The London-based company said the deal would see artists, including American actor Jared Leto's alternative rock band 30 Seconds To Mars and English electro-pop band Hot Chip, featured on the player when it goes to market later this year.
The news dispels speculation in media reports this month that Microsoft would have to delay the introduction of Zune's video capability until after its launch, which is expected to be in time for the year-end holiday season.
Sources at record labels, who have seen the new player, say itsand a feature that allows some sharing of music between users are what differentiates Zune from Apple Computer's market-leading .
"Apple has been an important partner in building the digital music market, but any well-funded serious entrant has got to be good news for the artists and industry," said Jeff Kempler, an executive vice president at EMI unit Virgin Records America.
The iPod has more than half of the digital media player market, according to research company NPD, while Apple's iTunes online music download service has a market share of more than 70 percent of U.S. digital music sales.
Microsoft, which was not immediately available for comment on Thursday,last month, in a move seen by industry analysts as a belated attempt to challenge Apple's dominance in both digital audio and video downloads.
said it believes its artists' videos will be preloaded alongside those from other record companies, but declined to discuss the device in detail.
Universal Music, owned by France's Vivendi, said it is in discussions with Microsoft on Zune but would not give any details. Warner Music Group and Sony BMG Music could not be immediately reached for comment.