Why The Zune Blood Money Universal Gets Probably Won't Reach Musicians

from the how-it-all-works dept

Thu, Nov 30th 2006 8:09am — Mike Masnick

We're still not sure we understand why Microsoft agreed to give a cut of every Zune sold to Universal Music. There's no real reason to, and it sets a dumb precedent. In fact, Universal Music's chief, Doug Morris, continues on his self-destructive path of squeezing everybody in the ecosystem for money by saying that he hopes to work out a similar deal with Apple in the future -- which seems unlikely to happen. We hope he tries, though, and Apple calls his bluff. It would be interesting to see who needs the other more. However, part of the excitement over the Microsoft deal was that Morris promised that 50% of the money coming in would actually go to the artists -- though it was never at all clear how it was determined what musicians would get what. Of course, that leads to all sorts of opportunities for typical entertainment industry funny accounting. Steve Gordon, who literally wrote the (okay, a) book on "the future of the music business," chimes in with an explanation for why it's unlikely musicians will see their cut of the deal. It's not in most musicians contracts to receive money from such licensing deals, and it's unlikely Universal Music is going to enlighten them about the availability of the money. But, the bigger issue is the same reason why most musicians don't make any money from CD sales in the first place. The record labels keep all incoming royalties to repay whatever the labels claim was the "cost" of making and promoting their album. Most artists never cover that fee with their royalties, so they never get anything. So, even if Universal actually does earmark the money to musicians, they'll probably still keep it and put it down to recouped costs.

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24 Comments

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Alex, 30 Nov 2006 @ 8:44am

Which is why we all seek out and support independent music, right guys?
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John Bonaccorso, 30 Nov 2006 @ 9:08am

Where will money go?
Its not just Universal. Can we ever trust someone to tunr over our money. What is their personal interest in doing that. I founded a company that makes sure EVERYONE in the chain ALWAYS get paid on everysale and EVERY RESALE. We believe that this is the way all digital entertainment should be sold-forever.
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- Reggie Crandall, 30 Nov 2006 @ 1:22pm
  
  Re: Where will money go?
  I agree wholeheartedly. Your company, 9thxchange, will make the difference for our industry. Profits should not be locked up in the digital world. Keep it up John Bonaccorso!
  
  Reg Crandall
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  - Gerard Sebastiano, 1 Dec 2006 @ 4:18pm
    
    Re: Re: Where will money go?
    You are on there too? I made $100 last week on 9thx.com. I uploaded my videos, and promoted them on my blog. I didnt think I had a chance...but sure enough people liked them.
    
    This helps with costs for sure! Way to go John b..whoever you are!
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- liar, 15 Mar 2007 @ 2:19pm
  
  Re: Where will money go?
  you are a liar and your company is a fraud.
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Rational Beaver, 30 Nov 2006 @ 9:10am

Recently got (won!) a new ipod and it came with a sticker over the screen which said "Don't steal music". That ought to be good enough for Universal, right? ;-)
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Anonymous Coward, 30 Nov 2006 @ 9:10am

This is why I can't wait to spend my hard-earned $ on a Zune ... because I think Universal Music needs to make even more money for no apparent reason and keep it to themselves rather than pass it on to the artists.
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Mark, 30 Nov 2006 @ 9:12am

The Lawyers Win
All the royalties collected, other than excessive executive pay packages, will go to lawyers so RIAA can continue to use the court system to extort even more money out of their customers who can't afford enough lawyers to fight the RIAA.
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Randy D, 30 Nov 2006 @ 9:14am

Of course they paid
They gave the money to universal to set the precedant thus hoping Apple will also be forced into making the same deal. Microsoft has much more money to throw away than apple so if apple has to pay also, it will impact them much more than Apple. Universal Vs. Apple ... who blinks first ? If (big IF) somehow the zune catches on then Universal will win, otherwise it's all steve saying ninety-nine cents ... what part of that don't you understand ?
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Evil_Bastard, 30 Nov 2006 @ 9:15am

I'm in the market for a portable media device right now, and guess what! It will not be a Zune. I hope Jobs gives that asshole the finger. I'm going to buy everyone in my family an iPod for Christmas this year.
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franticindustries, 30 Nov 2006 @ 9:39am

It boils down to this: if you gave the record companies money for every PC, CD, DVD, DVD-ROM...hell, even if you gave them money for the lightbulbs in your appartment, they'd still want more.

