Today's NYT quotes David Geffen:
“It’s a major change for the industry,” said David Geffen, the entertainment mogul who more than a decade ago sold the record label that bears his name to Universal. “Each of these devices is used to store unpaid-for material. This way, on top of the material people do pay for, the record companies are getting paid on the devices storing the copied music.”
He added: “It certainly changes the paradigm.”
What are they talking about? Zune, Microsoft's new MP3 player, is providing Vivendi Universal with a cut of the sales. My fervent hope in this is that MSFT plays the same royalty shell game that Unversal plays with its artists.
It doesn't seem that way. Apparently, Universal gets a buck for every Zune sold.
This is monsterously bad.
Previous attempts by companies like Universal from trying to own culture and the devices upon which culture may reside have been struck down by courts. Microsoft has just handed them a precedent. "Well, Microsoft gives us a buck for their player..."
The entertainment industry's argument is that people can easily copy music onto these devices and not pay for them. But this is not the fault of the device.
Suppose that every record label out there decided that they should also get a buck from every Zune? Vivendi's power here is its size. It makes it a bully.
Their desire to stop plummeting sales is to ensure consistent returns that are not proportional to their popularity. If the RIAA tracked music sharing and ran some algorithm that declared "to each label according to popularity", I would be more inclined to like this.
The Microsoft deal is two giants with an interest in DRM creating mechanisms to seal that deal.