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Universal files divorce with Apple

Universal files divorce with Apple

Universal Music Group has decided not to renew its annual contract to sell music through Apple's iTunes music store.

The world's largest music corporation, Universal Music Group, has decided not to renew its annual contract to sell music through Apple's iTunes music store.

According to sources inside the digital music industry, Apple offered Universal a two year deal but the record label declined the offer, refusing to enter a long term agreement with the digital music distribution giant.

Instead, UMG will continue to sell its music via iTunes on a month-on-month basis.

This could affect Apple's position in the market as it will allow Universal to remove its music from iTunes at short notice if the two companies cannot agree on pricing, or other terms in the future.

All of this happens amid growing tension between the music industry and Apple, the world leader in digital music distribution, after the digital music powerhouse has shown very little flexibility when it comes to things like pricing.

Apple has been very rigid on this front, and some would say this is part of the reason for the success of iTunes. Music labels have wanted to sell some music for more and some for less than the current $0.99 price per track. Only EMI has succeeded in breaking that deadlock so far though, and it is currently selling DRM-free songs via iTunes for $1.30 each.

The music industry believes that the mobile phone market will be the next major growth area for digital music and it seems clear that the record labels don't want Apple to dominate that market in the same way that it has dominated the digital download sector.

Got a thought on UMG's move? Share it with us in the community.

6 Comments

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Dr. Strangelove 2nd July 2007, 17:02 Quote
maybe this will enable them to switch to other up and coming services such as amazon, if apple doesn't play ball.... Although it will get messy if record labels of this size switches online distributer every now and then.
Havok154 2nd July 2007, 17:27 Quote
I have a feeling this is a "protest" by Universal due to the movement for DRM-less music. We all know how much the music companies loved that idea, even after EMI's reports that their sales are up because of it.
Hells_Bliss 2nd July 2007, 17:29 Quote
it's more of a seperation than a divorce isn't it? They'll still sell their music to iTunes, but they can pull tracks with little notice now
serial_ 2nd July 2007, 20:52 Quote
May Apple reap the rewards of their proprietary hard-headedness and forever burn in hell^^
mikeuk2004 2nd July 2007, 23:20 Quote
ouch!! thats got to hurt. If I said I feel sorry for apple, id be fibbing
ralph.pickering 3rd July 2007, 09:37 Quote
I'm not an Apple fanboy by any stretch, but I dislike the music industry bigshots a hell of a lot more. So I respect Apple for breaking their balls over price.

As far as Universal goes, I think it'll be one of those "this is going to hurt me more than it'll hurt you decisions". The percentage of the selling price that goes to Apple has to be a fair bit less than goes to the record label. And the number of people who now buy their music through iTunes is constantly increasing. Of course if a number of major labels were to ditch Apple in favour of something else then it could move those people elsewhere. Looking at the migration of users from Livejournal to Myspace to Facebook shows people aren't going to be tied down to any one thing.
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