Microsoft Corp. has announced it will pay Universal Music Group a fee for each new Zune digital music player it sells, reports Reuters.

The deal is seen as a way for MSFT to raise the competitive bar against Apple's popular iPod digital music player. Apple pays music labels for songs sold on its online iTunes music store but it doesn't give a cut of sales of iPods to music companies.

Currently the iPod has an 80 percent share of digital music player sales, reports Reuters. 

The Zune is scheduled for a launch next week. The financial details of the deal were not disclosed.