It's the nature of companies to be greedy, and the idea that information can be charged for is the fundamental flaw that causes all this mess.
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j, 30 Nov 2006 @ 10:10am

it will be awesome when the riaa sues on behalf of a universal artist, and the defense is that universal already got paid by said individual when they originally purchased that ugly ass zune.
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MIXLPLIX, 30 Nov 2006 @ 10:14am

I am here to tell everyone the new model for (us) musicians. Record at home, and distribute online. That means no need for Universal. Not to mention I get to own MY music. If you sign with them or the like you are either an idiot or in it for the money.or both.
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- Charles Griswold, 30 Nov 2006 @ 12:26pm
  
  Re:
  
  I am here to tell everyone the new model for (us) musicians. Record at home, and distribute online. That means no need for Universal. Not to mention I get to own MY music. If you sign with them or the like you are either an idiot or in it for the money.or both.
  
  That's why I like Magnatune's business model. The artist keeps the rights to their own music, and gets half of the proceeds from each sale. How cool is that?
  
  (No, I'm not affiliated in any way with Magnatune, I just think that they're really cool.)
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spoon?!?!, 30 Nov 2006 @ 10:43am

Roast spoon, anyone?
Lemme play devil's advocate for a second. What if they really spend these massive loads of money on distribution and advertising?

Then they're in the wrong freakin' business, 'cause it's been a long time since I've seen a music ad that's impacted me! If they don't spend all this money, then they're money-hungry despots like every other idiot that doesn't understand money is nothing but a medium, and welcome to the world of corporate Darwinism, enjoy your stay, and if they do, then that's just SAD. ^-^ Go be sad for them now ->
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Very, 30 Nov 2006 @ 10:48am

Disappointing.

Nothing to do about it.
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spoon??!!, 30 Nov 2006 @ 10:52am

@10
And what's wrolng with pulling in a decent wage? There's a difference between liking a comfortable lifestyle and being an incoherent money-whore. 'Sides, anyone who thinks they're gonna pull loads of cash by signing up with the wrong label isn't as savvy a businessman as many of the cookie-cutter rappers today.

And are you selling your CDs on 3rd party distribution sites? There are a lot of popular ones that are just distro, no labeling, no DRM, and most of the money still goes to you!
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Amy Alkon, 30 Nov 2006 @ 10:56am

But, who really wants a Zune? The Universal deal, plus this idea of "squirting" songs (which sounds sexual in the grossest way) that disappear three days later...I'll stick to the iPod, thanks.
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anonymous coward, 30 Nov 2006 @ 11:32am

I bought a Zune just to get the Universal music license. I've been downloading Universal artists over P2P since I got home from the store. I'm waiting for the RIAA to kick down my door. I'll show them my Zune and send them on their way...
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Bri, 30 Nov 2006 @ 11:10pm

The sad part is...
...that it wouldn't even take me more than a couple of weeks, most of that time working on integrating hardware, to ensure that the funds were disbursed proportionately utilizing real-time or near real-time sales data. That type of software, which included the ability to forecast and dynamically adjust its forecasts due to changes in conditions, is something I've done before. Would Universal or the other labels separately or as a consortium be interested in this even if I gave it to them free (which I would, at one time I was a musician and composer as well)? Not on your life! Accurate accounting and financials are the absolute last thing they want to see occur, just as with film and the rest of the entertainment industries.
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J Rodriguez, 1 Dec 2006 @ 6:04am

How needs the other more???
Apple needs the content. With out agreements from the Recording Lables they can not sell their music. I can see Universal giving Zune a preferential treatment (early release or exclusive music) if Apple refuse to pay.

Limiting their content will hurt them and move busines away to those that have what pepole want to listen.
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Anonymous Coward, 1 Dec 2006 @ 8:23am

To the music artists that continue to sign up RIAA companies: You deserve each other.
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Drew Barrett, 4 Dec 2006 @ 8:08pm

Universal Music Deal with Microsoft and its Zume M
I and my associates are building a digital music, video and movie store with the revolutionary unique selling proposition of empowering all parties involved in the sales transaction, including the consumer. 9thX.com, from The 9thXchance, Inc. an internet start up is introducing a new business model. We are offering 9thX.com member content owners and 9thX.com member consumers to become partners the sale of the music in which both parties have a vested interest. 9thX.com provides an opportunity for purchasers to become resellers legally, there having the incentive to generate more sales for the content owner. We are initially concentrating on 'boutique' and 'niche' content sources and in doing so expect even the artists and writers to benefit from the process. Check out http://www.9thX.com and the corporate site http://www.9thXchange.com. Join the revolution, membership is free.
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Reggie Crandall, 5 Dec 2006 @ 9:33am

I found an incredible company that will take digital media to new heights in profit: www.9thxchange.com. The 9thXchange marketplace is the newest way to bring together buyers and sellers of digital content. The service dramatically reduces content piracy by offering the seller lifetime royalties -- even on exchanges between consumers. Moreover, the service accommodates all technology platforms, file types and creators. I read about The 9thxchange in Crains Detroit recently as well. It’s new and exciting – Reg Crandall
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