Zune Thoughts: AHRA Tax Rears It's Head, Looks at Zune

"Microsoft's private deal with Universal Music to pay the record label a voluntary royalty of $1 for every Zune player it sells has raised eyebrows across both the technology and music industries. But it might not be the last payment Redmond owes from Zune, we've discovered. Recently, Steve Gordon, entertainment attorney and Reg music columnist, took a skeptical look at where Universal's Zune dollar might end up. He reminded us of a little known US tax, which harks back to the "Home Taping Is Killing Music" era. Under the Audio Home Recording Act of 1982, recording devices carry a small royalty which is then divvied up between the performing artists involved. The royalty is administered by the Alliance of Artists and Recording Companies, AARC. You don't hear too much about AHRA or AARC, because as a consequence of a 1999 court settlement over the Diamond Rio player, it's generally assumed that all MP3 players are exempt. But not so fast, AARC's executive director Linda Bocchi reminded us. "People tend to throw that Rio decision around a little haphazardly," she told us. "Rio didn't say that all MP3 players are exempt. The decision was based on the fact the Rio could not record unless via the hard drive of your computer. But Zune is going in another direction. People can record off of FM radio, and share from one Zune player to another. It's moving away from the direction set by the iPod, and it's a grey area.""

Wait a second here... The Zune doesn't record music from the radio, does it? I thought that was a big no, with a maybe in a future firmware upgrade. Until that happens, Microsoft doesn't have anything to worry about. And the WiFi sharing feature is only good for 3 days or 3 plays, so it's not exactly a permanent acquisition of copyrighted music. Besides, even if they did have to pay said tax (unlikely), I think Microsoft can afford it... Now what MS should really do if they want to stick it to the iPod is allow us to record FM into WMA, pay the AHRA tax and wait to see if Apple can do the same...