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Microsoft Hurls Chair At Music Labels

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The recording industry standard of music services paying $6 to $8 per user each month to the labels found no favor at Microsoft.

The potential launch of a subscription-based music service by MSN won’t happen today. The Wall Street Journal notes in a report that discussions between Microsoft and the four major labels, EMI Group, Warner Music, Vivendi’s Universal Music Group, and Sony BMG, have come to a halt.

In the report, the Journal cites several sources familiar with the talks as noting the royalty fees became a problem. Microsoft sees the monthly rate of $6 to $8 per user as being excessive, but those sources say the rates would be roughly what other subscription-based services pay.

Several sites like Napster, Real’s Rhapsody, and Yahoo Music, offer subscription-based services for digital music. Users who sign up essentially rent that music to use on portable music players or listen to via streaming on a PC. Individual songs can be purchased and burned to CD.

To enter the competition, Microsoft would probably have to price a service around what Yahoo charges for its Yahoo Music Unlimited product. Yahoo makes money from selling advertising on its music service. Apple earns profits from its trendy iPod music players and has refused to license the DRM scheme used on iTunes, forcing users to buy iPods for easy song portability.

Microsoft doesn’t seem willing to back down from its position and subsidize a music service with profits from another sector, like its digital rights management software. Perhaps after the full launch of its advertising network it may revisit the issue and try a solution similar to that used by Yahoo.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.

Microsoft Hurls Chair At Music Labels
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