Zune Marketplace’s Absurd Pricing Scheme

by James R. Stoup Nov 13, 2006

Lately I have been trying to avoid talking about Microsoft. I figured the whole Zune thing had been covered to death and so my input wasn’t really needed. I continued to think this until I read about Microsoft’s “Zune Marketplace”. This iTMS competitor was so badly designed I just had to write something about it. Even though by now I expect Microsoft to be incompetent, this was taking ineptitude and elevating it to an art form. But let me lay out the facts for you lest we get ahead of ourselves.

As we all know, purchasing songs, videos or games from the iTMS only requires a customer to create an account and have a valid credit card. Thus, like most other business transactions, you purchase a good and the price of that good is billed to your credit card. It works the same way at the grocery store, at the gas station or in a restaurant. And for the most part it seems like a pretty good system. Plenty of people have credit cards and they understand the concept of purchasing items with them. So, how, you ask, could Microsoft screw this up? No, first you might ask, what is there to screw up? I mean, the system already works. All you need your customer to do is show up with a credit card? Right?


I suppose Microsoft saw this as a chance to “innovate”. And we all know what happens when they innovate (in the 25 Worst Tech Products of All Time MS has many entries) This was one of those times when Microsoft should have just stolen the iTMS concept lock, stock and barrel. It would have been unimaginative, but at least it would work. Instead, they decided to go with the following scheme:

The 5 Step Plan To Fill Your Zune With Legal Music
1. Create a free Zune account
2. Register a valid credit card
3. Buy “points” from MS
4. Scratch your head as you try to figure out why you need to buy “points” to buy songs. Why can’t you just use standard American currency? Doesn’t Microsoft accept the Dollar anymore?
5. Say “screw it” and go buy an iPod

Adding a completely unnecessary layer of confusion is, in and of itself, a bad thing. But it wouldn’t be Microsoft if they didn’t go that extra mile to rape their customers. You see, when you buy these “points” you can’t buy them as you need them, you have to purchase them in Microsoft defined denominations. In other words, Microsoft just invented a currency and they require you to invest in this currency before they can sell you any music. And just if you were wondering, here are the denominations:

$5 = 400 points
$15 = 1200 points
$25 = 2000 points
$50 = 4000 points

But wait, it gets BETTER! There isn’t a 1 to 1 correspondence between the value of a “point” and the value of a penny. Let me break out some math for you:

$5 = 400 points
$1 = 80 points
100 cents = 80 points
1 cent = .8 points
1 point = 1.25 cents

So, let me explain why this is important. If Microsoft prices a song at 79 “Zune Points” is it cheaper than a 99 cent song from Apple? I don’t know, lets do the math.

79 points * (1.25 cents/1 point) = 98.75 cents (or approximately 99 cents)

So the answer is “no, the MS song isn’t cheaper, it is the same price as Apple’s”. So, that means, to find the actual price of anything on the Zune store you have to multiply it in your head by a ZP (Zune Point) factor of 1.25, and since the general populace isn’t to keen on doing math in their head I can only conclude that this will cause no small bit of confusion. But wait, it gets better.

If you recall $5 is the lowest denomination you can purchase. So if you want to buy one song from the Zune Marketplace you have pay Microsoft $5 up front and let them keep your remaining 321 points (or $4.01, this is beginning to get confusing).  Now, the expectation is that you will be back purchasing more songs (and more points) and so you won’t care about your balance. But, what you are in fact doing is giving an interest free loan to Microsoft (because they, of all companies, need the money).

Of course, you could just spend all of your points each time you buy music, but would require you to purchase songs in multiples of 31,600 points (that being the LCM of 79 & 400). That works out to 400 songs for $395. A better plan would be to buy 5 songs for 395 points (or $4.94) and just save your 5 remaining points for some future purchase. In effect, Microsoft has created a store that only accepts gift cards as the valid method of payments. And if you don’t think thats insane then you obviously already have pre-ordered your Zune.

I know what you’re thinking. Why would Microsoft do this? Perhaps to screw customers out of their money by creating a complex, uselessly confusing layer designed to hide the real price of their products? No, of course not. Why, according to Zune.net the reason is:

The Points that you purchase can be easily managed in a special account that you can use on Zune Marketplace and Xbox Live Marketplace.

