11/11/2006

A Minor Difference of Opinion

24/7 WallStreet claims that the Microsoft/Universal deal is bad news for Apple, because they'll need to placate the music companies. Not quite: Microsoft is paying a literal penalty for being late to the digital music market, and not being able to promise music companies a revenue stream. Apple is compensating them piecemeal; Microsoft is doing it in bulk. This is more or less what you'd expect, since Apple got to the market first and had no idea what kind of cost they were imposing on music companies. Better to hedge by paying them per song than bet big by paying per player. Microsoft has more information (and more resources), so they can afford to take the route they took.

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posted by Byrne Hobart at 10:39:00 PM

2 Comments:

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