CrunchGear’s Matt Hickey has been tracking rumors about a Zune phone for the last week. What began as a reliable tip is now a solid story: Last Monday Microsoft filed an application with the FCC for an enigmatic wireless device that could be used to talk over the Internet. The device is described as being used for “consumer broadband access and networking.” Microsoft goes on to say that the device would use OFDM as its communications protocol, not WiFi or Bluetooth. The standard OFDM (orthogonal frequency-division multiplexing) is a modulation scheme that is used widely in upcoming 4G standards of the future. Sprint/Nextel may be the carrier, since they are building out a 4G network that will work with the OFDM standard.

And the most interesting part of the story is that this device may be available in May, a month before the iPhone.

If this all fits together, it looks like MS is working on a mobile WiMax-enabled Zune Phone, which would have download speeds of up to 2Mbps, fast enough for the Xbox-to-Zune streaming we’ve heard about, and fast enough for just about anything else the Zune Phone might be used for.

The first real news is that we can expect to hear an announcement from Redmond about it before March 17, St. Patrick’s Day, at which time we should learn the name of the device. At the same time, we should also learn other launch specifics, and here’s where it gets incredibly juicy; our source says that, pending FCC approval, the specter-like Zune Phone will hit the streets sometime in May, a full month before the iPhone.

The New York Times reported late last night and the press release has just gone out about a deal between Universal Music Group and Microsoft concerning the Zune. Microsoft will pay Universal more than $1 for every $250 Zune that is sold. (Or is that $251?) Universal says half of the money will go to Universal artists.

I don’t think it’s a big deal. Not at all. Some people are concerned that it’s a slippery slope and that every big music publisher could demand $20 per device soon. I think the market will prevent that – a “Zune tax” will either stay within an acceptable range for consumers or it won’t.

A number of countries around the world have tried levying an “iPod tax” to compensate the music business for all the unpaid for music on iPods. In Canada “anti-piracy” taxes have raised the price of some iPods by $25 – Canadian courts ruled that such a tax was invalid, the music companies were ordered to return the proceeds to Apple and Apple offered to compensate consumers for the taxes they had paid. In this case it’s probably fairly voluntary between Microsoft and Universal and that’s good. Universal is rumored to have demanded some sort of compensation in order to license their music for the Zune, but they aren’t obligated to license their music to anyone. Asking for a chunk of the hardware sales revenue seems like a fair request to me. Maybe there’s something I’m not seeing here, but I don’t think this is something to get up in arms about.

Other writers highlight the possibility that Apple could lose favor with the music publishers if it doesn’t offer a similar kind of deal. Isn’t that a logical function of the market as well? If you believe studies that find that only a small percentage of music on iPods has been purchased at iTunes (and how could you not believe that?) then the impact of this on the iTunes music store is not of much importance either.

Someone has to come up with some sort of new business model for music. We’ve written about Universal’s partnership with startup SpiralFrog, a Napster-esque subscription service that will let users download music for free as long as they regularly check in with the company’s website and watch ads. That’s awful. We’ve written about Amie Street, a very cool model that prices music based on demand. Someone needs to come up with some way to compensate the artists and the industry for their work. I like the idea that music should be free and I’ll pay for added value goods and services. I am also happy to pay more when I purchase hardware if a significant portion is going to artists or will shut up all the claptrap about piracy.

Some people say this is a case of customers being presumed guilty, but I say take money from me at the point of hardware purchase or don’t take it at all.

Unfortunately, it’s hard to believe that any new model is being offered in good faith by the music industry. Big music corporations rank right down there with telcos and companies that dump toxic waste next to childrens’ playgrounds as far as many people are concerned. So much of the discussion around so called piracy has been disingenuous that it’s hard to believe that any proposed remedy will be sufficient for the big players in the music industry. (See Weird Al for more on this.) I don’t think anyone is of the belief that $1 per device is going to end the battles over file sharing. I would gladly pay a healthy chunk of money per device if I could access any high quality MP3 I want, for free and without DRM, without getting hassled about it.

Microsoft’s new new bundled personal media player/service Zune goes on sale on Tuesday November 14. The official Zune website went live this morning at zune.net.

The device will retail for $249. The full specs are below, but the Zune has a 320×240 pixel 3 inch screen (a little bigger than the 2.5 inch screen on the current iPod Video), 4/14 hour battery life for video/music, and 802.11 b/g connectivity.

