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Universal, Apple in dispute over iTunes

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By Charles Starrett

Contributing Editor
Published: Monday, July 2, 2007
News Categories: iTunes

The Universal Music Group, the world’s biggest music corporation, has notified Apple that it will not renew its annual contract to offer its music catalog through iTunes, according to a New York Times report. Universal has said that it will instead market its music to Apple at will, a move that may allow Universal to pull its songs from the iTunes Store with little if any notice should the two companies not come to an agreement on pricing and other key terms. However, such a move might spell financial hardship for Universal, which saw 15 percent of its first quarter revenue come from sales of digital music — more than $200 million. Industry observers are skeptical about Universal’s play. “When your customers are iPod addicts, who are you striking back against?,” said Ken Hertz, an entertainment lawyer. “The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they need to do that while Steve Jobs still has an incentive to keep them at the table.”

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Comments

1

I think Apple should let them. Universal are such greedy bastards. I can live without them, and so can iTunes. Not that I’m a huge iTunes buyer. But Apple should let them throw their little tantrum and when they find they’re just cutting their own nose, they’ll come back.
When are the big greedy record companies going to realize times have changed?

Posted by ~ruindpzzle in san diego, CA on July 2, 2007 at 9:28 AM (PDT)

2

Universal should double the bitrate of it’s iTMS catalog…take off the copy protection…and double the price for a single to $1.99.

That’s where it’s all headed…and Apple is happy to go there, too.

Posted by YouKnowItsTrue on July 2, 2007 at 9:43 AM (PDT)

3

Yeah let them go.  We can buy their CD’s second hand somewhere else and they’ll lose out even more!

Posted by JT on July 2, 2007 at 9:56 AM (PDT)

4

Typical music executive crack-party behaviour.

Posted by phennphawcks on July 2, 2007 at 10:18 AM (PDT)

5

torrent begin.

Posted by Alpha on July 2, 2007 at 11:14 AM (PDT)

6

For years we all have seen the greed of the record companies and Hollywood to control how we get their product.

Bye Universal..Others would love to be in the itunes store. Move over.

I also purchase used cds and movies.

Posted by mango on July 2, 2007 at 11:52 AM (PDT)

7

Since I rip my music, it’s not that big of a deal…EXCEPT…

One thing I do appreciate about iTMS is that they often have music that’s out-of-print on any other format or, for that matter, on any other download service. Despite the DRM, if I feel I want to have the album or the specific hard-to-find song, I know I can download a DRM version as a last resort. Universal is hurting consumers in more ways that just trying to grab more money by yanking their catalog from iTMS.

Posted by flatline response on July 2, 2007 at 12:45 PM (PDT)

8

Please, please, please, please, please Steve.  Tell Universal to go take a hike!

Posted by The Raven on July 2, 2007 at 1:24 PM (PDT)

9

EMI one step forward, Universal one step back. And after I specially upgraded my EMI tracks to Plus to encourage the other labels to follow. What a waste of £3.20! smile

Posted by Phil B on July 2, 2007 at 1:26 PM (PDT)

10

The price of singles is going to go up, guys, and Apple is going to have the benefit of blaming it on someone else.  Jobs knew the pressure to get more per single was coming and that was a big motivator for his ‘digital music manifesto’.

Apple kicked up the bit rate a few bits, removed the copy protection and gave it a 30% price increase.  Everyone thinks that’s cool because they think it was something Jobs led the way on via his manifesto and they love him even more for giving them a slightly higher quality track.

Well, $1.29 ain’t enough for the labels and it ain’t enough for Apple.

When iTMS first started, the 99-cent single price was being compared to the price of pirate downloading…FREE!  Well, 2.5 billion songs later and the bar has been raised for both the music labels and Apple.  People are still pirating music (as much now as ever), but the demographic of people who are willing to pay has been created via iTMS and that demographic will bear an increase in price. 

Some here say they won’t put up with it, but you will if you have no choice.  Some say they will simply go back to pirating music if the price goes up, but if you’re one to say that, I bet you never stopped in the first place.

What if Jobs took the stage and said ‘one more thing’ you can now purchase songs wirelessly to your iPhone for only $2.49 a pop?  I bet a lot of people here would say how great that was and be all over it…even though getting it directly to your iPhone shouldn’t inherrently be any more expensive than over the Net.

The price increase is coming (already has for BMG) and lucky for Jobs his distortion field is gonna make all his followers blame it on someone else, but if he’s making 10 cents for each song he sells now, he’ll be that much happier to be making a quarter per song.

A few more notes for those of you out there that seem to think everything Jobs does is so altruistic:

1. His Pixar movies sell for $14.99 at iTMS.  Shouldn’t movies be cheaper if his business model is that music is cheaper via iTMS.  Maybe there’s no price cut on the movies because Jobs is a copyright owner when it comes to movies whereas he’s not with music.

2. The 8GB iPhone sells for $599 and doesn’t allow for an industry standard subsidy for signing a two year contract.  Sign a two-year contract for any other phone and you get $200 off.  If you don’t wanna give the subsidy, why is there a contract and cancellation fee?

3. Speed does matter.  While the Apple computers were the first line to implement gigabit Ethernet, the iPhone will be the last phone to use the slow EDGE network.  What’s up with that?  Speed no longer matters?

Hopefully, no one resorts to calling me a troll, but I welcome a lively discussion.  I own as many iPods and Macs as anyone here.  I’ve done everything Apple has asked, except drink the Kool-Aid.

Posted by YouKnowItsTrue on July 2, 2007 at 1:35 PM (PDT)

11

Well, not to nit-pick or anything but I believe Jobs had to use EDGE because it made the phone much slimmer and takes less battery. Remember Steves is always so critical about the looks and “other” stuff.

Posted by Lucy on July 2, 2007 at 1:55 PM (PDT)

12

Isn’t Universal the one which is getting $1 for every Zune sold?

They’re tight with Microsoft with MSNBC and exclusive support for HD-DVD.

Or is Universal Music not part of NBC-Universal which includes the movie studio?

Yeah this could be a plot for Universal Music to get some of iPod revenues, just like they are getting with the Zune.

Posted by wco81 on July 2, 2007 at 11:26 PM (PDT)

13

YouKnowItsTrue You are a troll. And probably from the dark side.

Posted by tifeo on July 4, 2007 at 3:55 PM (PDT)

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