Universal files divorce with Apple

Written by Tim Smalley

July 2, 2007 // 3:41 p.m.

Tags: #apple #digital #download #emi #fixing #flexibility #group #itunes #music #price #songs #tracks #umg #universal #vivendi

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.

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