Universal, Apple in dispute over 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.”