Los Angeles – After weeks of negotiations, Microsoft Corp. 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 on Friday, citing an impasse with the record companies over royalty rates, these people said Tuesday.
Another person, who works closely with Redmond, Wash.-based 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.
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 portable music players, for a monthly fee.
Several online retailers already offer music subscription, including Yahoo, Napster, RealNetworks’ Rhapsody and MusicNet. Fees range from $5 to $15 a month.
The collapse of the talks between Microsoft and the record labels, reported by The Wall Street Journal on Tuesday, 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 hike prices on the iTunes Music Store.
Record label executives have scoffed at that suggestion. Last month, Warner Music Group CEO Edgar Bronfman Jr. said Apple’s 99-cent price for single tracks ignores the issue that not all songs are the same commercially and shouldn’t be priced the same.
