Universal Severing Ties With iTunes?
Universal Music Group has pulled out of iTunes. That's according to The New York Times, which, citing anonymous sources close to the negotiations, is reporting that the world's biggest music company has opted not to renew its contract with Apple to carry its artists on iTunes -- artists that include U2, Akon and Amy Winehouse.
The move by Universal is an attempt to coax Apple chief Steve Jobs into spreading the wealth that's been raked in thanks to the successes of iTunes and the iPod. Jobs currently has the music industry eating out of his hand: More than 100 million iPods have been sold worldwide since its invention, and yet the only copy-protected digital music service that works with it is iTunes. iTunes, for its part, accounts for 76 percent of all online music sales -- the only sector of the music industry currently experiencing any growth. Of course, the iPod is the only player that works with tracks purchased on iTunes.
Universal is such a massive player in the music business that its artists are responsible for one out of every three new music releases in the U.S. Losing Universal will be a blow to iTunes, though the reverse is also true: In the first quarter of 2007, iTunes accounted for 15 percent of Universal's worldwide revenue.
For now, it appears Universal will offer its music on iTunes without a contract, meaning it can remove its artists completely at any time with no advanced notice if it's not happy. That day may come sooner than later, since Steve Jobs has repeatedly refused to even entertain the notions Universal and other music companies are asking of Apple. They include allowing the iPod to be used with other services, allowing iTunes to work with other players and putting an end to flat rates for music files. The music industry wants the right to sell more popular songs at a premium and sell less popular songs at a discount.
For now, it's a stalemate between Apple and Universal and it'll be interesting to see who cries 'Uncle' first. Of course, it doesn't hurt Steve Jobs that he's a pro at twisting arms.
From The New York Times
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