Well there you go. It isn’t targeted at average consumers it is targeted at these special Marketplace users. So how many of theses users are there? To figure that out we need to know how many Xbox Live users are there. Well, there have been 24 million Xboxes sold and almost 6 million Xbox 360s sold (as of Sept. of this year). So, if every Xbox owner also buys a Zune, and they also decide to use both Marketplace services (or else what’s the point?) then this service will be useful to, at most, 30 million people. That assumes that all of those people who bought Xboxes outside the USA fly over here and buy a Zune (because the Zune is US only baby!) and then use that Zune in America to load up on their music. (presumably they can then fly home and enjoy their music, assuming of course, that they can both read English and enjoy American music, but whatever)

A more realistic figure is Microsoft sells around 2 million Zunes and maybe half of those users also use the Xbox Live Marketplace. So, this horrible system has been put in place (according to Microsoft’s logic) to make life easier for less than 1 million people.

“Welcome to the Social”, b***h!


  • From the Ts & Cs at the Apple Store, Re: gift cards.
    “Prepaid cards are not redeemable for cash and cannot be returned for a cash refund, exchanged, or used to purchase gift certificates or provide allowances. Unused balances are nontransferable.”

    Which to me implies that you can’t get back your 15 cents if you use your $15 gift card for 15 singles. Of course, Apple don’t force you to buy giftcards, and every other gift certificiate scheme I’ve seen won’t give change either. I prefer apple’s system, when I buy a song at iTMS, I see a 0.79 bill on by credit card. More if I buy > 1 song at a time (unusual). They don’t charge me 5 pounds and then use that until it runs out, which is what MS are effectivly doing.

    octarine had this to say on Nov 15, 2006 Posts: 1
  • Being a Math teacher I can’t believe the fatal flaw the author made in his assumptions.  He asserts that you are NOT getting all your money’s worth when using the Zune Marketplace (hereafter referred to as ZM, and iTunes Music Store will be referred to as iTMS).  Supposedly, if you spend $5 for 400 points you are somehow LOOSING money!

    This is quite curious. 
    The reason he came to this conclusion, is because the author made a careless and fatal flaw in rounding.  Conversions cannot be rounded arbitrarily.  It is a mistake I find in the journalism industry regularly and can only figure it occurs for two reasons:

    1) To use perceived “true” data as a form of persuasion.  (Journalists hold significant power to change other’s views and should be more responsible than this.)

    - or -

    2) It is simply an oversight or misunderstanding of the tools they use.

    I will assume the second point is the real reason simply for the sake of discussion.  Let’s begin…


    Here is the known data for ZM and iTMS.

    $5.00 = 400 points.
    1 song = 79 points.

    1 song = 99 cents

    According to the author…
    1 pt = 1.25 cents.  This is true.
    1 song costs 1.25 x 79 = 98.75 cents.  This is also true.
    “So the answer is ‘no, the MS song isn’t cheaper, it is the same price as Apple’s’.”  This is NOT true.

    For some inexplicable reason he makes the assumption that the 98.75 cents is rounded up to 99 cents.  First of all, that would imply that the customer does NOT have 321 points left.  But, they DO…AND those points contain that quarter of a penny.  Notice, 321 x 1.25 = 401.25 cents.  You do NOT magically have 401 cents left, you STILL have 401.25 cents left.

    Consider further the following.  Suppose you were to buy 5 songs from ZM and 5 songs from iTMS.

    5 songs = 5 x 79 = 395 points
    You have 5 points left over to use in future transactions.  And is equivalent to 6.25 cents.
    It cost you 5 dollars with 6.25 cents left in your account.  Or in other words you spent 4 dollars and 93.75 cents.

    5 songs = 5 x 99 cents = 4 dollars and 95 cents (a total of 1.25 cents MORE than ZM!)

    Also consider, after buying 81 songs you will have spent 6399 points.  6400 points would cost $80.  In other words it cost you $80 to buy 81 songs with one point left (1.25 cents left in your account).

    If I used iTMS, 81 songs would cost 81 x 99 cents = 8019 cents or $80.19
    iTMS – 81 songs = $80.19
    ZM   - 81 songs = $80 with 1 point left.

    I think this settles some of your bogus claims.  Instead they are incorrect.  ZM does NOT steal money from users and is NOT in fact costing you more.  It costs less.

    Now, whether that is a favorable system is COMPLETELY of personal opinion.  Perhaps this was simply an error and if so I understand but would ask the author to correct it.  If he does not then he is implying that he is PURPOSELY employing improper rounding to skew data to suite his needs.

    As I stated before, this was simply to clear things up.

    Side Note:

    Yes, ZM DOES have those 6.25 cents locked up until the user uses them later (if you only buy 5 songs).  But, if the author is seriously worried about that, then I fear there are much larger more important issues that should be addressed since clearly buying music online should not be the current priority.

    If the author does not like that system, then he can simply choose to not be a part of it.  DO NOT, however, slander it.  The author’s claims that MS is trying to confuse consumers are quite hypocritical since the author himself has confused his readers into believing they lose money by using ZM.

