After weeks of negotiations, Microsoft has suspended talks with the four major record companies over the licensing terms for a new online...
LOS ANGELES — After weeks of negotiations, Microsoft has suspended talks with the four major record companies over the licensing terms for a new online music-subscription service, according to music-industry people familiar with the talks.
Microsoft ended the discussions Friday, citing an impasse with the record companies over royalty rates, these people said yesterday.
Another person, who works closely with Microsoft and has been involved in company discussions on the possible venture with the labels, confirmed the negotiations had ended but said Microsoft remains committed to the idea of a subscription service.
Microsoft spokesman Adam Sohn declined to comment.
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Microsoft already sells song downloads on its MSN Music Internet site but had been seeking to develop a subscription service. Such services typically offer users unlimited number of tracks for download, and in some cases, for use on compatible portable music players, for a monthly fee.
Several online retailers already offer online music subscription, including Yahoo!, Napster, RealNetworks’s Rhapsody and MusicNet. Their fees vary but range between about $5 to $15 a month, with some charging users extra to move songs to portable players.
The collapse of the talks between Microsoft and the labels, reported by The Wall Street Journal yesterday, represents the latest skirmish between retailers and record labels over pricing in the developing digital-music market.
Last month, Apple Computer CEO Steve Jobs publicly criticized the recording industry, saying some major labels were “greedy” for pushing Apple to increase prices on the iTunes Music Store.
Record-label executives have scoffed at the suggestion they’re being greedy. Last month, Warner Music Group CEO Edgar Bronfman Jr. said at an investors’ conference that Apple’s 99-cent price for single tracks ignores the issue that not all songs are the same commercially and, like any other commodity, shouldn’t be priced the same.
“The labels have complained basically that they’re not making enough money on downloads, that they prefer subscription services,” said Phil Leigh, a digital-music analyst in Tampa, Fla.
“Microsoft is saying on behalf of themselves and, indirectly, on behalf of the rest of the subscription [services], ‘If you want a subscription offering, if you want the better recurring revenue from subscription pricing, then give us a better price.’ “
AP Business Writer Allison Linn in Seattle contributed to this report