Microsoft Sends Indie Labels Bonus Checks

Microsoft recently sent substantial one time bonuses to some digital distributors and independent labels.  The checks appear to be the company’s answer to criticism of payments as high as $1 per player extracted by Universal and other major labels granting permission for Zune‘s music sharing functionality.

In an email sent earlier this week to label and artist partners obtained by Hypebot, The Orchard wrote that Microsoft "made a corporate decision to demonstrate their commitment
to the independent sector in a manner we all appreciate: rather than simple lip
service, they wrote a check". The digital distributor plans to share the revenue with content providers in a "Zune Bonus".

IODA CEO Kevin Arnold confirmed that they too had received a bonus from Microsoft and would be sharing it with labels. "It’s their money, after all."  Arnold called the check "a smart move by Zune at a time when concerns are being expressed over treatment of the indie community."  The equity position offered to major labels by MySpace Music and cash advances by some new music services have led to concerns that the indie sector was not receiving its fair share.

MICROSOFT COMMENTS

Exactly which distributors and labels received checks from Microsoft remains unclear as does how the payments were calculated.  A company spokesperson would only say, "Zune remains committed to supporting artists and working with the industry to develop new models and experiences around digital music and entertainment.  We don’t comment on the financial details of our relationships with our content partners."

FULL TEXT OF THE ORCHARD LETTER AFTER THE JUMP.

Dear Label,

As many of you know, Microsoft launched their Zune player and service last year.  Recently, the company made a corporate decision to demonstrate their commitment to the independent sector in a manner we all appreciate: rather than simple lip service, they wrote a check, and paid a flat bonus to The Orchard.

We are sharing this money with you.  Therefore, in your Q1 2008 statement, you will see a credit to your account called “Zune Bonus.”  Zune has paid out this money in appreciation for our collective patience and support as Microsoft continues to invest in and build its digital retail service.  We have distributed the money proportionate to your label’s 2007 sales activity across all DSPs.  We are proud to deliver this money to you, and we feel on many levels – from one of our digital music services unilaterally choosing to reward the vital independent sector, to your distribution services partner sharing it with its represented artists and labels – that this is indicative of an ongoing transition to a more equitable and fair playing field for all of you.  We certainly maintain that commitment.

The Orchard holds Zune in high regard and greatly appreciates Microsoft’s commitment to the independent sector.

Best regards,

The Orchard’s Artist/Label Relations Team