Universal Calls MP3 Users Thieves
On Friday Chris Seibold wrote about a deal between Universal and Microsoft. He reported that Microsoft agreed to pay Universal a portion of the proceeds from every Zune player they sell.
But wait, there’s more. You might be interested in knowing what Universal’s chairman/CEO has to say about it. According to Billboard.com, Doug Morris doesn’t think much of people who use mp3 players.
“These devices are just repositories for stolen music, and they all know it,” UMG chairman/CEO Doug Morris says. “So it’s time to get paid for it.”
Maybe he needs to read the Jupiter research better. Mac Daily News does a good job reporting the research. To sum it up, only 7% of iPod users and 25% of those using other mp3 players download music illegally. That leaves an awful lot of people either downloading music legally or filling their iPods with music ripped from CDs.
Doug Morris is risking alienating a lot of past and potential customers. Even those who use illegal download sites probably purchase some music, whether online or in the form of CDs. If Morris had read the Jupiter research, he might realize that people who use iPod and other mp3 players are much more likely to purchase CDs than those who don’t own such a device. That only makes sense. If you purchase an mp3 player, you’re probably already a music lover.
The comments on Mac Daily News show a strong reaction by mp3 purchasers. Several readers sent letters to Universal which they copied at the Mac Daily News site. Some are suggesting boycotts. Quite a few of them talked about the total number of songs they have on their iPods and stated that they had paid for every one of them. Others said they had stopped listening to and purchasing music altogether until iTMS and iPods breathed new life into their music listening habits.
Mr. Morris might also do well to remember that iTMS has sold over one billion songs. That’s a lot of music, every bit of it legal. While I don’t have any statistics proving that much of it was from Universal’s artists, I know this has to be true just because of Universal’s sheer size.
How much money did Universal make from those one billion downloads? How many customers did it take to download these songs? Compound that by downloads at other legal sites. Mr. Morris, I think a lot of people wonder why you insulted them that way.
People are already angry at Microsoft for making this deal. It’s a dream come true for Universal. According to American Public Media, Microsoft plans to enter into similar deals with other labels. Hopefully their CEOs will just be happy with the situation and realize that it’s not the best move to insult their customers.
When the contract renewal comes up between Universal and Apple, I hope Apple stands their ground. If Zune is successful, labels will feel they have an option and might try to hold out for the same deal with Apple that they get from Microsoft. I hate the idea of Apple doing business with a company whose CEO calls me a thief.
By the way, Mr. Morris, my MP3 is full. In fact, we have three in our family, most of them full. Every song on them is ripped from purchased CDs. Not one is an illegal download.
Apple, please take note of the Jupiter research report. Even with one billion songs sold on iTMS, most of the music on iPods comes from CDs. Don’t make a Microsoft deal with Universal. They still need you more than you need them.
***Last minute update: I was reading the article by James R. Stoup on the Zune pricing scheme. Following a link left by reader Ben Hall (thanks, Ben) I discovered why it is that Microsoft and Universal work so well together.
Microsoft has long believed iPod users are thieves.
Check out this quote dated October 4, 2004. Microsoft CEO Steve Ballmer, in talking about iPods, states “The most common format of music on an iPod is stolen.” He blames a lot of it on the difficulty of using Apple’s DRM.
Are any of you being tired of being called thieves? I know I am.
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Comments
<i>if they included television shows into that subscription fee so that I can download all of those NBC Universal hit tv shows legally at no extra cost, then I’d be very interested indeed. </i>
I wonder about that as well and that’s an interesting notion. Balmer just announced that you will be able to share video the way you share music, so they are at least thinking along those lines.
I wouldn’t subscribe to a music service, but I would seriously consider subscribing for video, especially if it included movies.
Exactly. People are accustomed to owning their music outright, being able to record a mix tape or a mix cd and not get sued. This is considered fair use, as far as I can tell (so long as you’ve paid for the music).
Meanwhile, people buying television is a rather new concept that has sprung up over the past 5 years with the dominance of DVD (sure, you could buy Star Trek on VHS, but the price was ridiculous). Of the tv that I’ve bought on the format, I generally haven’t gone back to watch it more than once or twice. In fact, the main reason why I buy DVD’s is to share it with my friends, lending them out so that they can enjoy some obscure tv show which may not have even aired on basic cable in Canada. Generally that doesn’t warrant a 70 dollar investment for each season. Especially when what had cost me 60 dollars in 2002 is now available for 30. This fluid pricing scheme has put me off to supporting this industry on anything that I don’t really want to have (the super special edition dvds with 10 hours of special features, for example). Meanwhile the price keeps going up, the new seasons of 24 cost 80 dollars. They’re selling Battlestar Gallactica half a season at a time (same sort of scheme that they came up with for Farscape) to further encourage me to wait until they start releasing them all on High Def, where it would be worth it to pay that kind of money as then you wouldn’t have to another version of the same show ever again.
Of course now I’m simply making the same sort of argument that I made in the Big Brother in the iPod article, so I guess I’ll stop now.
Of course the user pays the tax. Its built into the $249. It means MS makes less on each Zune, but you pay for it. The problem with this “royalty” is that Universal hasn’t provided anything to the product to justify the royalty. If Universal had provided some piece of IP to the overall design of the product then most folks probably wouldn’t be complaining. One could also argue that more people would be complaining if they knew how often they get tagged for royalty payments on products in many cases whether they use the taxing feature or not.
Of course the user pays the tax. Its built into the $249. It means MS makes less on each Zune, but you pay for it.
Nope.
Zune pricing without the piracy tax=$249.
Zune pricing with the piracy tax=$249.
The tax does not affect consumers, at least not directly. It’s certainly not “stealing” from them.
The problem with this “royalty” is that Universal hasn’t provided anything to the product to justify the royalty.
Agreed. The problem here isn’t that MS is stealing from customers, which is a wholly moronic statement. The problem is that MS’s capitulation further props up the music industry for doing nothing more than having a monopolistic stranglehold on copyrighted music and draconian copyright laws.
Absolutely. Its not stealing. Folks need to understand that MS and Universal were not looking at the business deal as just the player. It was the whole ball of wax. The player, song purchases, and music subscription. No doubt in order to get something they wanted MS ponied up the $$ per unit sold. Probably as someone mentioned above in relation to the subscription service. Where Universal was given the choice of a certain size of the subscription pie or gambling on making more by taking a bit from the money from Zune unit sales. Regardless the “piece of the unit sale action” is VERY common in the electronics industry.