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Universal rebuffs long-term iTunes contract

updated 09:30 am EDT, Wed July 4, 2007

New Universal iTunes deal

Despite assertions by Apple to the contrary, made just yesterday, Universal Music has issued a statement saying it has in fact changed its agreement for the iTunes Store. "Universal Music Group," the statement reads, "decided not to renew its long-term agreement for Apple's iTunes service. Universal Music Group will now market its music to iTunes in an 'at will' capacity, as it does with its other retail partners." This echoes original reports circulated on Monday by Reuters.

The news marks a potentially important blow to Apple, since it gives Universal the freedom to negotiate special deals -- including non-iTunes exclusives -- with other vendors, such as Napster. Prominent artists on Universal include the Black Eyed Peas, Macy Gray and U2, with the complete roster representing nearly a third of all music published worldwide.

The label seems to have bristled at its relationship with Apple. While the two companies were originally united in a three-year deal, after the rise of the iTunes Store to dominance, a subsequent deal was limited to one year. Universal has also come out strongly in favor of DRM, something that Apple has been seeking to dismantle with iTunes Plus.




by MacNN Staff

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Comments

  1. bobolicious

    Joined: Dec 1969

    0

    Perhaps the artists...

    ...should just start marketing with Universal 'at will'...

  1. Toyin

    Joined: Dec 1969

    0

    Too Bad

    Time to dust off Acquistion

  1. Ikon

    Joined: Dec 1969

    0

    universally stupid

    No problem, I never bought or never will buy something from them. Greedy bast.rds

  1. PookJP

    Joined: Dec 1969

    0

    To be fair...

    They aren't abandoning iTunes, they just aren't locking themselves in to contracts with Apple.

    No love for Universal or the majors, I'm just pointing out this doesn't represent a total ship-jump.

  1. scotty321

    Joined: Dec 1969

    0

    Greedy b*******

    Talk about biting the hand that feeds you. Greedy b*******.

  1. Toyin

    Joined: Dec 1969

    0

    re: pookjp

    True, but the 1st popular hit that they start asking $1.99 for (if Apple allows it) will be the time when users start jumping ship.

  1. MacnTX

    Joined: Dec 1969

    0

    Napster?

    Who actually uses Napster anymore? Even the failed-bit known as the Zune isn't compatible with Napster.

    Universal isn't leaving iTunes, even they aren't stupid enough to ever leave the service that has a 75% market share of the music download business....

  1. Johnny Niles

    Joined: Dec 1969

    0

    this quote...

    "Universal has also come out strongly in favor of DRM"

    means that Universal Music will be meeting its end in fairly short order. If Apple manages to get most of their online store DRM-free, but Universal sticks with DRM... seriously, who does Universal think they're kidding? And this is independent of the fact that the iTunes store does more online business than Universal in the first place.

  1. vasic

    Joined: Dec 1969

    0

    Big catalogue

    It is very dificult to buy music without Universal's talent. While the quality of current releases bay be argued, their back catalogue includes artists such as Tom Jones, Leonard Bernstein and many of the greatest names in the history of music.

    I still believe Apple has greater leverage here. It is obvious, even to Universal execs, that downloads are rapidly gaining traction, and it is all thanks to Apple. For now, they must be in bed with SJ in order to survive. Maybe later on the landscape will change (after the death of SJ, perhaps...). With the current move, they are just jockeying for leverage. Fortunately (for consumers, or unfortunately for Universal) SJ isn't calling anyone's bluff. If they try anything funny, he'll dump them. While it might be a big blow to iTMS catalogue, it would be an enormous gamble for Universal, which they would ultimately lose. I'm sure they know this, which is why they are not cutting the arm that feeds them.

    Good luck, Universal, in your attempt to gain leverage. You are going to need lots of it, if you're to take on Steve Jobs and win anything at all.

  1. TiDual

    Joined: Dec 1969

    0

    It all depends on who

    follows suit. If it's only Universal, then they lose. I assume SJ will tell Universal he's prepared to sell any of their titles at .99, and others will not be sold (and not be promoted on the iTunes "home page", which has huge influence even on people who don't buy from the iTunes store!). People will continue to go to the iTunes store and buy what's available (if the catalog is large enough), and Universal will lose. And yes, annoyed consumers will go back to acquisition ... and that hurts Universal, nor Steve.

    But it'll be interesting to watch how this plays out. Universal will be publically humiliated if they go crawling back to SJ, so that's unlikely.

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