It’s not a huge shock to see former start-up CEOs join big companies after the demise of their own. But this move is a bit more surprising: It means Shapiro will be working for one of the companies that helped put him out of work.

That’s because MySpace Music is a joint venture between News Corp. (NWS) and the big music labels, including Universal Music Group. And Shapiro, among others, has pointed to Universal’s copyright-infringement lawsuit against Veoh as one the primary reasons for the video site’s downfall.

But apparently, Shapiro doesn’t mind working for Universal now. In any case, he’ll be reporting to MySpace execs Courtney Holt, Mike Jones and Jason Hirschhorn, not Doug Morris. And you could argue that it makes sense for MySpace Music to have a tech guy on board who has intimate knowledge of the big music labels, warts and all.

Plus, MySpace Music needs help from wherever it can find it. The site still boasts some 30 million unique users. And as other free music sites melt away, it is one of the only places to get legal streams without paying for them. But two years after launch, it’s still a mess to navigate, and I don’t know anyone who uses it on a regular basis. Maybe Shapiro can help.

Veoh, meanwhile, never actually went away. Something called Qlipso purchased the site, which had raised some $70 million, for less than $10 million in March.

Vivendi says it will install Lucian Grainge as head of its Universal Music Group unit in 2011, replacing longtime head Doug Morris. The Grainge era will really start this summer, since Universal’s international boss will be moving to New York in July, and he and Morris will be “co-CEOs” for a six-month stint.

This one will surprise absolutely no one as it has been in the works for a very long time, and people both in and outside of Universal have been trying to figure out how they’ll fit in after Grainge’s ascension. In the meantime, a more pressing issue for Universal is chatter that the company is looking at yet another round of layoffs this spring.

Release:

Vivendi announced today the appointment of Lucian Grainge as Chief Executive Officer of Universal Music Group (UMG), the world’s leading music company. Mr. Grainge is promoted from his current role as Chairman and CEO of London-based Universal Music Group International (UMGI). He will take up the position on Jan. 1st 2011, succeeding Doug Morris, who will remain as Chairman. He will relocate to New York from July 1st 2010. During these six months, Doug Morris and Lucian Grainge will act as co-CEOs of UMG. Lucian Grainge will report to Jean-Bernard Levy and become a member of the Vivendi Management Board.

Under Lucian Grainge’s leadership since 2005, UMGI has grown its market share worldwide, broken global acts and led the music industry in developing a range of new digital services. He started his career with CBS/April Music in 1979, advancing to positions in Artists & Repertoire (A&R) and talent development, and rising to senior management positions at PolyGram UK and Universal Music internationally.

Doug Morris commented: “The time has come for Lucian to step up to the CEO role. I am very happy with the new organization as I have been grooming him to succeed me for quite a while now. I know he is ready, willing and able to attack the challenges of the new decade.”

Commenting on the appointment, Jean-Bernard Levy, chairman of the Vivendi Management Board, stated: “I am delighted that Lucian Grainge has agreed to move to New York to take on the Chief Executive role. His track record speaks for itself, finding stars, growing revenues and building new business models. He has the right combination of experience and innovation to take UMG forward as the migration into the digital era accelerates.”

Jean-Bernard Levy went on: “I would also like to take this opportunity to thank Doug Morris for the extraordinary results he has achieved over the years in a very tough environment. After starting out as a songwriter in 1965, Doug has overseen 35 years in the business and taken it from Vinyl to Vevo. Lucian will be able to benefit from their period in tandem. I know Doug, as the chairman of UMG, will continue to provide a major contribution to the business and the music industry as a whole.”

Lucian Grainge added: “Stepping into Doug’s shoes is an honour and a privilege. This is a great industry which I believe has as much to look forward to as to be proud of. If we keep getting the basics right of exceptional music and artistry, backed by a great team and sound business sense, then we’ll continue to achieve success.”

Google’s YouTube and Vivendi’s Universal Music Group will be launching a new site, dubbed VEVO, that will highlight UMG’s videos. The site will launch in “coming months” according to a press release (below). And YouTube users will still be able to watch UMG clips from the likes of Lil Wayne via a “new VEVO channel through a special VEVO branded embedded player.”

