A New Way Forward?

So Microsoft has agreed to pay Universal music a royalty on every Zune player it sells. The royalty rate was not disclosed in this New York Times piece, but it does say that it will be greater than $1 for every Zune player that is sold. Further, the article says that Microsoft plans to pay royalties to other music labels. And Universal plans to pay out 50% of those royalties to its artists.

It’s interesting to see how this plays out. First, how many record companies does Microsoft need to make a deal with? Just the majors? Or the indies too?

And is paying out 50% to the artists fair? Should it be more?

And will Apple be forced to follow suit? Hard to imagine that will happen anytime soon.

But even with all the issues that this raises, this is a model I like. I wish they’d take it one step further and offer a unlimited music service like Rhapsody on the Zune and pay a big portion of that monthly subscription to the artists and the businesses that serve them.

Because we are in an age of abundance. Music is everywhere. It makes no sense to pay by the song or album anymore. It just leads to a world where, according to the Times article:

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.

I won’t buy music from iTunes for reasons I’ve articulated time and time again on this blog and elsewehre. DRM is nuts.

But providing a technology platform that allows for the discovery and consumption of music and getting a piece of the action when consumers use that platform makes total sense. This is the beginning of a new way forward. Greed and fear may still get in the way of real progress toward nirvana, but we are getting closer.

#VC & Technology