Microsoft shakes up iPod business model
Microsoft has entered into an agreement with Universal Music, the world’s largest music label, where Universal receives a royalty payment for every Zune player sold, in addition to a royalty for every song sold.
Microsoft’s Zune
This contrasts with Apple’s iPod business model, where labels only get royalties for songs sold.
This deal demonstrates just how determined Microsoft is to get market share of the portable media market. As usual, Microsoft was a late entrant, so it’s needing to work quite hard to be able to catch up with the innovators.
Difficult talks between Universal and Micorsoft have been going on for the past few weeks, and it must be quite strange for Microsoft to be playing a game that where it doesn’t hold the upper hand. At this stage, Microsoft needs the labels much more than the labels need Microsoft.
But then again, in business, the tables can turn very quickly, and it’s not impossible for Microsoft to establish itself as a significant player in this market.
News source: New York Times
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