Microsoft changing music royalty rules


New York Times reports that Microsoft has struck a deal with Universal Music that gives the music label royalties not only for music sold, but also for every music player the software giant sells.??Universal Music will receive a royalty on the Zune player in exchange for licensing its recordings for Microsoft's new digital music service, the companies said.

"It's a major change for the industry," said music-industry icon David Geffen. "Each of these devices is used to store unpaid-for material. This way, on top of the material people do pay for, the record companies are getting paid on the devices storing the copied music."

Universal, which recently reduced online pricing on 1,500+ back-catalog albums, is expected to receive more than $1 for each $250 Zune Microsoft sells, as well as royalties for music sold via the Zune music service.

Editor's note: Deals between massive, multi-billion-dollar companies is one thing, providing a value equation consumers will buy into is quite another...

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