This is essentially what I’ve been calling “YouTube Music,” and it’s been in the works since last fall. In March, I reported that the two sides had basically hammered out a deal.

I’ll be tracking down whatever details I can throughout the day, but at first glance, this is a pretty big deal for YouTube, the music business, and the rest of the media world.

• YouTube, which dominates the market for Web video but can only sell ads against a small portion of the clips it shows, gets to hang on to valuable, advertiser-friendly inventory.
• Universal gets its best shot at making money from something other than music sales, which it desperately needs to do. I’m also assuming that it gets a large chunk of cash upfront: The press release says the two companies will share ad revenue, but I’d be shocked if UMG CEO Doug Morris wasn’t able to wrangle a significant advance from Google (GOOG). UPDATE: No word on an advance, but I’m told that the two sides have scrapped their earlier arrangement, in which Google paid Universal a fraction of a penny every time someone played on of its videos. That’s a big deal: YouTube has complained that the previous deal was a money-loser, while the labels have complained that they weren’t getting adequately comped for their content.
• Obvious question: Will Universal’s fellow labels–Warner Music Group (WMG), EMI and Sony (SNE)–come on board? Sony has already re-upped its deal with YouTube, and Warner is currently at loggerheads with the video site. I assume that all of them will want access to the dollars and eyeballs that Universal is now getting, but a person familiar with the deal tells me that it’s not a foregone conclusion–in part, because neither YouTube nor the labels understand how VEVO will do. It’s possible, for instance, that both Sony and YouTube will be happy to keep the label’s videos on the larger site. “This is their big toe in the water,” an insider tells me, speaking of YouTube. “I’m not sure they want their whole body in the water.”
• The deal is also an important signal to other content providers YouTube would like to do business with: Give us your best stuff, and we’ll cut you a special deal. Now that YouTube is creating a new site for music videos and directing some its traffic there, who’s to say it couldn’t do the same thing for movies or TV shows? The company would desperately like to sell ads against some of Hollywood’s premium content–whether it’s Sony’s movies, or Disney’s (DIS) shows on ABC. So VEVO may be a template for future deals.

More later. For now, here’s a Lil Wayne video, followed by the press release:

UNIVERSAL MUSIC GROUP (UMG) AND YOUTUBE TO LAUNCH REVOLUTIONARY PREMIUM MUSIC & VIDEO SERVICE

VEVO – UMG’s Premium Music Service Powered By YouTube
To Launch In Coming Months

NEW YORK, NY and SAN BRUNO, CA, Thursday, April 9, 2009 – Doug Morris, Chairman & Chief Executive Officer of Universal Music Group (UMG), the world’s leading music company and Eric Schmidt, Chairman of the Board & Chief Executive Officer of Google Inc., today announced that UMG and YouTube, a Google subsidiary, are working together to launch VEVO, a music and video entertainment service that will feature UMG’s premium video content.

In addition to VEVO, YouTube has renewed and extended its successful partnership with UMG that allows users to continue creating and watching user-generated videos containing UMG sound recordings and Universal Music Publishing Group’s compositions on YouTube through various territories around the world. The two companies will also share advertising revenue on YouTube and VEVO.

Launching later this year, VEVO will be a premium online music video hub built for consumers, advertisers and content owners that will blend UMG’s broad catalog of top artists and content with YouTube’s leading edge video technology and user community. YouTube will provide the technology infrastructure that will power VEVO and host UMG’s extensive library of professionally-created music videos on the new site.  On YouTube, this content will be exclusively available through VEVO.com and a new VEVO channel through a special VEVO branded embedded player.

“VEVO will bring the most compelling premium music video content and services to the world’s single largest online video audience,” stated Mr. Morris. “We believe that at launch, VEVO will already have more traffic than any other music video site in the United States and in the world. And this traffic represents the most sought after demographic for advertisers, especially as advertising dollars continue their shift from old media to new. VEVO will be uniquely positioned to monetize this opportunity and a host of others as we grow it to become “the” destination for premium music video content online. For music lovers who want the best in music videos, the VEVO experience will be second to none.  At the same time, VEVO will expand the premium video marketplace, generate new revenue streams for content creators, and provide brand advertisers an unprecedented opportunity to get in front of a highly engaged audience. We couldn’t be more excited about the huge potential we see in the VEVO service.”

