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January 19, 2007

Sony and Universal snub the Zune social

Posted by David Hunter at 9:56 PM ET.

I thought I’d heard all the complaints about the heavily touted Wi-Fi music sharing feature of Microsoft’s Zune personal media player (“Welcome to the social”). Aside from the difficulty of finding another Zune owner to be social with, the tunes you “squirt” (Microsoft’s approved terminology) to others are restricted to 3 plays in 3 days, whichever comes first. Now it turns out that there is yet another inhibitor to squirting fun:

It appears Sony Music and Universal Music Group are marking certain artists of theirs as “prohibited” for sharing, meaning that just because you’ve paid for a song, and even managed to find another Zune user on the planet Earth, doesn’t mean you’ll necessarily get to beam that JoJo track to another Zune via WiFi magics. In a non-scientific sampling of popular artists by Zunerama and Zune Thoughts, it looks like it’s roughly 40-50 percent of artists that fall under this prohibited banner, and the worst news is that there’s no warning that a song might be unsharable until you actually try to send it and fail. Oh well, maybe you can just hum a few bars or something — just make sure the labels don’t hear you!

I guess Microsoft left the flashing green dollar sign off the tunes list interface. Of course the best part is that the Universal Music Group is scoring a tax on every Zune sold.

Filed under Argo, Coopetition, DRM, Microsoft, Sony, Technologies, Universal Music Group, Zune

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November 18, 2006

Microsoft Weekly Miscellany, November 18, 2006

Posted by David Hunter at 12:50 PM ET.

Internet Advertising Revenues Surpass $4 Billion for Q3 and the fact that it is up 33% over Q3 2005 is the good news. The bad news is that it is only up 2% over Q2 2006. Of course, the worst news is that the spoils are unevenly distributed among the players and while Google shows great growth, other players like Microsoft just get by.

And speaking of advertising, Microsoft apparently thinks Google shouldn’t have the eyeballs in the US municipal free Wi-Fi market all to itself, so it signed up to provide ads for MetroFi’s public network in Portland, Oregon. No financial details were disclosed.

Internet Explorer 7 Auto-Updates Begin

Office 2007 and Windows Vista were made available for download by members of Microsoft’s MSDN and TechNet programs. Vista is also now available to Volume License customers. Also, CompUSA will start retailing Vista and Office 2007 to small businesses on Nov. 30 through a special volume licensing plan. Unsurprisingly, bootleg versions are also available, but Microsoft says they won’t work for long.

Microsoft’s Software Update Services (SUS) users got a 6 month reprieve until July 10, 2007. It’s being replaced by Windows Server Update Services (WSUS).

If Linux violates Microsoft’s patents, let’s see the proof. I can’t believe that Microsoft would be so foolish as to sue its customers, so FUD like Ballmer’s remarks and deals with impoverished Linux vendors like Novell are all we’ll see. Related: Red Hat Rejects Patent Agreement with Microsoft.

Microsoft Delays Halo 3 to Late 2007

Had to happen: Universal sues MySpace over “user-stolen” content

Hardware hackers (in the old, good sense) are already taking apart their Zunes.

Microsoft is either going to release a low end version of Longhorn Server called Fresno for the appliance market or they aren’t.

Filed under Advertising, Argo, Coopetition, Executives, General Business, Licensing, Linux, MSN, Microsoft, MySpace, OS - Client, OS - Server, Office, Office 2007, Open Source, Patent Lawsuits, Patents, Steve Ballmer, Universal Music Group, WSUS, Windows Server 2003 R2, Windows Vista, Xbox, Zune, adCenter

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November 9, 2006

Microsoft pays off the music mob with a Zune Tax

Posted by David Hunter at 10:10 AM ET.

More years ago than I care to recall, a friend remarked on a deal negotiated between a computer company and some music labels to the effect that while technology people always think they are slick negotiators, they can never match the ferocity and rapacity of the music mob. More empirical evidence for this hypothesis is provided by today’s expected announcement of an agreement between Microsoft and Vivendi Universal giving Universal a tax on every Zune sold:

Microsoft Corp. has agreed to pay Universal Music Group a fee for each new Zune digital music player it sells when the iPod rival launches next week, the companies said on Thursday.

The groundbreaking deal could redefine the digital music business pioneered by Apple Computer Inc.

Rivals including cell phone makers eventually could pay for hardware sales as well as for the music itself, Universal said.

Microsoft is trying to break into an industry closely aligned with archival Apple, which is credited with nearly single-handedly building the legal Web music world with its iPod players and iTunes music store.

But Apple does not give a cut of sales of iPods to music companies. It only pays labels for songs sold on its iTunes music store.

“We felt that any business that’s built on the bedrock of music we should share in,” said Doug Morris, chief executive of Universal, owned by French media giant Vivendi.

I wonder how good Mr. Morris’ Godfather impersonation is? The formal announcement will be later today, when we’ll get the definitive word on how Microsoft plans to spin this turkey, but here’s a hint:

Redmond-based Microsoft Corp. is pursuing similar agreements with other major record labels, Chris Stephenson, general manager of global marketing for Microsoft Entertainment, said late Wednesday.

By paying record labels a portion of Zune player sales, Microsoft hopes to have more freedom to allow song-sharing or other promotions, Stephenson said.

“There’s certain marketing elements that we’re looking at going forward, all based around the sharing and wireless scenarios,” he said. He declined to provide specifics.

But in an interview late Wednesday, Universal Music Group Chairman and CEO Doug Morris told The Associated Press that the wireless song-sharing feature of the Zune was not a major factor behind the company seeking a revenue sharing deal on the player.

“The only factor was that we feel that there’s a great deal of music that’s (stored) on these devices that was never legitimately obtained, and we wanted to get some sort of compensation for what we thought we’re losing,” Morris said. “I want our artists to be paid for the music that makes these devices popular.”

Gosh! It’s all about the poor starving artists, I guess. Actually, it may be better for the artists than the music labels’ arrangement with YouTube before the Google acquisition:

The media companies had their typical challenges. Specifically, how to get money from Youtube without being required to give any to the talent (musicians and actors)? If monies were received as part of a license to Youtube then they would contractually obligated to share a substantial portion of the proceeds with others. For example most record label contracts call for artists to get 50% of all license deals. It was decided the media companies would receive an equity position as an investor in Youtube which Google would buy from them. This shelters all the up front monies from any royalty demands by allowing them to classify it as gains from an investment position. A few savvy agents might complain about receiving nothing and get a token amount, but most will be unaware of what transpired.

That kind of makes you wonder if the Zune Tax actually counts as a license payment, doesn’t it? 

Anyhow, Microsoft is coming from a position of weakness since the Zune is starting from way behind the iPod and so they apparently folded like a house of cards when the music labels came knocking and offered them some “protection.” As I said at the start, I’m not really surprised, but one wonders how Steve Jobs got to be savvy enough to face down the media bruisers. Maybe his time at Pixar stood him in better stead than we can imagine.

Update: For a similarly dyspeptic view with a gangster theme, see Om Malik’s Microsoft, Zune & The Music Mafia.

Update: For an alternative view, watch Jupiter Research’s Joe Wilcox try to put lipstick on the pig.

Update: This is apparently the press release although I coudn’t find it on either the Microsoft or Universal Music Group websites. There’s not much there besides more starving artist platitudes from both Microsoft and UMG, but here’s another theory: Microsoft To Give Portion of Zune Sales To Universal In Attempt To Hurt Apple. I enjoy a good conspiracy theory, but ineptness seems to be an adequate explanation here.

Filed under Apple, Argo, Coopetition, Microsoft, Universal Music Group, Zune

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