Microsoft Zune industry shadiness (must-read)
luck
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The game is to be bought, not to be taught.
Related: Non- Strut thread of the week.Microsoft strikes deal with Universal Music Group for Zune music service By Alex VeigaASSOCIATED PRESS9:21 p.m. November 8, 2006LOS ANGELES ??? Microsoft and Universal Music Group say they have struck a licensing deal for the software company's new Zune portable music player and digital music store that calls for the recording company to get paid a cut of the sales of the device. Executives at both companies declined to disclose the financial terms of the deal, which is expected to be officially announced early Thursday. Redmond, Wash.-based Microsoft Corp. is pursuing similar agreements with other major record labels, Chris Stephenson, general manager of global marketing for Microsoft Entertainment, said late Wednesday. Zune, which is scheduled to be released Nov. 14, is Microsoft's attempt to compete with Apple Computer Inc.'s market-leading iPod player and iTunes music service. The device, which will sell for $249.99, lets people share songs, playlists or pictures over a wireless connection with nearby Zune users. By paying record labels a portion of Zune player sales, Microsoft hopes to have more freedom to allow song-sharing or other promotions, Stephenson said. ???There's certain marketing elements that we're looking at going forward, all based around the sharing and wireless scenarios,??? he said. He declined to provide specifics. But in an interview late Wednesday, Universal Music Group Chairman and CEO Doug Morris told The Associated Press that the wireless song-sharing feature of the Zune was not a major factor behind the company seeking a revenue-sharing deal on the player. ???The only factor was that we feel that there's a great deal of music that's (stored) on these devices that was never legitimately obtained, and we wanted to get some sort of compensation for what we thought we're losing,??? Morris said. ???I want our artists to be paid for the music that makes these devices popular.??? While sales of digital tracks have increased in recent years amid lagging sales of CDs, record labels lament that much of the music that winds up on iPods and other digital players comes from either CDs fans already own or tracks culled from online file-sharing services. Earlier this year, Universal and other major recording companies settled a dispute with Sirius Satellite Radio Inc. over its Sirius S50 portable music player by reaching a deal that called for Sirius to pay the record companies a fee for every S50 it sells. Universal sought a similar approach when Microsoft came calling Universal to hash out a licensing deal for its Zune online music store. Absent a deal with Universal, Microsoft faced the prospect of unveiling Zune without content from the world's biggest recording company, home to artists such as U2, Eminem and Shania Twain. Morris said the agreement with Microsoft marks a turning point in how the company will approach similar deals in the future. ???I don't want any business built on our music without getting paid a part of the business,??? he said. Morris declined to say what percentage of each Zune sold will be paid to Universal Music, but said ???it's good.??? Under the terms of the deal, Universal will split the money it gets from Zune player sales with its artists. Morris declined to say how much artists will be paid. AP Business Writer Allison Linn in Seattle contributed to this report.
Comments
You and your lizard people.
Anyway I think everyone is over-reacting at this point, especially the Apple dick riders. Ipod is cool, but its continually gotten shittier with what seems like a sacrifice of quality builds for higher numbers of production/faster production, jut my observation.
Anyway back to the Zune though. I don't think this is the machine that will be the "iPod Killer" persay. Mainly Because:
If Microsoft really wanted the digital music market they can and will take it. They have the money and the muscle and the brains to create a strategy that will force most players out. Now I haven't seen signs that this is the case. True the music deal with Universal would be huge (especially if Universal buys Sony Music Group as rumored), because it could potentially shut Apple out when renegotiation time comes around. However that is probably a ways a way. The other reason, is the marketing does not seem to be there... yet. I could be wrong though, as I have started to see the ads rolling out here in LA. And to the MAC users that say no one knows the system... well if the ad campaign does go into effect, it will take all of a month before everyone and their mother knows about this, and once they do, they will all want it... kind of like cell phones.
Microsoft also owns a very large stake in Apple. I don't think they would do anything that would hurt Apple' profitability. Provide some competition, yes, but nothing that will shut them out the game. This way they are earning money from digital music two ways. Plus Microsoft does not own stakes in Sony, so even if Microsoft dumps billions into a product like X-box they are and have stolen the market from Sony. And even if they hadn't stolen it from Sony, they made Sony spend billions to protect their share of the market. I don't see this same strategy being employed with Apple.
Microsoft does not have the best track record when it comes to hardware. They have one product that has succeeded - X-box. Beyond that though, Microsoft is mainly good at mass producing dumpy software that requires update after update after update after new version after update etc. When they have done really well i when they leave the hardware up to the pros... HP, IBM, etc. And again the actual physical controls of the Zune were my only issue with it.
Last, in regards to the major labels signing a deal like this... what do people expect them to do? They have to answer for falling profits and are looking for outlets like this to help supplement the mone they are losing from the decline of CD sales. This makes sense from the label perspective.
never the less it should be interesting.
PS- "Zune"??? Really? That's the best name they could come up with? Sounds like a kid's toy...
Let me get this straight - you're pretty much saying everyone with an iPod is a thief, right?
all this digital/ipod/portable shit is in the ether
i can't stand this shit
vinyl is true
maybe a cd or two
souldrop
man c'mon... is ipod such a great name? I thought it was the gheyest name in the world when I first heard it. Its only been accepted over time.
And just as a note... the Zune Commercials and marketing is starting to seep in, and they are hyping up the beaming portion which I think is what is going to get them to sell. Me, I am sitting back and watching though. I find product launches pretty fascinating.
If folks knew about the file-sharing limits imposed on the wireless app (3 plays max?), they wouldn't be so excited.
Really, though: Microsoft is so big that they could lose money on the Zune forever while making money on peripherals and software and slowly push the climate away from iPod-centrism. XBox and XBox360, as I read recently, are both money losers for MS.
The link to the MacRumors thread I posted is a good read from/for folks who know.
Video Game consoles in general were always money losers because of the development costs for the next thing and the strict timelines, thats nothing new... that's why Sega dropped out of the console business and went strictly game route. Even if Microsoft is not breaking profit on the Xbox line completely, as of yet, they are now in position to be the dominant gaming system. They only became the number one console almost right before the 360 was released. Add to that the cost of them having to go from 0 marketshare to a majority marketshare and also add in the fact that instead of the the market being divided between two competitors (nintendo and playstation), they made it into 3 competitors (an thus pretty much eliminating Nintendo).
Anyway to me its not about whether they are making money at the gaming console business... Its that they went from no presence in gaming to being the dominant force in it.
Is it me, or does PS3 look like it might get fucked up everywhere but Japan?
This shit is kinda funny.
http://www.thebestpageintheuniverse.net/c.cgi?u=sony_bullshit
"Tough shit Sony. We've moved on. We're dating your younger, hotter sister, Wii. Even your fuglier step-sister, Xbox 360, looks hotter than you do. At least she's been around the block a few times and knows how to turn tricks."
HAHAHA
I thought the whole loss-leader strategy in video games was something really started by Microsoft's Xbox and Sony's PS2. I don't think Nintendo has ever sold a system initially at a loss (including the upcoming Wii, which has specs that are barely better than Gamecube), and Sega just straight up bombed completely or failed to meet needed expectations with five straight systems/add-ons (Sega CD, 32X, Saturn, Dreamcast, Nomad) + their main supporter passing away and buyout led to the software only route.