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Universal declines 2-year iTunes contract

updated 12:45 pm EDT, Mon July 2, 2007

Universal: no new contract

Universal Music has declined to ink a 2-year contract with Apple to keep its vast catalog of tracks on the Cupertino-based company's iTunes Music Store, but has agreed instead to offer its tracks on a month-to-month basis. The music company is now free to offer its music -- which includes artists such as 50 Cent and Mariah Carey -- exclusively to other vendors, which could weaken Apple's dominant position in the digital music industry. Universal's 12-month agreement with Apple expired last month, according to Reuters, and some music execs have expressed discontent with Apple's market leading stranglehold that they say may have stunted growth of the digital music market by locking users into its own iPod+iTunes ecosystem.

by MacNN Staff



  1. rtbarry

    Joined: Dec 1969


    yeah...'s apple's fault that the labels are all dying. yeah, that's it.

    @sshats. the only future prospects for the music industry lie online. and the only performer in this space is iTunes. ultimately, apple shouldn't need exclusivity and should just compete on the merit of their delivery system. but when universal tries to blame iTunes for their bad fortunes, it is laughable.

    read last month's rolling stone. the death of the crappy music industry has been a long time coming and was very well earned by these greedy dinosaurs.

    RIP Universal.

  1. jpamental

    Joined: Dec 1969


    stunted the growth?

    The iTunes store has grown so fast that it's become the 3rd largest music retailer online AND offline. It's laughable to think that Apple has done anything but expand online music. I think that they're looking at the $38 in royalties they got from all of those Zune players and wish they were getting a piece of iPod sales. (I'm being a bit flippant about the Zunes, but Apple does sell just a few more music players than Microsoft)

  1. sUNtiGEn

    Joined: Dec 1969


    stunted growth????

    some music execs have expressed discontent with Apple's market leading stranglehold that they say may have stunted growth of the digital music market by locking users into its own iPod+iTunes ecosystem

    this is a load of CR**. If the labels want to avoid being locked into a closed eco-system... then have Apple strip DRM from their catalog (like EMI did). They can even make a couple of extra cents doing this.

    What this really is, is Universal looking to start a bidding war over it's catalog... they want to close the eco-system, that's for certain... it's just a question if it will be FairPlay, WindowsMedia, or RealMedia.

    Who do you think will pay the most to lock the other two out?

    - matthewk

  1. cblackmo

    Joined: Dec 1969


    are they serious?

    Month-to-month contract? What for? So if Apple doesn't agree to their ridiculous price increases they can threaten to pull their catalog from iTunes? They consistently refuse to learn from their mistakes. Tsk-tsk, I think they underestimate the relationship and influence that Apple and Steve Jobs have built with the artists directly.

  1. vasic

    Joined: Dec 1969


    Stunned growth???

    Let' me get this straight; downloadable music has been growing so fast before Apple invented this iTunes business and locked all those iPods in; then the growth was suddenly stunned because of this???

    The music industry execs can spin all this without shame only because few people who listen actually know what they're talking about. One out of every 10 dollars their business makes is coming from Apple and iTunes. If Apple weren't there, none of the competitors would have had as many customers as they do have now. The iTunes/iPod ecosystem has raised awareness among consumers that there actually IS a legal way to buy and download music. Most of those consumers, having been educated by Apple, chose the iTunes as their shop; some, however, went to the competition. Napster, Rhapsody and others should be grateful that Apple raised their profile and made world aware that music can be downloaded legally, not just P2P.

    This is just PR. The Music industry desperately needs as much leverage as they could possibly get against the juggernaut that is iTunes/iPod. Universal is the best candidate to try exert this force. While so many of us here dismiss Universal and vow never to buy Universal tracks, it is a bit more difficult said than done; one in three of all the artists out there is under Universal label (including Apple's big champions, U2, among others). I'm still hoping Steve will not blink. If anyone has any leverage today, it's Apple. For the good of all the consumers out there, he should use it whenever dealing with the labels.

  1. Feathers

    Joined: Dec 1969


    all we need is U2

    ...and if the headline read that U2 has decided not to renew it's distribution agreement with Universal except on a month to month basis, the game would be over. The fact that so many established musicians still choose to align their distribution with bullies like Universal says as much about them as it does about the record companies themselves. Typically, U2 and Bono particularly, talk the talk but when it comes to walking, the don't.

  1. ClevelandAdv

    Joined: Dec 1969


    User experience

    iTunes / iPod has grown so fast because the iPod is simple to use and cool, and the ITMS is simple to use and cool. Other companies never got this so Apple now dominates this market. If Apple had not created this combination - and record companies controlled online downloads the way they wanted them - illegal downloads would be growing faster then ITMS and they would be getting nothing.

    As a side note...the iPhone was done the same way and will quickly become the #1 selling smartphone.

  1. vasic

    Joined: Dec 1969


    funny subjects here

    It's quite amusing to see several of us burst at the same time, with same subject, saying more-or-less same thing.

    It's obivous, we all love Apple...

  1. appleisgreat

    Joined: Dec 1969


    This won't weaken Apple

    This will weaken Universal. Let them offer their tracks to other vendors. They will spend a lot of time and money doing so and then see that Apple was the right choice from the start. Apple is best because they are only interested in selling iPods and iPhones. The music on iTunes is simply a vehicle to do so.

  1. testudo

    Joined: Dec 1969


    Re: are they serious

    Month-to-month contract? What for? So if Apple doesn't agree to their ridiculous price increases they can threaten to pull their catalog from iTunes? They consistently refuse to learn from their mistakes.

    First, yes they are serious. Second, vasic is basically right when he says its a power play. Of course its a power play. The labels want to have a say on how much their catalog sells for, they don't want to be dictated a price by the person doing the selling (Apple, in this case). At this point in time, Apple is the big bully, with Universal the bratty kid saying "Waaaa! I want it my way!".

    BTW, neither of them are in it for the customers. They're in it for only one thing, to make money. If Apple was concerned about the listener, they'd open up Fairplay. But that's one thing they refuse to do. And with this, Apple insists that their one-price strategy is best, yet they don't even have a one-price strategy. Songs are either 99 cents or $1.29. I've seen albums anywhere from $4.99 up. New albums almost invariably cost more than $9.99. Movie pricing is $10 or $15, depending on the flick.

    And, really, you think you all would WANT apple to accept universal's deals. Let 'em raise prices. Then, no one will buy the music, and the company will only go out of business sooner. Don't you see. Apple is actually trying to keep the labels alive and thieving forever, instead of forcing their demise!

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