Came across this article while surfing the web on my Treo 700w waiting for my take out food tonight! Microsoft has agreed to pay Universal Music Group an undisclosed fee for every new Zune player that it sells. This is sure to turn some heads in the music business and it definitely sets an interesting precedent for hardware manufacturers going forward.

Up until this deal, music labels traditionally made money from every digital track sold via an online music store such as iTunes – they’ve never made any money from the actual hardware device that’s used to play the music. Some companies have balked at this notion, the argument being that digital music players are often used to play back pirated content. Apple has managed to stay clear of this problem primarily because they dominate the digital music industry with the iPod and iTunes.

However, with Microsoft making deals with music labels, it’ll be interesting to see how this could affect future contracts with labels and other hardware manufacturers such as Apple.

“We have a current contract with him [Steve Jobs] and at the end of that I’m sure we’ll negotiate,” – Doug Morris, chief executive of Universal

Again - the notion of paying a fee itself is not a new idea – it’s just not something that’s ever really been done before. No word on how much Microsoft is actually paying Universal on a per Zune basis but I’m sure someone will figure it out someday.

[Check it out] – Article republished from ZuneSphere.com

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