The Universal Zune Tax: Coming Soon to an iPod Near You?

Everyone it talking about the Zune, Microsoft’s attempt at an iPod killer. It adds one neat new feature to the product mix, but otherwise it pales in comparison to the real thing.

Microsoft ZuneMicrosoft, always more interested in feature bloat than usefulness, has built wireless connectivity into the Zune. This allows users to share any of their music – digitally protected or not – with another Zune user. The new user can listen to the beamed track up to three times over the course of three days, at which point their Zune will lock the track until it’s paid for.

This turns the Zune into something the iPods isn’t – a music publishing system. And that’s probably the big reason Universal Music was able to extort a $1 per Zune fee from Microsoft in exchange for allowing Microsoft to sell tunes from the Universal library online.

And now for the bad news: “Universal Music Group Chief Executive Doug Morris said on Tuesday he may try to fashion an iPod royalty fee with Apple Computer Inc. in the next round of negotiations in early 2007.” (Reuters)

The iPod Is Different from the Zune

Apparently it’s not enough for Universal to make money off the music Apple sells through the iTunes Store and from the CDs we buy. Corporate greed says they want a piece of the action every time Apple sells an iPod.

What if you had to pay an OPEC tax or a Shell Oil tax every time you bought a gasoline-powered car? Or what if you had to pay a meat tax when you bought a grille? That’s the equivalent of what Morris is proposing for the iPod.

Of course, this is the same man who says iPod users are thieves. What, because we rip our CDs to iTunes instead of buying new copies from the iTunes Store?

Of course, the RIAA thinks everyone with a computer and MP3 files is a thief, so maybe we shouldn’t be surprised.

But there’s one big difference between the iPod and the Zune: iPods don’t share their music. iPods are not part of a music publishing/broadcasting system. And I’m sure that’s the angle Universal used in negotiating the Zune Tax with Microsoft.

Don’t Cave In

Devices such as the iPod, Zune, and other MP3 players create a market for online music sales. That means money in Universal’s pockets, along with all of the other labels available through the online stores.

Why in the world would Universal want to penalize its customers by inflating the price of the iPod (or the Zune, for that matter). That’s like adding a user tax to CD players – as though there isn’t enough profit in the CDs themselves.

It’s wrong. The company that created the market shouldn’t be penalized for it. Nor should the consumers who buy the product – and we know that fees like this are always shouldered by the buyer in the end.

If Universal has its way, other publishers will follow. We could easily see a $5 tax on every Zune and iPod sold if the members of the RIAA are true to form. And that $5 charge to Apple will work out to an even higher fee for the end user, possibly adding as much as $20 to the price of a 60 GB video iPod – or the $79 iPod shuffle.

It’s a greedy profit grab pure and simple. Apple does the work – designs and markets the iPod, distributes it, makes the iTunes software, and runs the iTunes Store – while Universal and others simply provide them with digital files they can sell.

It’s a perfectly good model, and I hope Steve Jobs won’t cave in to Universal’s suggested extortion.

Further Reading

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