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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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RE: Fair?
By dwalton on 12/1/2006 5:24:25 PM , Rating: 5
I hope Apple says "no", Ipod's loss of Universal will have as much impact on Universal's bottom line as Apple if not more. Music company are overstepping their bounds and are asking to be compensated in ways that make no sense.

Listerners won't have to forego the Ipod just to get to Universal's library of songs. There are abundance of places to get them free and with ease. That means Universal recieves no revenue from from Ipod or Itunes and has to deal with the uptake of Ipod users pirating Universal's songs. That might be enough to make record companies realize that such tactic hurt worse than they help.

Next thing you know HBO, ESPN and MTV will be asking Samsung, Sony and Toshiba for a cut of the sales of their HDTVs, while MGM, Paramount and WarnerBros will want a cut of HD and Bluray player sales.


RE: Fair?
By ajfink on 12/1/2006 5:49:03 PM , Rating: 2
If Apple says now along with all other media player manufacturers (and Microsoft doesn't play spoil sport and try and get out of their agreement), Universal will choke on their own attempts to try and do this. How obnoxious. Microsoft never should have done it in the first place.


RE: Fair?
By creathir on 12/1/2006 10:02:51 PM , Rating: 3
Maybe at first...
But given that other manufactures are complying with the request (Microsoft) this would just mean the entire music collection would only be available on Zune and CD... (Excluding of course Napster, Yahoo, Rapsody... any of the subscription services...)

It may hurt them at first, but which will be hurt more? What good is that awesome iPod if you cannot get music for it.
- Creathir


RE: Fair?
By michael2k on 12/1/2006 11:09:48 PM , Rating: 2
Hmm, given that 93% of music sold this year was on CD and only 5% from the iTMS, Apple has a long time to go before worrying about Zune Marketplace threatening them.

In fact, Microsoft has more to worry from Apple given that Apple has 8% marketshare in the US, and growing faster than the Zune is...


RE: Fair?
By PrinceGaz on 12/1/2006 8:58:16 PM , Rating: 2
Whilst I may ordinarily be a pro-PC and anti-Apple sorta guy, I really hope Apple do the right thing for the whole industry and don't give in to this music-industry enforced "MP3 player tax". If Apple do give in to it, then it will be a serious step backwards in legal digital-music adoption.

When will record companies realise that they are not in charge any more, and so stop trying to make us pay extra for our music? I don't mind paying for the music I enjoy listening to, but there's no way I'll pay extra for it in one format or another, or because I may be playing it on a PMP.

The only end result of extra charges or taxes either on individual music tracks or on the hardware used to play them, will be more people downloading the music illegally.


“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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