“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
I say I’ll pay the stupid record companies for each and every record that I buy! As for my CDs, they’re paid for at the CD store.
MDN word: matter – what the heck is the matter with these money mongers!?
over 8100 songs. not one illegal.
if Doug Morris doesn’t shut the hell up and get a clue, he may find his sales dropping and there will be no one to blame but himself. moron.
Had the music industry dropped the price of CDs to reasonable levels, as they promised at the beginning of the CD era, they wouldn’t be in the state they are now. Music stores like Tower Records wouldn’t have gone out of business either.
It’s pretty foolish to insult your customers by calling them thieves.
What if UMG is getting $1 per Zune because they think the Zune is going to fail miserably. Perhaps this was their “If you want us bad enough you’ll have to pay us for the priveledge to sell our music.” approach to someone they really don’t want to deal with.
I can only assume the conversation went something like this:
MS: We want to sell your music through our Zune service.
UMG: (After laughter stops) Not a chance! You guys really think you’ll sell a lot of Zune’s?
MS: Of course we will….eventually.
UMG. We’ll only agree to let you sell our music if you give us $1 per device. Either that or no deal.
MS: Um…sure. We lose money on each unit anyway so what’s another $1? We’ll make it up on Vista.
UMG: (After laughter stops). Deal!
This is bogus. You can either have a flast tax on music devices like Canada…or pay for eeach music item like the USA. It’s wrong to do both. I’m sure we in the sus already pay some hidden tax for music…I probably just don’t know about it.
Also to reply to this post by “gwm”:
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 megabytes of music on their hard drives?
Just saying. I think we ought to at least be honest when we discuss this issue.
Hello GWM…nice to meet you. In my life I purchased and accummulated over 900 CDs. At an average price of $15/cd…that’s $13,500 of legally purchased music. It took me over 1 month to digitize all of them which I did at th launch of iTunes….and lke others years before I got an iPod. But it’s all mine…and I still have the CDs…but now instead of filling a bookshelf…they fill a hard drive and the physical CDs are in boxes in my basement.
Also…until iTunes arrived…I had stopped buying music…I never used any sharing sites…I had simply lost interest. Buying crap filled CDs for one song that I liked just didn’t make sense any more. So my music addication faded.
However, when iTunes launched and I was able to find and buy only the songs I wanted…I started to get hooked again. For the last two years I have averaged buying 2 songs at day. Or a total of 700 plus songs…I’ve spent probably over $1000 if you combine TV shows and movies.
So $13,000 worth of CDS and $1000 worth of iTunes…well I don’t quite make your $20K – $30K mark…but I’m close.
This is all about MS trying to cut Apple’s profits. Unable to come up with a decent idea themselves they are atttempting to use their monopoly profits to undermine Apple’s success.
Nonetheless as another poster says, what happens when Sony and all the others come knocking on the door? Then there are the indie lables all wanting their cut.
It’s the sort of sleazy trick I would expect MS to pull. These guys really have no shame. And they wonder why people regard them as s..t.
I can’t believe there isn’t a phone number or email address to this Ahole Morris
“These devices are just repositories for stolen music, and they all know it,”
Computers could also be classed as “repositories” so does he want a cut of every Mac or PC sold aswell??
I fail to see the logic in his point of view.
No contact links on Universal site or (parent company) Vivendi site. Figures!
Boycott their products, all of them, if possible, this includes the other divisions
like Vivendi Games.
Vivendi knows al ot about crooks after all. Their ex-CEO Jean-Marie Messier is in jail in France for stock fraud.
Can’t believe i used to work for one of their divisions (since spun off and sold).
With this kind of attidtude, I am wondering why no one is calling for a boycott of UMG? Hit them where it hurts and don’t buy ANY of their products.
I’m not sure it qualifies as socialism, however much it would suit MDN’s right-wing bias and the leanings of Rabid Dog.
This is simple legalised theft delivered though a commercial front. It has more in common with the behavior of the Cosa Nostra than it does with socialism, conservatism or any other political philosophy and anyone who thinks the Mafia were in league with left-wing politics obviously has no understanding of history (go look up the histories of P2 or Gladio if you want proof).
To be honest, Apple should just decide that it has tried hard enough to be nice to the music industry and it should now just get on an assimilate the industry in incremental stages: the two easiest players in the market to acquire and derive benefit from are Warner Music Group (controlled by the phenomenally greedy Edgar Bronfman, but owned by VC and private-equity groups if memory serves) and EMI Group plc given that Sony-BMG is a joint venture and Vivendi-Universal is far too cumbersome and unfocussed.
