Labels to Make Cash on Every Zune Sold

Universal Music Group is assured compensation for the unknown number of pirated or file-shared tracks that are transferred/downloaded to a Microsoft Zune player after striking a revenue-sharing deal on sales of the player.

The record label will get over $1 for each $250 Zune sold and claims it will extend half of what it receives to the artists. The Zune digital media player hits stores next Tuesday and, yes, it’s available in doodie brown.

In trying to compete with iPod, Microsoft is turning the digital audio industry on it’s head — and once again Universal is saving itself from the costy litigation route.

Historically — and as decided in court — labels have never been compensated for the sales of digital audio players that can potentially play “illegally” acquired songs. In the case of Apple’s iPod, labels receive a percentage of every download via the iTunes Music Store. But clearly, this didn’t cutting it for the labels and Universal — the money-hungry bullies they are these days — threatened to give Microsoft hell (imagine that).

From NYT:

A recent study estimated that Apple has sold an average of 20 songs per iPod — a fraction of its capacity. The rest of consumers’ music files — 95 percent or more — come from ripped CDs, possibly including discs from their own collections, and illegal file-trading networks, the study said.

The article, complete with a lil’ nut graf referencing the 1999 Diamond Rio decision, includes “we make the rules now” sentiment from Universal’s whiny chairman, Doug Morris and even David Geffen. Microsoft will happily pimp the same buck n’ change to the other majors.

(A review in the same NYT Technology section harps on the Zune as an “unabashed copy” of the iPod.

Om Malik weighs in: “what a bunch of crap!”