Saul Hansell at The New York Times talks to Microsoft's J Allard about the Zune. Here are some choice quotes:

On Zune marketshare: "Fifteen percent [market share] would be great for us," he said. [Microsoft] hopes to displace Sandisk as the second-ranked vendor of MP3 players next year. In North America [last year], Apple had a share of 75 percent in the [hard drive-based MP3 player] category to Microsoft’s 15 percent.

On learning how to enter this market. "The less-than-enthusiastic response to the first generation of Zunes was an important learning experience. I’m a big believer in failing fast … If we skipped last year, we would have never come out with the product we did this year … We learned that because of the shortfalls in the PC client [software], the device was less useful … People hated that there was no podcasts, that they couldn’t fill their cultural cache [the Zune] with the stuff that was meaningful to them."

On DRM: "People are unhappy with DRM download-to-own. If I buy a track with DRM and it has fewer rights than the CD, that is where people get their nose out of joint. There is no art, no track information, no liner notes. I can’t sell it for four bucks to buy a burrito if I’m hungry."

On subscription services: "Music subscription services are very promising. But the music labels have hurt them, imposing too many restrictions ... It is easy to get subscriptions right, if we could reinvent rights. If we had full rights to every piece of music recorded since the beginning of time, and we could choose what to do with it, we could build a dynamite service …. It would be free and available on every device …. There would be advertising. Or it would be a loss leader to a higher value proposition."

On the record industry: "The music industry is very healthy. The record industry is the problem. The notion that the only way to monetize artist creation is 10 songs that come out every 18 months, in a package called an album — the classic record model — isn’t what it used to be. [Musicians can profit from] reality shows. Fashion. Maybe I release five or six tracks and the rest comes in a paid subscription, that is basically a fan club …. Most labels are going to become management companies [making money from booking concerts, etc. rather than selling CDs.] There will be a lot of pain [on the way to that future]."

There's more: J Allard: Microsoft’s Plan to Be King of All Media and J Allard: Dancing Around the Cellphone Question