) for a while, they even had a crazy levy on MP3 players, based on capacity – I think I paid $15 or $20 on my original 3rdGen iPod – but thankfully a federal court ruling repealed that one, and refunds were given.

    basically the assumption is that all people with a CD burner must be music thieves, forget about fair-use, by the way. the loose interpretation of this levy to some people is that it must therefore be ok to copy music, because we’re paying this levy. and of course, the gov’t IS giving it right back to the artists, right? (wink, wink). oh, and you pay this levy whether you’re using your CD-Rs to back up just data, or copy non-Canadian music, or whatever. the gov’t doesn’t discriminate

    will the Univeral-MS Levy have a similar interpretation by the consumer – that’s you’re compensating Univeral already (because they think all of you are thieves anyhow) so go right ahead and copy?….

    anyhow, it’s probably a moot point if only a couple thousand Zunes are ever sold…

  12. “UMG have confirmed that half of all the proceeds from the device’s sales will be shared equally among all its artists.”

    This is a complete load of horse s**t – the artists in their stable will get exactly what’s in their contracts, and any new revenue from Zune sales or anything else, I guarantee, will not be passed out like birthday cake over at UMG.

    I would really like to see iTunes become a label…

  13. I think the other ones will knock on the door shortly…

    Then let ’em them knock. MS just sprung a huge can of worms on themselves. Every studio out there will definitely want their $1 too.

    As for getting paid by device…I don’t get it. Talk about thievery and money-grabbing. What next, the studios get paid $1 for EVERY music-playing gadget? Why not $1 for every PC that can store & play music? Ohhh why not pro-rate the capacity of every music-capable PC? One penny per song of capacity across a few dozen open gigs would make for some good revenue.

    Many thanks to the marketing geniuses at MS for giving the music companies another foothold. Here’s to Apple holding out while they milk MS.

  14. Jobs and Apple have almost single-handedly pulled the Recording Industry’s collected “chestnuts” out of the fire. With the first successful digital music sales and delivery model, Apple breathed life into a decaying, decadent group of of companies. The greed of the recording industry is what brought them to the brink of failure before Apple, and the greed and utter stupidity of Universal CEO Doug Morris and his ilk will destroy them for good. With slime like him running the “big music” industyr I say GOOD RIDANCE!

    No DEALS for these guys. Royalties on music is business, royalties on iPods is extortion. It won’t hurt me a bit to stop buying Universal/Vivendi product. But they won’t be in business long if everyone who owns and MP3 player quits buying their products (and I mean all movies, games and music that they produce). It won’t take a day before Universal’s artists find a better home when that POS company declares bankruptcy.

  15. Tobacco companies pay for death and injury owing to government hypocritical sanctioned tobacco use.
    Firearm manufacturers are sued to pay survivors of murder victims.
    Alcoholic beverage manufacturers intimidated to pay survivors of drunk drivers.
    Restaurants and food processors are threatened with lawsuits for obesity and diabetes.

    The obvious trend is that you go for the group with the deep pockets, not the actual offender. And you’re surprised that honest and law abiding citizens conducting lawful businesses are <strike>extorted</strike> expected to pay a tax because criminals steal music?

    The music distribution industry has simply turned the tables and is using the same philosophy to reach into the collective accounts of music fans. Now, you, the honest consumer, has to share the pain by paying for more expensive products and services. As long as individual responsibility and culpability are supplanted by collective punishment, you had better get used to the idea of more pain and aggravation.

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