MS sharing revenue from Zune sales
- Posted on [November 9, 2006 ] @ 11:18 am
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The changing landscape in the content world results in one interesting deal after another. Today it was announced that Microsoft will share a percentage of each Zune sale with record labels, the first deal struck with Universal. Record labels are struggling with falling CD sales, and according to MarketingVox, this deal is intended to compensate record labels when someone purchases a Zune, which can potentially store illegally downloaded music.
I wouldn’t be surprised if this was the case — but I think there are two strongers reasons for such a deal:
# Zune allows you to share music with other Zune owners, transferring songs via WiFi. If you transfer a copyrighted song, it only play on the other device for 3 days or 3 playbacks. It seems that this sharing feature would encourage sales of songs, since a transferred file is only good for a very limited period. However, I could see the record companies wanting compensation for allowing this feature (and allowing sharing of their content).
# In Robert Scoble’s interview with the Zune Product Manager, the PM mentioned that they want you to have a great experience out of the box, and that the Zune will come pre-loaded with some cool content. If MarketingVox is right that Zune is giving a little more than $1 to Universal, it could actually be compensation for pre-loaded content, like an mp3 and a music video.
If I’m wrong and the compensation isn’t for purposes like those above, then it’s a pure strategic move for Microsoft, better aligning themselves with the content owners. Hopefully such a deal opens the door to other new opportunities for the music business…