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When Zune goes on sale next Tuesday, Universal Music Group stands to gain a royalty for every unit sold by Microsoft, according to the terms of a deal announced by the two companies. In turn. UMG will pay its artists half of the fee, reported by the NYT to be more than $1 per $250 device. UMG also will receive royalties for music purchased through the Zune Marketplace.
— The move, while not a first, marks a variation from the pay-per-download or pay-per-play models. Earlier this year, Sirius agreed to pay the four major labels a fee for every S50 sold after the companies complained that a device allowing users to store music wasn’t covered under the fee they are paid for music played on satellite radio.
Music companies that gave Apple, Sirius, XM and others rigths in exchange for relatively small fees have been increasingly frustrated by the inability to profit from device sales, particularly from the popular iPod. One reason: the low number of iTunes downloads actually sold per iPod and the perceived high amount of music stored without being bought by the device owner.
NYT: UMG Chairman Doug Morris gained some attention recently for calling YouTube and others “copyright infringers” who owe rights holders “tens of millions of dollars” — and then signing a licensing deal with YouTube that actually includes a small equity stake. Morris told the NYT: “I