AppleInsider StaffFollowing a standoff in negotiations, Universal Music Group of Vivendi, the world’s biggest music corporation, last week notified Apple that it will not renew its annual contract to sell music through iTunes, reports the New York Times.
The New York Times characterizes the move by Universal as a bid to regain a bit of leverage in the near-monopoly that Apple chief executive Steve Jobs has created in the digital download sector — the one part of the music business that is showing significant growth.
In particular, Jobs’s stance on song pricing and the iPod’s lack of compatibility with music services other than iTunes have reportedly become points of contention between the two parties. The Apple headman has adamantly demanded that iTunes stick to its original pricing system that charges a flat 99 cents for a song since, arguing that a uniform system and low prices will invite new consumers and reduce piracy.
The big record labels, however, want the right to charge Apple more for popular songs to capitalize on demand or, in the event of special promotions, to charge less, reports the Times. During a recent investor conference, Edgar Bronfman Jr., the chairman of Warner Music Group, reinforced the labels' notion that "not every song, not every artist, not every album, is created equal."
Similarly, Jobs has also refused to bend at calls for Apple to license its FairPlay proprietary copy restriction software to other manufacturers, saying it would dramatically increase the software's susceptibility to hackers. Instead, he has urged the labels to drop copy protection measures on digital songs all together.
In April, Jobs and Apple teamed with record label EMI to do just that: launching premium, unprotected tracks (called iTunes Plus tracks) for $1.29 a piece. The move, according to EMI, has since driven a significant uptick in its digital sales. So far, however, other major labels have been reluctant to follow EMI's example.
Malcolm Owen
Marko Zivkovic
Andrew O'Hara
William Gallagher
57 Comments
The only surprise here is that it took so long.
This is a late and perhaps not-so-smart chess move on behalf of Universal. The big record labels are a dying breed, much like the huge airlines but aren't reading the writing on the wall. This stand-off will be interesting to observe. Note to big record labels - it isn't 1984 anymore.
this is kind of scary. I am a big supporter of the music side of the store, downloading songs on a daily basis. The EMI deal, great... but if other songs go up in price from .99, I am going to stop buying.
The only way I can agree with a price jump is if DRM is completely wiped off of the songs. Even then, $1.29 really sucks, but what can I do?
If the labels would only follow EMIs example they would not be tied to iTunes but could still be compatible with the iPod.
They are so obsessed with DRM, but it only takes 5 minutes to create non-DRM files from a CD, which they sell.
I am sure that this is just because they want to wait a bit longer for the results of EMI sales. Before they see some hard numbers, they are too scared to hop on the no-DRM train, but also do not want to make a long term DRM deal. When they see the results, I think they will sign the long term deal, and we all know what it is going to be like.