Feeds

Microsoft may pay Zune tax twice

New features, grey area

HP ProLiant Gen8: Integrated lifecycle automation

Microsoft's private deal with Universal Music to pay the record label a voluntary royalty of $1 for every Zune player it sells has raised eyebrows across both the technology and music industries. But it might not be the last payment Redmond owes from Zune, we've discovered.

Recently, Steve Gordon, entertainment attorney and Reg music columnist, took a skeptical look at where Universal's Zune dollar might end up. He reminded us of a little known US tax, which harks back to the "Home Taping Is Killing Music" era. Under the Audio Home Recording Act of 1982, recording devices carry a small royalty which is then divvied up between the performing artists involved. The royalty is administered by the Alliance of Artists and Recording Companies, AARC.

(Steve explained the details here.)

You don't hear too much about AHRA or AARC, because as a consequence of a 1999 court settlement over the Diamond Rio player, it's generally assumed that all MP3 players are exempt.

But not so fast, AARC's executive director Linda Bocchi reminded us.

"People tend to throw that Rio decision around a little haphazardly," she told us. "Rio didn't say that all MP3 players are exempt. The decision was based on the fact the Rio could not record unless via the hard drive of your computer."

"But Zune is going in another direction. People can record off of FM radio, and share from one Zune player to another. It's moving away from the direction set by the iPod, and it's a grey area."

In fact, the portable players that record digital satellite radio in the US - sold by XM and Sirius - already pay an AHRA, says Bocchi.

Steve Gordon explained that XM Radio pays the labels for the music by paying SoundExchange under the DMCA compulsory license. XM also pays the labels for every INO player under AHRA.

"But the labels argue that just because they are paying for the device through AHRA, XM must pay a third payment because the INO does more than what the AHRA contemplated - such as the ability to make personalized play lists."

So is Microsoft be obliged to pay an AHR Act royalty, too?

For now, it's a case of wait and see, said Bocchi.

AARC must wait to see if Microsoft pays the royalty voluntarily, which its obliged to do under the Act, and this may take some months.

"We're watching, and there are situations where we can step in. I'm not saying we're going to, but I can see argument where we could discuss this with my board and we would decide what to do."

AARC administers around $5m worth of royalties a year - "not a huge amount", said AARC's executive director but it's an amount that's increasing.

We rang the Zune team to see if Microsoft thought the player fell under the AHR Act - but they didn't get back to us in time for publication. We'll update you if and when they do. ®

Bridging the IT gap between rising business demands and ageing tools

More from The Register

next story
Brit celebs' homes VANISH from Google's Street View
Tony Blair's digs now a Tone-y Blur
Virgin Media goes titsup AGAIN. The cause? Yet MORE DNS strife
ISP refuses to comment on why outages keep happening
10Gbps over crumbling COPPER: Boffins cram bits down telco wire
XG-FAST tech could finesse fiber connections
What the world needs now is... a Bluetooth-enabled baby's dummy
Oh NO! Temp-sensor pacifier just got dunked in my tea
BT slapped down by BSkyB over O2 broadband 'switch off' porkies
Ad watchdog tells one-time state monopoly to behave
Siri, did we just take a hit in that voice-recog patent fight?
Yes, Apple, you did, says this Beijing court
Islamic terror peril hits US giants' phone wallets
'We have made the decision to rebrand' says ISIS Isis
BlackBerry knocks Google's KNOX LOCK PICK for Android
John Chen disses Samsung's security solution
Silent Circle takes on Skype, Viber, mobile telcos with crypto-VoIP
But, hey ... we cut the roaming charges, mumble mobile carriers
TalkTalk talks itself into trouble with budget broadband package fibs
ASA places cheap-as-chips telco on the naughty step
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Eight steps to building an HP BladeSystem
Building your ideal BladeSystem infrastructure solution begins with eight simple steps, outlined in this whitepaper.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.
Build a Business Case: Developing Custom Apps
In this whitepaper learn how to maximize the value of custom applications by accelerating and simplifying their development.