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Analysts expect more music studios to follow

Apple may have to pay royalties in 2007 for every iPod shipped in 2007 if Universal Music Group successfully negotiates an agreement with Apple. Earlier this year, DailyTech reported that Universal had struck a deal with Microsoft and its Zune portable music player. Microsoft would pay royalty fees for every song downloaded by a user and every Zune player sold. Similar to a tax, this contract was definitely a big win for Universal and the music industry.

Now, Universal is indicating that it wants to have the same contract setup with Apple too. According to Universal's chief executive Doug Morris, he is already communicating with Apple about the possibility of an agreement. Analysts are uncertain about Apple's decision but based on the outcome Universal had with industry giant Microsoft, it is likely that the situation between Universal and Apple will be coming out the same.

In a Reuter's report, Morris said "it would be a nice idea. We have a negotiation coming up not too far. I don't see why we wouldn't do that... but maybe not in the same way. The Zune (deal) was an amazingly interesting exercise, to end up with a piece of technology."

It will be certainly interesting to see the outcome that Universal has with Apple, considering that Apple leads the number spot for portable music players. The iPod is such a staple of the portable music industry scene that it was certainly difficult for Universal to ignore. Other major music studios and labels may end up seeking similar negotiations

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By tdawg on 12/1/2006 5:07:44 PM , Rating: 2
Hopefully, with Apple's market share and resulting strength and influence, they will be able to stand up to Universal and say no. There's no reason why Universal or any other music company deserves royalties on hardware they didn't contribute to making in any way.

Analysts may think that because Universal was able to get Microsoft to agree to this that Apple will be forced to follow suit, but in reality, Universal had a much stronger bargaining position with Microsoft, a newcomer trying to build a music service portfolio necessary to sell their hardware, than they do with Apple.

RE: Please
By Kadoro on 12/2/2006 1:32:22 PM , Rating: 2
Let's hope Apple can see what Walmart did!

RIAA and imparticular Universal needs Apple more than Apple needs them...

This is a really good article about how Walmart is planning on playing hardball with the RIAA. Apple shouuld do the same.

Apple has stood up a couple of times and said the price is $.99 (US) let's hope they continue.

And Hoorah for the Indies... I didn't realize they could benefit so directly from iTunes. I may have to buy some more Independent songs...

"So if you want to save the planet, feel free to drive your Hummer. Just avoid the drive thru line at McDonalds." -- Michael Asher
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