MS 'quits' music licensing talks

Major labels' royalties too high, apparently

By Tony Smith • Get more from this author

Posted in Financial News, 4th October 2005 13:09 GMT

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Microsoft could be the first victim of the major record labels' attempts to force up digital music prices.

According to a Wall Street Journal report today, the software giant last week pulled out of content licensing talks with all four major recording companies: EMI, Universal, Warner and Sony-BMG.

The paper's unnamed sources claimed that Microsoft had stepped away from the negotiating table because the labels were seeking to impose royalty rates it considered to be too high. Curiously, the sources allege the labels wanted $6-8 per user, per month, essentially what existing subscription services already pay.

Microsoft has been expected to begin offering a music subscription service alongside those already offered by the likes of Napster, Yahoo!, Virgin Digital, HMV and others. According to the WSJ sources, now that licensing talks are over, the service won't be launched. That's undoubtedly good news for the aforementioned music services, all of who have based their offerings on Microsoft technology and would suddenly find themselves competing head-to-head with the company.

The news comes as Apple faces increasing pressure from the labels to put up its prices for new content and to adopt a differential pricing model that would see older, less popular songs fall in price. ®

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