The cost of assimilation would be around $4.0 billion for Warner Music and around the same for EMI. Choose whether to dispose of the bits that don’t serve any strategic purpose – like EMI’s recording studio empire – and then remove redundant overlap (like accounting and distribution) and you’re left with a viable cash generating business, simmer gently for three years and then spin-off 30%-40% as a separately quoted business.
The advantage of doing this is that Apple can effectively shape the future of the music industry and – most probably – disrupt the quasi-criminal cartel of the record industry. Furthermore, new artists who come into the “industry” (although it’s hard to understand where that word can be applied) can make a choice as to whether to sign for a label run by people who have no understanding of the digital age or sign for a label owned and controlled by people who created the digital age.
Apple has the money and the market cap to make these things happen.
same problem w/ my screen.
Double digit maegabytes? well sure I might have double digit megabytes on the hard drive. But I must say, if I did have that much, a good portion of that is music I wouldn’t have paid for. Ever. A fact, and maybe I’ve been living under a rock, but before digital music, I had bought no more than 1 CD over a ten year period. It appears that I have spent at least $800- on music over the past 3 years between iTunes, Amazon, and other sources. So is the movie industry better off now that I have some tunes they have not a cut of, or before MP3s when I spent 20X less on music than I do now?
I agree that the Zune Tax (like the iPod Tax that was once levied by Canadians) is a very very stupid idea.
On a side note: “It’s time for Apple to start eliminating the middlemen.”
Um…. what does that even mean, MDN? Most artists don’t own the rights to their music, so you can’t be implying that Apple make direct deals with the artists. It’s not possible in most cases.
So, what are you implying?
When AAPL finally get things sorted out with Apple Corps, (aren’t we waiting for the appeal?). Just you see, AAPL will start signing bands, that will start such a huge trend away from the big labels.
My iPod holds more than 700 CDs I already bought… and the music industry wonders why it’s failing….
Don’t worry, the big record companies will soon be irrelevant. But great music will be as relevant as ever.
I, for one, am tired of their packaged crap, pushed will millions while producers of great music are waiting tables trying to pay the rent.
The likes of Maurice Star (NKOTB, etc.) are over. They need the monopolistic vertical and it is eroding. Thank God.
Down with readio, too.
Readio?
Radio.
how are they going to “equally share” the money with the artists? does that mean everyone gets an equal share? or every group gets an equal share? or is it based on their sales? how far back in history do they go to count sales?i think the movie “it’s a mad mad mad mad world” dealt with this issue of equal sharing. maybe better than umg perhaps.
I know Doug from working at UM. Nice guy,but, not a smart comment.
Anyone got the UMG’s email address?
I have over 15,000 songs. A large portion is stuff I have transfered off of LPs. I amassed a huge LP collection while in college in the 90s. It was cheaper to go to Rasputins and get 30 LPs at $1 apiece rather than 2 CDs.
It’s taken about 4 years to put most of them into a digital format. I think I have like 1000 something LPs, plus all my CDs.
So, UMG, are these legal? Hmm? I mean, I got these for practically free. You guys didn’t make any money off the LP when I bought it.
If UMG get $1 for every Zune sold, by this time next year they should have enough to buy…
….1 Zune !
Guess it’s time that all iPod users not buy any more Universal Music Group’s music cuts for awhile – and for that matter lets all email back all of thise so called stolen musdic cuts that us iPod owners paid for!
Maczealot (above) really has this slimy practice pegged. As to whether this is socialism or fascism, that’s a silly debate–both types of collectivism are two sides of the same coin. I wish boycotts actually worked, because I’m sorely tempted to boycott Vivendi.
BTW, this will probably cause the anti-DRM zealots to avoid the Zune; most of those folks are really anti-music corporations, in an anti-DRM disguise. And, frankly, I’m beginning to sympathize. But not to the point of participating in theft, yet…
I admit I have got some songs via limewire, but 98% of my music on iTunes were originally ripped from my own CDs. 1% of songs from iTS.
iTunes first and then the iPod reinvigorated music for me. I certainly wouldn’t have bought about 100 CD in the last 5 years if it hadn’t been for iTunes and iPods.
So sure I have stolen a few songs (basically cos it would have cost an arm and a leg to get those titles), but I have also paid for a lot of titles that I wouldn’t have done if it hadn’t been for iTunes.
My take on this is that you win some and lose some. The record companies won big when CDs came out, lost out when recordable CDs and ripping became available and stand to gain new business by embracing digital music distribution.
Apple have demonstrated that people will buy legally. But this is still in its fledgling stage. I rarely buy iTS songs because I want a higher bit rate and want whole albums. But sooner or later that will be less of an issue because I want to get only songs I like or get explore new bands without having to get a whole album.