    Kharnellius had this to say on Nov 15, 2006 Posts: 2
  • On a final note, it should be noted that the point system has many uses.  One of them will be a reward system.  ZM will reward Zune users for sharing the music.  They will receive 1 pt for each song they share with a friend using the wi-fi capability built into the Zune.

    Check out this recently release information!


    Kharnellius had this to say on Nov 15, 2006 Posts: 2
  • I will replace my 2g iPod this holiday. As I am an eMusic user/CD ripper (who can afford to pay a buck for a digital copy of a song?), the Zune Marketplace vs. ITMS argument is irrelevant to me and most other device owners; The regular users of the aforementioned services comprise a small percentage of MP3 player owners.

    I will evaluate the Zune on its merits as a player, but MSFT is starting in a hole, and setting a VERY bad precedent by paying Universal Music a royalty for each Zune sold. That alone may preclude me from considering one.

    As for the points system itself, I have no problem with it. But I’m an Xbox Live subscriber and really like the system they have in place for buying content and arcade games. Being that MSFT is trying to interconnect all their entertainment services, it was a logical next step.

    tommy66 had this to say on Nov 15, 2006 Posts: 1
  • People who buy music from the zune store are stupid. People who buy for themselves with iTMS gift cards are stupid.  People who are buying gift cards as gifts,  well, it’s kind of nicer and more thoughtful than cash,  but cash would make more sense as the recipient could buy DRM-free music instead.

    There’s nothing wrong with companies taking your money before they give something in return.  It’s a smart, if cynical, business practice.

    It would be wrong, I think, not to point out that consumers who fall for it are being stupid though.  I try to avoid it as much as possible.  I do have money on a mobile phone, and on an oyster (London public transport) card.  They’re pretty much unavoidable though.

    Hywel had this to say on Nov 15, 2006 Posts: 51
  • I have just read the review and let me say that found a little bit inconvenience to my thoughts.  First, the person that wrote this review should get out of his office, home and town more often.  I am not from the US, and the reason why I think that this person should move outside, is that I already own a video iPod and I only used it for two or three months.  The reason, I cannot buy songs from iTunes, because Apple only thinks that America is only from U.S. to Alaska, they do not care about the potential market from the south of US border.  I do not have an american CC, I have AMEX, VISA and MC but cannot buy songs from iTunes.  However, I just bought a Zune and I can go to any game dealer and buy a card with MS points, then download my music from my home, and my country, I do not have to go to the US to install music or video, I can do it directly from my country.  I am not saying that iPod is not a great system, it is the first system and number one gadget in two years and will take years to any other system to reach the numbers Apple sold, but they should start thinking outside the border, besides, credit cards like AMEX, VISA or MC are international or not ?  what MS did, they opened my options to buy music.

    MkGlz1 had this to say on Dec 23, 2006 Posts: 1
  • Now, I don’t own an MP3 player by either MS or Apple (Memorex), but i’m thinking i’m going to get one this year. I have 2 comments on this whole conversation thus far:

    1. I play on XBox live. It works wonderfully. I frankly see no problem with the points left over, as their accumulation will allow me to get thins off XBL. I realize the amount of songs i’d need to get, but judging by the way i both game and listen, i think it’ll pay off. Also, at least for XBL users, points purchased from the XBox 360 can be used for Zune Marketplace, so I’d have that as well.

    2. The real question here isn’t even about the points. If (AND I SAY IF, PLEASE DON’T CRUCIFY ME FOR SAYING THIS) the Zune were to be a better player, even marginally, wouldn’t it be worth the tiny, tiny inconvience of having a few cents locked in MS points?

    Just saying.

    metalmerlin had this to say on Jan 25, 2007 Posts: 2
  • I joined to call you an idiot. Those points are designed to be a universal currency on your xbox, pc, and zune. I looked at your 25 worst ideas ever, and noticed that microsoft was on the list many times, but whats wrong with trying and failing? Microsoft is the best because they try so hard to change the industry. When microsoft makes a bad program, os or anything they learn and adapt to what their users want. What other player can download songs from wifi with no computer middle man??? none, only the zune. Oh and by the way ipods suck, i hate them.

    tayg10 had this to say on Jul 16, 2007 Posts: 1
  • @tayg10

    Thank you for your amazingly intelligent and articulate comment. I now realize the error of my ways, and its all thanks to you. If you have anymore thoughts I’m sure we would all love to hear them. As always, thanks for the comment.

    Oh, and good luck with life. It is always inspiring when I see people with mental disabilities trying to make it on their own. You are my hero.

    Thanks again for the comment.

    James R. Stoup had this to say on Jul 16, 2007 Posts: 122
  • This is one of those rare occasions when you can take ‘lol’ literally.

