Report: Universal Music Group Declines to Renew iTunes Contract
July 2, 2007 1:27 PM
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Experts say going up against Steve Jobs isn't a wise move
release of the iPhone on June 29th
, Apple took a bold step into an industry it has never before been in. Facing stiff competition is something that Apple's been use to doing for a long time now. This week however, Apple faces a surprise turnaround from one of its partners in the online music industry, an area where Apple is the dominant force.
Universal Music Group of Vivendi last week sent notification to Apple indicating that
it would not renew its contract to sell music on Apple's iTunes store
. The move comes after much negotiation between UMG and Apple. Unfortunately, music industry experts say that the grip that Apple holds on online music sales is what's discouraging UMG.
UMG has a long list of artists including notable names such as Akon, Rhinna and U2. However, Apple itself packs a punch in the amount of revenue that it brings to UMG. In the first quarter of 2007, Apple's sales on the iTunes store brought in more than 15-percent of UMG's worldwide revenue -- that's more than $200 million USD.
According to unnamed executives, UMG is looking into other sources for revenue, either through other channels or possibly a store of its own. Apple's long time control over what devices can play its music has troubled a lot of music lovers as well as publishers. Just recently however, the
iTunes store began selling DRM-free music
Ken Hertz, an entertainment lawyer representing such artists as Beyonce and Black Eyed Peas warned against going up against Apple directly.
"When your customers are iPod addicts, who are you striking back against? The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they to do that while Steve Jobs still has an incentive to keep them at the table," said Hertz.
Since the launch of iTunes, Apple has controlled prices of music on its store. This is one area of concerns for music publishers who either want more revenue or are looking into other areas for revenue. The iTunes model has proven itself to be a success formula for music sales however. Before the advent of online music stores, consumers were forced to buy whole CDs and often times received only one to two favorable tracks while the rest were throw-ins.
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RE: End of the 99 cent music download?
7/3/2007 8:43:34 AM
I say let them charge what they want. They can charge $5.00 per song if they want to, that doesn't mean I have to purchase it. I think UMG is gong to quickly find out at $.99 is about the maximum anyone is willing to pay for a song before they pirate it; Steve Jobs knows this. Piracy isn't killing the music industry, it's greed.
RE: End of the 99 cent music download?
7/3/2007 10:29:01 AM
Totally agree...except that $.99 is above my threshold at which I will pirate the music. AllofMP3 was cheap enough to get me to pay for it though.
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