Microsoft Cuts Zune Deal With Universal

$1 Per Sale Goes To UMG

THE NEW YORK TIMES reports that MICROSOFT has agreed to pay a percentage of the sales of its new portable media player to the UNIVERSAL MUSIC GROUP.

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. UNIVERSAL 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.

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.

"It’s a major change for the industry," said DAVID GEFFEN, who more than a decade ago sold the record label that bears his name to UNIVERSAL. "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."

He added: "It certainly changes the paradigm."

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