We will have a lot of coverage of the Zune device and service in the next ten days or so here on TechCrunch, as well as our gadget blog CrunchGear. Our previous Zune coverage is here.

Microsoft is conducting invite only press conversations tomorrow to discuss the rollout of Zune, their new bundled device/music service. Look for updates on TechCrunch and CrunchGear tomorrow AM as the story starts to break. Previous Zune coverage is here.

CrunchGear has a picture of the new Microsoft Zune device, which we wrote about here and here.

I like that it’s black, and the screen is large, much bigger than my iPod video. But other than that, it seems sort of…uninspired. More on Gizmodo, which found the picture.

Lots of new details are emerging about Zune, Microsoft’s new music/video device and related service.

The news about Zune broke last week in a Billboard article where Chris Stephenson, Microsoft’s new GM of marketing for MSN Entertainment Business, said Zune will be an umbrella brand for what he says is “a family of hardware and software products” targeting various digital entertainment services. The somewhat creepy-yet-strangely-soothing “comingzune” site launched as well, with no real information whatsoever.

On July 25 Microsft CEO Steve Ballmer spoke about Zune at a Retail Vision Summit in Seattle:

it’s all about how do multiple groups of people, friends, interact together in various entertainment experiences, whether it’s watching the British Open, whether it’s enjoying movies, and music, and other video entertainment, whether it is involved in an interactive gaming session, a lot of the IQ we’re putting into is how you view community and entertainment together.

On July 27, Robbie Bach, President, Entertainment & Devices Division at Microsoft gave a presentation to financial analysts. He says:

And then the third secret I’ll say is looking at Zune as part of our broader picture. You know, in the case of Apple, they have certainly an iMac business, they have their iPod business, and they’ve sold a few things in the home that compete with Media Center, although the numbers there are actually quite small. Look at our business: We have a burgeoning IPTV business that we think is going to grow and be successful in the home. We have Media Center in over 14 million units and growing around the world. We have Xbox 360 in place and growing around the world. We have Xbox Live, MSN, and our Windows Live initiatives expanding. Put all of those things together, and then take Zune and put it in the context of that. It enables us to complete the picture. It enables us to have the full entertainment and connected entertainment experience that we want to have. And so that’s why Zune is important, and it is a way we’re going to differentiate ourselves, because the experience of having Zune in that connected environment is going to be a dramatically better experience than you get just from having a portable music player.

And today more news broke on Engadget, which release specs for the product and announced a launch date of November 14, 2006. Zune will include a 30 GB hard drive (I expect a 60 GB version as well), multiple color options, an FM tuner, lots of accessories and a 3.75 inch screen, which is 50% bigger than the iPod video.

There are also rumors that the device will have built-in wifi and possibly also phone capabilities.

The picture is becoming clearer - Zune looks to be an iPod-type device that will show the full spectrum of audio and video content, as well as social networking (which Microsoft is doing an excellent job of with XBOX Live). Microsoft is clearly messaging that they see this as an integral part of the Xbox/Media Center consumer offering. The fact that it has wifi means it will be an independent device from a core computer, able to download files, streaming content and other data directly.

If they do this right, it will be one hell of a cool product.

A lot of the best news on Zune is coming from ZuneInsider, a blog set up specifically to cover the product. Om Malik and Engadget are also covering it closely.

Microsoft today confirmed the existence of a new portable music player and integrated service called Zune. Launch is scheduled for launch some time this year.

Zune is clearly aimed at Apple’s iTunes/iPod dominance. In an interview with Billboard, Chris Stephenson, Microsoft’s new GM of marketing for MSN Entertainment Business, said Zune will be an umbrella brand for what he says is “a family of hardware and software products” targeting various digital entertainment services.

It’s an ambitious project that some critics are already saying goes too far outside Microsoft’s core strengths and could end up joining other media projects on the junk heap of tech history. Perhaps after seeing how successful Robert Scoble was in making Microsoft lovable again, two company employees working on Zune are also blogging about the project. Cesar Menendez is writing ZuneInsider.com, just launched today, and Richard Winn is writing blog called Madison and Pine. The company has also set up a site to collect emails for further information at ComingZune.com.

It will be interesting to see if the company can take a position of real innovation or whether Zune will just be a case of playing catch up – at the risk of feature overload.