“Technology has allowed fans to discover music in endless ways while creating new business opportunities for artists and labels alike,” said Mr. Schmidt.  ”At Google, we are committed to promoting greater innovation and choice and are thrilled to be working with UMG in what will surely be an exciting new service for consumers, advertisers, content creators and the music industry at large.”

At launch, people will be able to access UMG’s entire catalog of premium music video content, including professionally-created and full-length videos on VEVO, as well as artist-generated content and user-generated content hosted on YouTube.  VEVO will also serve as a syndication platform, expanding the reach of the VEVO brand. This innovative platform is aimed at providing consumers the very best in digital music content while further extending UMG’s lead in the direct-to-consumer market.

Presently, UMG’s YouTube video channel has more than 3.5 billion views, making the UMG channel the most watched on YouTube.

It’s not clear which aspect of Total Music has piqued the Justice Department’s interest, though it’s likely concerned that participating labels might collude to set wholesale music prices. And for good reason–the major labels were found guilty of wholesale CD price fixing back in 2000.

Really, an album that someone worked on for two years–is that worth only $9, $10, when people pay two bucks for coffee in Starbucks? People never really understand what’s happening to the artists. All the sharing of the music, right? Is it correct that people share their music, fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go. That’s what happened to the record business.”

–UMG CEO Doug Morris, Wired, Nov. 27

Offering its entire catalog of digitized video and music for free to the 19 million users of an upstart social-networking site was once about the furthest thing from Universal Music Group’s mind. Now, with the Internet rejiggering the music industry’s economic structure, it’s at the very top of it.

And so this morning, UMG said it would allow members of social network Imeem to stream its music for no charge, in exchange for a cut of the revenue from advertising aired while songs are playing. “Imeem has developed an innovative way to make our artists’ music a central part of the social-networking experience,” UMG CEO Doug Morris said in a statement. “They’ve done so the right way–by working with UMG to provide an exciting musical experience for consumers, while ensuring that our artists are fairly compensated.”

And ensuring that UMG is fairly compensated as well. As part of the deal, the company will get an equity stake in Imeem and is rumored to have received an upfront payment of more than $20 million.

UMG is the last of the ‘big four’ major labels to ink such a deal with Imeem, following in the footsteps of Warner Music Group, Sony BMG and EMI. All four majors–quite an achievement for a company that this past summer didn’t have a deal with any of them. Seems the music industry isn’t quite as wary of advertising-supported business models as it once was. “2008 is going to be the year of music labels trying to put themselves in front of everyone, no matter what business model it takes,” Forrester analyst James McQuivey told CNNMoney. “The labels have realized that you have to be everywhere on the Web, because the customer is everywhere. You need to put yourself in front of them when they make their entertainment decisions.”

Really, an album that someone worked on for two years–is that worth only $9, $10, when people pay two bucks for coffee in Starbucks? People never really understand what’s happening to the artists. All the sharing of the music, right? Is it correct that people share their music, fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go. That’s what happened to the record business.”

–UMG CEO Doug Morris, Wired, Nov. 27

Offering its entire catalog of digitized video and music for free to the 19 million users of an upstart social-networking site was once about the furthest thing from Universal Music Group’s mind. Now, with the Internet rejiggering the music industry’s economic structure, it’s at the very top of it.

And so this morning, UMG said it would allow members of social network Imeem to stream its music for no charge, in exchange for a cut of the revenue from advertising aired while songs are playing. “Imeem has developed an innovative way to make our artists’ music a central part of the social-networking experience,” UMG CEO Doug Morris said in a statement. “They’ve done so the right way–by working with UMG to provide an exciting musical experience for consumers, while ensuring that our artists are fairly compensated.”

And ensuring that UMG is fairly compensated as well. As part of the deal, the company will get an equity stake in Imeem and is rumored to have received an upfront payment of more than $20 million.

UMG is the last of the ‘big four’ major labels to ink such a deal with Imeem, following in the footsteps of Warner Music Group, Sony BMG and EMI. All four majors–quite an achievement for a company that this past summer didn’t have a deal with any of them. Seems the music industry isn’t quite as wary of advertising-supported business models as it once was. “2008 is going to be the year of music labels trying to put themselves in front of everyone, no matter what business model it takes,” Forrester analyst James McQuivey told CNNMoney. “The labels have realized that you have to be everywhere on the Web, because the customer is everywhere. You need to put yourself in front of them when they make their entertainment decisions.”

