AfterDawn: News

Universal seeks month-by-month iTunes licensing deal

Universal Music Group (UMG) is reportedly seeking to abandon year long+ agreements with Apple Inc.'s iTunes multimedia download store. Instead, the world's largest record company is seeking to make short-term, month-by-month licensing agreements with Apple. According to a source seeking to remain anonymous, the arrangement would allow Universal to offer exclusive content deals to rivals of iTunes.

Wal-Mart, Best Buy Co. and Yahoo Inc. currently have similar short-term agreements with Universal for their online offerings. The previous agreement with Universal expired at the start of June, and according to Apple spokesman Tom Neumayr, both companies are still negotiating.



"Their music is still on iTunes, and their not re-signing is just not true," Neumayr said, declining to elaborate. When Apple first signed deals with the major record companies a few years ago, the record industry was failing to provide alternatives to piracy when interest in digital music files was booming.

Apple CEO Steve Jobs had a plan for a "one-price-for-all" music download store that could be tied with the company's iPod. Apple has since grown to be the No. 3 music retailer in the United States. The company claims to have revolutionized music online and as a result, has always had considerable leverage in its dealings with the record industry, and many executives within the record companies are tired of not being in power.

"There's some feeling among some music labels and some executives that Apple, because it's so dominant with iTunes, has gained a disproportionate power in the equation," said Susan Kevorkian, an analyst with market researcher IDC. "This looks like tactics to enable Universal to regain some control over the situation, at least as they perceive it."

Source:
Yahoo (AP)

Written by: James Delahunty @ 2 Jul 2007 18:59

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• 6 comments

• duckNrun

  Universal needs to cut the umbilical cord that ties their music downloads to Apple's iPod and THEREFORE to iTunes.
  
  Offer DRM free mp3's and all of a sudden EVERYONE at EVERYSTORE can buy and play YOUR music... this to me seems to be what will allow the execs to 'regain' some of the control they allowed Jobs to steal from them when they and he came up with the tie it to iPod/DRM wasteland to begin with!

  3.7.2007 03:09 #1

• SProdigy

  Only one problem with your logic duckNrun: The record companies are afraid of "theft" and need DRM. Apple, MS, Sandisk, etc. do not make enough profit off of their players alone, much like Sony with the PS3. That means they need to make up for the expensive players by selling music. I don't like DRM, but it's the only way for a company like Apple to protect it's business model, and for the record companies to protect their "intellectual property".
  
  For Universal to sever ties with Apple, would be like Coca-Cola yanking their products from McDonald's restaurants: financially, it wouldn't make sense. Apple is the 3rd largest retailer for music because they own over 70% of the portable music player market. The only way for Universal to win, is to pull their music from EVERY online store and sell exclusively through their own website. For them to do that, they would need to sell DRM free MP3's and considering that only EMI has jumped aboard the DRM-free train, I don't see it happening.

  3.7.2007 07:34 #2

• webe123

  "There's some feeling among some music labels and some executives that Apple, because it's so dominant with iTunes, has gained a disproportionate power in the equation," said Susan Kevorkian, an analyst with market researcher IDC. "This looks like tactics to enable Universal to regain some control over the situation, at least as they perceive it."
  
  
  Well I am GLAD they finally admit how CONTROLLING they really are! I hope all of the big four go down in flames and something else comes along that is better to take their place. They are a dinosaur in a digital age...their time is now way past...they need to die!

  3.7.2007 12:42 #3

• webe123

  Originally posted by SProdigy:Only one problem with your logic duckNrun: The record companies are afraid of "theft" and need DRM. Apple, MS, Sandisk, etc. do not make enough profit off of their players alone, much like Sony with the PS3. That means they need to make up for the expensive players by selling music. I don't like DRM, but it's the only way for a company like Apple to protect it's business model, and for the record companies to protect their "intellectual property".
  
  For Universal to sever ties with Apple, would be like Coca-Cola yanking their products from McDonald's restaurants: financially, it wouldn't make sense. Apple is the 3rd largest retailer for music because they own over 70% of the portable music player market. The only way for Universal to win, is to pull their music from EVERY online store and sell exclusively through their own website. For them to do that, they would need to sell DRM free MP3's and considering that only EMI has jumped aboard the DRM-free train, I don't see it happening.
  Sorry, I disagree. It is exactly that kind of thinking that is making the labels more and more excluded from the public and their buying the product. You want ME to buy a product? Fine, then take off the DRM and treat me like a CUSTOMER instead of a CRIMI*NAL and I will...but they keep this up and they can fuck off!

  3.7.2007 12:45 #4

• duckNrun

  SProdigy..
  
  We're already seeing this happen with EMI, and it's boosting their sales and opening up new markets for their music. They haven't 'dumped' Apple but you can sure bet that next time they sit down at the negotiating table their not gonna feel like Jobs has got their nuts in his hand and be afraid he's gonna start squeezing them.

  3.7.2007 17:31 #5

• borhan9

  Would this have to do with DRM free mp3's now being the new wave of music. Also the fact is that Universal does not want to put all their eggs in one basket.

  4.7.2007 01:04 #6