    Benji had this to say on Jul 16, 2007 Posts: 927
  • In my own opinion you are making things 10 times more complicated then the truthfully are. I own both an ipod video and a 30gb zune. I believe they are both amazing products although my ipod broke after about 5 months and my zune wont load some of my mp4 files. I do thank the author for their opinion, though i think it is miss placed.

    kura1 had this to say on Dec 31, 2007 Posts: 1
  • @James R. Stoup

    Dearest James,
    You are a congenital moron, and you have my sympathy. 

    And everyone else who thinks that MS is stealing money:
    Consider first that you can buy an ITunes gift card from a retailer with potential “unusable” leftover pennies, just as you can purchase a Zune Marketplace giftcard from a retailer with potential “unusable” leftover pennies.

    Next consider that to get any substantial “upgrade” to an iPod to get all those trendy gen-X zippy new cool “can’t live without ‘em” features, you need a $250 patch (i.e. iPod generation X + 1) where MS made all new Zune features available free to first generation Zune owners.  So for MY $250, I can purchase 253 more songs.  While YOUR $250 gets you all the same Emo and Russian Astro-Pop you already had.  Not to mention the time wasted moving all that crap over to the “upgrade.”  And apple in general is a money pit.  How many different machines and operating systems have they released in the last 10 years?  What happens when they’re obsolete?  You buy a new one.  What happens when the OS is garbage?  You buy a new one.  What happens when THAT one is also garbage?  You give users the ability to dual-boot back to a decent iteration.  When that fails?  You buy Virtual PC and Microsoft Office to squeeze whatever “value” you can from your bloated “investment.”  Or what the HEY!!!  Just boot right to Windows XP! Sure I can dig my AppleII out of the attic and it will probably still run, but ... seriously ...
    it’s not 1970 anymore ... we can ALL have long filenames now, OK?

    And if a simple conversion chart (i.e. X dollars == Y points, Z points == 1 Song) is just SO difficult for you to comprehend then, no, the Zune is not for you ... neither are brownie recipes. 

    I applaud MS for assuming their target audience has a brain ... unlike Apple, who runs their ad campaigns like Socialist Propoganda. “YOU MUST HAVE THIS! YOU DON’T HAVE TO DO ANYTHING! IT’S SO EASY!  WE KNOW YOU CAN’T HANDLE A COMPUTER ALL ON YOUR OWN!!! WE’RE IN CONTROL! just lie down ... that’s right ... drink the kool-aid ... that’s right ...”

    And of course you can always just get an unlimited download subscription service through the Zune Marketplace ... which (unlike iTunes) DOESN’T look like Lotus Notes circa 1983 ... why would ANYONE want to emulate THAT!?!?!

    damashi had this to say on Feb 21, 2008 Posts: 2
  • @damashi,

    Wow. . . uh. . . yeah.

    I’ve got to say, you’ve left me speechless on this one pal.

    At first I assumed you were joking, then I the horror of it all suddenly hit me.

    I think you really are serious.

    Good luck with that.

    James R. Stoup had this to say on Feb 21, 2008 Posts: 122
  • @James R. Stoup

    Of course I’m serious.  And the fact that you are speechless doesn’t surprise me. That’s generally what happens to people when they have no idea what they’re talking about.  Another symptom is trying to sneakily evade failure and elevate themselves above the quagmire of idiocy they’ve created by delivering some adroitly evasive little quip such as “You’re my hero.”  or “Good luck with that.”

    My sympathy for your deficiency is waning ... “pal”

    damashi had this to say on Feb 22, 2008 Posts: 2
  • @James R. Stoup

    This whole article is irrelevant, why did you waste your time bashing the ZUNE when its features and functionality are far better than the IPOD. Your only motive is the pricing scheme because its not as retard proof as itunes. It’s genious what microsoft did, and i’m glad they did it. Why? Because for the people who do own an xbox, they can easily earn free music by being lazy like me and playing video games. Besides who pays for music nowadays or even the last 10 years for that matter. Who wouldn’t want free music LEGALLY? And what better way to get it than playing video games.

    But in all honesty your right for the common consumer or all the old farts out there that have no interest in videos games, or an xbox, it’s just a stupid extra step to get music. But consider those of us that own both in your reviews and throw some positive points in there about the benefits of being a part of that “community” and maybe you wouldn’t leave yourself looking like a pissed off apple stockholder from the early 90’s cursing every innovative idea microsoft introduced.

    And if you do respond, don’t bother typing a stupid resonse to belittle me and avoid everything you just read about. There’s no point.

    Synester had this to say on Sep 29, 2008 Posts: 1
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