Monkey See – Money Do Microsoft Strikes Deal for Music

In the usual Microsoft to enter a field and attempt to play catch up, the company said yesterday that it had agreed to pay a percentage of the sales of its new portable media player to the Universal Music Group.

Universal Music, a unit of Vivendi, will receive a royalty on the Zune player in exchange for licensing its recordings for Microsoft’s new digital music service, the companies said.

Universal, which releases recordings from acts like U2 and Jay-Z, said it would pay half of what it receives on the device to its artists. The company is expected to receive more than $1 for each $250 device, according to executives who were briefed on the pact.

The deal represents a big departure from the standard set by Apple Computer, which pays record companies for songs sold through its iTunes service but does not give them a cut of the sales of its hugely successful iPod.

Under the deal, Universal, the world’s largest music corporation, will receive a percentage of both download revenue and digital player sales when the Zune and its related service are introduced next week.

The pact comes after weeks of tense talks and averts a standoff that might have crippled Microsoft’s attempt to compete against the iPod.

We give it just a few years before Microsoft loses interest and essentially leaves it treading in the water, like Hotmail.

http://www.nytimes.com/2006/11/09/technology/09music.html?_r=1&oref=slogin