In the interview, Morris took aim at Apple’s popular music player and service, blamed college students for the music industry’s troubles and generally seemed disgruntled that this digital stuff would not go away.

He even compared the music industry to hapless and helpless Shmoos (pictured here) from L’il Abner, despite the fact that it has been and remains a rapacious business.

For example, he said of Apple’s Steve Jobs: “We were just grateful that someone was selling online. The problem is, he became a gatekeeper. We make a lot of money from him, and suddenly you’re wearing golden handcuffs. We would hate to give up that income.”

Readers were not pleased (neither was BoomTown!).

Wrote Randy Harrison:

Doug has it backwards.

“If you follow his logic, then the companies that manufactured, say radios, should have tithed off a piece of their sales to the labels too. Sorry.

“And to blame the students for the labels current woes is disingenuous at best. The real problem is that the labels, who saw this coming with plenty of lead time, abdicated their responsibility to manage change and now face the ‘music’ which is an (i)tune they don’t like.

“Get off it Doug! Look at iTunes and any other outlet, digital or not, as a promotional tool. Quit looking back at the good old days and get on with it. After all, the music industry invented direct retail merchandising and promotion. Update the model. It’s in your corporate DNA.

“And remember you are competing against free, so you have to understand value and your customers in new ways. But just think, you have been there before… say when FM usurped AM to be the dominant vehicle to launch music and LPs took over from 45s.”

Wrote Milton Soong:

I love this logic…Consumers have always complained that labels have been screwing over the musicians over the years, their justification for their role was ‘We are valuable, we are a gatekeeper who takes the risk of discovering new talent, make sure there’s access to their material through promotion/marketing, etc.’

“Now that the shoe is on the other foot (iTunes=Gatekeeper to help consumers get to the material), all of the sudden the argument is reversed.

“I hope the labels all go bankrupt, and a new scheme is set up where consumers can directly compensate the artists for their work. All Hail Disintermediation!”

Wrote Michael Long:

Wow. They must really hate Wal-Mart and Amazon too. I mean, can you image the audacity of someone selling billions of your products for you?

“Golden handcuffs, indeed.”

We did not think it could get worse than NBC honcho Jeff Zucker (pictured here), who demanded a vig for every iPod sold because “Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money.”

And then came former Disney pooh-bah Michael Eisner, who blamed the writers’ strike on Apple head Steve Jobs, because he was ruining the entertainment business with that darn iPod.

“[Movie and television studios] make deals with Steve Jobs, who takes them to the cleaners. They make all these kinds of things, and who’s making money? Apple! They should get a piece of Apple,” said Eisner. “If I was a union, I’d be striking up wherever he is.”

And now comes Morris, who heads up the Universal Music Group and who was interviewed by Seth Mnookin of Wired, trying again to skewer Jobs.

Of course, he ends up poking his own petard. From his private dining room (I kid you not) at the company HQ, the 68-year-old veteran music exec talked about plans to take aim at Apple’s popular music player and service, blamed college students for the music industry’s troubles and generally sounded like a woefully out-of-touch exec.

Says Morris in a refrain you would think he might have gotten over after all this time and all those stolen songs ago: “Is it correct that people share their music, fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go.”

We know, we know, there you go. Piracy is wrong! We agree! Of course, that begs a solution.

And Morris’s have not been so very consistent. On one hand, he’s pissed and, thus, has aggressively gone after companies like YouTube and MySpace for copyright infringement and has held up Microsoft by taking a piece of Zune sales. On the other, Universal has offered some unprotected songs on sites like Amazon and has been doing well in the ringtone business.

Still, Morris seems proud of coming off as an anti-geek, a stance that has apparently messed up the good thing the music business had going–mostly milking consumers and not delivering product in the way they wanted it.

“There’s no one in the record company that’s a technologist. That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do,” said Morris, without a trace of regret about the rank incompetence of dealing with the changes created by digital distribution. “It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?”

Mnookin correctly suggests getting a vet. But I would go a step further: Get a new dog.

