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

119 Comments

  1. 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.

  2. 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.

  3. 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…

  4. 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.

  5. 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…

  6. “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…

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