UMG's Zune deal is a 'win-win'

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Universal Music Group and its artists will get a portion of the sales of Microsoft's upcoming Zune device under an agreement set to be announced today.

UMG chairman and CEO Doug Morris called the Zune deal "a significant milestone" that will provide his company a revenue stream not only from the sale of digital songs but also from one of the hand-held electronic devices that they are played on.

Zune, the Microsoft gadget that will compete with Apple Computer's dominant iPod, will hit retailers Tuesday along with the Zune store at Zune.net, which will carry music from several major and independent labels.

Apple and other makers of hand-held digital music players do not share hardware revenue with content providers.

Microsoft executives said Wednesday that the deal struck with UMG, or ones similar to it, will be offered to other labels and music publishers. Zune, like iPod and its iTunes online store, also features video, though executives didn't say Wednesday if they would extend similar revenue-sharing plans to providers of video content.

The UMG agreement, said Bryan Lee, corporate vp entertainment and devices at Microsoft, "is one of many innovations we plan on introducing to the entertainment industry."

Music consumers, Lee added, "will appreciate knowing that when they buy a Zune device, they are helping their favorite artists get paid."

Financial terms of the UMG-Zune deal weren't disclosed.

"This move demonstrates there can be a win-win situation where consumers have a great experience while labels and artists are also fairly compensated," Morris said.
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