Instead, he is kicking a few others, such as Jobs, mostly for out-negotiating the labels to get them to sell on iTunes. “We were just grateful that someone was selling online,” said Morris. “The problem is, he became a gatekeeper. We make a lot of money from him, and suddenly you’re wearing golden handcuffs. We would hate to give up that income.”

Which is why he and others are trying to blow up the whole thing, by attempting to do damage to iTunes by pulling songs off the service (evil to consumers who love the iPod, but it could work) and offering alternatives like a competing subscription music service that seems destined for failure too.

Worst of all, Morris incorrectly compares the music industry to the Shmoo of the cartoon Li’l Abner, as if the creature was a loser. In fact, the Shmoo is beloved and helpful to all, as well as delicious and entertaining, characteristics the music industry could take a clue from.

“Shmoos haint make believe,” said Li’l Abner. “The hull (whole) earth is one.”

Morris should wish he were a Schmoo.

Doug’s a very special guy. He’s the last of the great music executives who came up through A&R. He’s old school. I like him a lot.”

–Apple CEO Steve Jobs on Universal Music Group CEO Doug Morris

The per-device royalties Universal Music Group receives for every Zune player sold were apparently substantial enough to buy CEO Doug Morris a bigger set of balls, because he’s out drumming up support for an industry-owned subscription service with which he hopes to loosen Apple’s grip on the digital music market.

The endeavor is called “Total Music,” and Morris has already approached Sony BMG Music Entertainment and Warner Music Group about participating. His proposition: a subscription-based music service for the hardware industry, one whose cost could be baked into the hardware that supports it. Under the Total Music model, hardware makers subsidize the cost of music, which consumers are then given for “free” when they buy a new digital media player. That’s more money up front for hardware makers, but it’s a wise investment because, as Morris reckons, they’ll make that money back and then some by selling many more devices.

Interesting business model. “If the object is to wrest control of the market from Steve Jobs,” said Gartner analyst Mike McGuire, “this is a credible way to try it.”

Sadly for Morris, it’s also one inevitably complicated by recent turmoil in the music industry. With Radiohead releasing its latest album as a pay-what-you-will digital download, Nine Inch Nails declaring itself a free agent, and Madonna about to dump Warner Music Group for a concert promoter, we’re clearly seeing a sea change in music discovery, distribution and consumption, one perhaps lost on an industry so hardened by years of CD price fixing. So while the music industry struggles so to wrest control of the digital music market from Apple, some of today’s biggest popular artists are crafting an entirely new business model.

Doug’s a very special guy. He’s the last of the great music executives who came up through A&R. He’s old school. I like him a lot.”

–Apple CEO Steve Jobs on Universal Music Group CEO Doug Morris

The per-device royalties Universal Music Group receives for every Zune player sold were apparently substantial enough to buy CEO Doug Morris a bigger set of balls, because he’s out drumming up support for an industry-owned subscription service with which he hopes to loosen Apple’s grip on the digital music market.

The endeavor is called “Total Music,” and Morris has already approached Sony BMG Music Entertainment and Warner Music Group about participating. His proposition: a subscription-based music service for the hardware industry, one whose cost could be baked into the hardware that supports it. Under the Total Music model, hardware makers subsidize the cost of music, which consumers are then given for “free” when they buy a new digital media player. That’s more money up front for hardware makers, but it’s a wise investment because, as Morris reckons, they’ll make that money back and then some by selling many more devices.

Interesting business model. “If the object is to wrest control of the market from Steve Jobs,” said Gartner analyst Mike McGuire, “this is a credible way to try it.”

Sadly for Morris, it’s also one inevitably complicated by recent turmoil in the music industry. With Radiohead releasing its latest album as a pay-what-you-will digital download, Nine Inch Nails declaring itself a free agent, and Madonna about to dump Warner Music Group for a concert promoter, we’re clearly seeing a sea change in music discovery, distribution and consumption, one perhaps lost on an industry so hardened by years of CD price fixing. So while the music industry struggles so to wrest control of the digital music market from Apple, some of today’s biggest popular artists are crafting an entirely new business model.

These devices are just repositories for stolen music, and they all know it. So it’s time to get paid for it.”

