With the soon release of Zune, and the possibility that they would have to combat Apple iTunes without Vivendi Universal Music, Microsoft (MSFT) forged a deal with the company to give them a piece of the Zune portable media player. With Universal representing a third of all new albums sold in the U.S., Microsoft had to do something. They also said that they're willing to make deals with other music companies as well, according to the New York Times.
How it will work is that for every Zune player sold, Universal Music will get a royalty of a little over $1. For the royalty, Microsoft will receive licensing for their new music service. Of course Universal will also receive a percentage of revenue from the downloaded music as well.
Universal said that half of the royalties received for the devices will be distributed to its artists.
This is Microsoft's usual response to battle against Apple (AAPL) products which are more closed systems, against Microsoft's strategy to open things up. With the "cool" factor of the iPod, it'll be interesting to see if it helps them to grab a large share of the market.
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