–Universal Music Group Chairman/CEO Doug Morris on digital music players, November 2006

Universal Music Group appears to have finally taken Steve Jobs’s “Thoughts on Music” essay to heart–although not in the way the Apple CEO might have imagined. Heeding Jobs’s call to abandon digital-rights management, the company announced late yesterday that it will sell at least some of its music catalog online without copy protection for the next few months. Described by UMG as a “test” of the DRM-free option, the effort will see the label selling DRM-free tunes through retailers like Amazon.com, RealNetworks’ Rhapsody and Best Buy.

But not Apple’s iTunes.

Why exclude the third largest music retailer in the United States? Publicly, Universal claims it’s so that iTunes could serve as a “control group” against which to compare its sale of DRM-free downloads elsewhere.

A plausible explanation, but improbable. More than likely, this is an effort to temper Apple’s growing influence in the music industry. A month ago, Universal scrapped its long-term contract with iTunes, opting instead to continue the arrangement on an at-will basis that will give it an easy exit should disagreements over pricing become a problem.

And make no mistake, pricing is a problem. Apple is the No. 3 music retailer overall, according to NPD Group, and its ubiquity in the download space has given the company serious leverage in negotiating pricing with the major record labels. It’s fairly clear then that UMG’s DRM-free effort is a “test” not just of unrestricted digital formats, but of Apple’s growing influence in the music industry.

Said Mike McGuire, vice president of research at Gartner, “It seems like a boldfaced move to blunt Apple’s influence.”

These devices are just repositories for stolen music, and they all know it. So it’s time to get paid for it.”

–Universal Music Group Chairman/CEO Doug Morris on digital music players, November 2006

Universal Music Group appears to have finally taken Steve Jobs’s “Thoughts on Music” essay to heart–although not in the way the Apple CEO might have imagined. Heeding Jobs’s call to abandon digital-rights management, the company announced late yesterday that it will sell at least some of its music catalog online without copy protection for the next few months. Described by UMG as a “test” of the DRM-free option, the effort will see the label selling DRM-free tunes through retailers like Amazon.com, RealNetworks’ Rhapsody and Best Buy.

But not Apple’s iTunes.

Why exclude the third largest music retailer in the United States? Publicly, Universal claims it’s so that iTunes could serve as a “control group” against which to compare its sale of DRM-free downloads elsewhere.

A plausible explanation, but improbable. More than likely, this is an effort to temper Apple’s growing influence in the music industry. A month ago, Universal scrapped its long-term contract with iTunes, opting instead to continue the arrangement on an at-will basis that will give it an easy exit should disagreements over pricing become a problem.

And make no mistake, pricing is a problem. Apple is the No. 3 music retailer overall, according to NPD Group, and its ubiquity in the download space has given the company serious leverage in negotiating pricing with the major record labels. It’s fairly clear then that UMG’s DRM-free effort is a “test” not just of unrestricted digital formats, but of Apple’s growing influence in the music industry.

Said Mike McGuire, vice president of research at Gartner, “It seems like a boldfaced move to blunt Apple’s influence.”

These devices are just repositories for stolen music, and they all know it. So it’s time to get paid for it.”

–Universal Music Group Chairman Doug Morris, November 2006

Though Apple would have had it otherwise, Universal Music Group, the world’s largest music company, has indeed scrapped its long-term contract with Apple’s iTunes service, opting instead to continue the arrangement on an at-will basis that will give it an easy exit should disagreements over pricing or other terms become a problem.

“Universal Music Group decided not to renew its long-term agreement for Apple’s iTunes service,” the company said in a statement. “Universal Music Group will now market its music to iTunes in an ‘at will’ capacity, as it does with its other retail partners.” The move follows a bit of a Mexican standoff in negotiations, with Universal Music Group packing a catalog that accounts for one in three releases sold in the United States, Apple a 70%-plus market share of the music download business and a recalcitrant CEO who would probably rather eat a Zune than be pressured into bringing variable pricing to iTunes, opening the iPod to rival music services or handing over a percentage of iPod sales to record labels, as Microsoft has done with Zune.

“When your customers are iPod addicts, who are you striking back against?” entertainment lawyer Ken Hertz told the New York Times earlier this week. “The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they need to do that while Steve Jobs still has an incentive to keep them at the table.”