Universal confirms non-renewal of iTunes contract

Hot on the heels of the almost-ran reconciliation between Apple and the Universal Music Group, the music label has issued a statement saying definitively that it will not renew its long-term agreement with the Cupertino juggernaut. All this news comes at the tail-end of an extended negotiation period fraught with leaked info and damage control (mostly from Apple's end of the table). The new arrangement will enable Universal to deal with iTunes sales "at will," thus allowing them to market music freely to other retailers, as well as offer exclusive arrangements with whomever the company chooses. It can be assumed that Apple honchos are not very stoked by this turn of events, considering Universal is responsible for one out of every three records released globally, and this will only increase their ability to control online distribution. Can't be fun to be the Jobs-man today.

[Via iLounge]

[Kyrra @ Jul 5th 2007 11:58AM]

This may be bad for everyone actually. Apple has done a good job of keeping their prices locked at $0.99. Lets just hope Universal doesn't find some other online distributor that is willing to do more flexible pricing.

[Chokko @ Jul 5th 2007 11:47AM]

looks like Apple's World Domination Plan® just had a setback.

[Quix @ Jul 5th 2007 11:48AM]

Let's see, Apple makes very little from music downloads but continues to sell bajillions of iPods (and now iPhones). Universal's sales are slipping dramatically. Consumers are becoming even more agitated by the big record labels and the RIAA. Yet somehow Universal getting antsy about the #1 online music store is an *Apple* problem??? Wow, nice spin.

Hey Universal, give the Zune Marketplace a try. I hear they have *dozens* of users now.

Record companies must die. I pray for the day when I can buy music directly from the artists via whichever online store (iTunes, etc.) I want, with no input from the recording cartels like Universal. Come on artists, it's time to sever your recording contracts for gross negligence by the labels and embrace the digital age. U2, I'm looking at you.

[booyaka @ Jul 5th 2007 11:51AM]

Let me guess you own a Macbook, an iPhone, an iPod. Am I right?

[Quix @ Jul 5th 2007 12:02PM]

No iPhone yet, but you nailed the others. Nice work!

Not surprisingly, I can also dial you in with uncanny accuracy. You live in your parents' basement, spend your days trash-talking in FPS games on your home-built PC (with see-through case and neon lighting awesomeness!) and have a poster of dreamy Steve Ballmer on your bedroom wall?

Keep hating. Apple will keep rolling. Forward.

P.S. sadly, Engadget removed your original profane comment to this story, which revealed you to be the classless troll you are.

[Paul @ Jul 5th 2007 12:11PM]

@Quix
And you are better than the troll because....

You might have started off better, but you quickly sank to his level.

[mustharshid @ Jul 5th 2007 1:08PM]

How can puppets dump their puppet masters? They will be motionless. That's the case of most "artists"!

[Josef F @ Jul 5th 2007 3:28PM]

"I pray for the day when I can buy music directly from the artists via whichever online store (iTunes, etc.) I want"

Directly from the artist via online store is not "directly from the artist". I pray for the day when I can log onto www.cowboyjunkies.com (or whatever) and get the music DIRECTLY from the artist. Eliminate ALL middlemen

[mustharshid @ Jul 5th 2007 1:15PM]

How can puppets dump their puppet masters? They will be motionless. That's the case of most "artists"!

[o rly @ Jul 5th 2007 1:33PM]

oh noes, Quix and his "I'm not fanboy yet am a fan+boy" attitude has wallowed over from digg. Now we need flag564 to make this migration of "idiotic Apple/MS fanboy wars" complete.

[Darrell @ Jul 5th 2007 6:24PM]

I totally agree. Record companies must die. $15-20 for a cd and the artist sees very little of that, and we're the problem? Universal is shooting themselves in the foot on this. The only good thing that they could do is open their own website with drm free downloading. Otherwise is suicidal...

Take a look at the movement to get radio stations to charge per song...

[Evan @ Jul 6th 2007 4:15AM]

Why do all the Apple articles end up having comments all about Microsoft? Honestly, behind some closed doors in some top secret location Jobs and Gates probably sit back, laugh, and plot some new strategy to keep everyone on their puppet strings.

Just because I use more products from Microsoft than Apple doesn't mean I need to post some fanboy bs in every comment section of every techblog in the universe like some (many) others. Find something more constructive to do (like posting a comment relating to the article)!

On a more related note to this article. Maybe competition will help lower prices for online music distribution, not increase them. I don't honestly believe that Apple was using iTunes domination to help keep prices low. They just found the price that worked for them, now with a little less exclusiveness we can really see where the market is going.

[Frederik Grøn Schack @ Sep 8th 2007 3:14PM]

The record industry is supposedly suffering due to loss in record sales, and I like many other young people continue to copy music from the Internet without the slightest concern. That's a problem to the artists, and at the end of the day to the listeners, because we can't expect the musicians to deliver free music, at least not at a professional level. So is professional music doomed?

The idea I’m going to present to you is rooted in reality, unlike the ideas of the record companies. It will “legalize” the MP3 format in a reformistic way, it will give musicians more creative freedom and it will make musicians earn money that way.


Reality – MP3

All people can manage to pay some amount for a piece of music, but as soon as an individual’s price threshold is crossed, and this is very important, the alternative is obviously not to pay! That's reality, people aren't going to pay if the price is too high. Further, if the process of purchasing music is too dificult and implies too many disadvantages, people might not be willing to pay anything at all. Either realize this reality, or fail any attempt to save the music industry.

Reality is that it’s impossible to prevent the copying of music. At some point the music has to be transformed to either a digital or analogous audio signal, which can be copied, and just a single copy is potentially spread like wildfire on the Internet.

Reality is that the MP3 format has many advantages over the CD.
*Doesn't take up space in the shelves.
*Doesn’t get scratched.
*Is faster to search and find specific tracks.
*Makes it possible to compile your own playlists.
*Offers loads of smart features like visualization plug-ins, automatic lyrics lookup (evil lyrics), automatic music recommendation (audioscrobbler.com), etc.
*Cost’s almost nothing to distribute.
*Is easily distributed over the Internet.
*You don't have to go anywhere to get your music, you can download a track within minutes (and speeds are increasing).
*A wider selection is already available on e-mule and WinMX than almost any store.
*Is stored on any digital medium (harddisks, memory sticks, CDs, DVDs, micro drives etc.).

The disadvantages are
*It’s mostly illegal
*Some believe that MP3 is worse quality than CD (I believe this to be a confusion between the quality of a recording and the limit of the MP3 format. I have very good HiFi equipment, and can’t tell the difference between a good MP3 and a CD.)

To me, and many others, the MP3 format is so convenient, that we don’t even care whether it’s illegal or not. Reality is that we aren't going to sacrifice the advantages of the MP3 format, just because some butthead says it’s illegal. If I was recommended a piece of music through ICQ, AudioScrobbler, AllMusic.com or whatever, should I then spend an hour or so going to the music store, buying a whole CD with lot’s of stuff that I don’t want, going home, ooops scratching the CD? No way! I’m already online, it’s right there, the music, you can’t fool me! Neither can colourful CD covers, the marketing machine or PR stunts.

This is a new paradigm demanding a new solution


Problem – Record Companies

The problem to me and many others is that we like our artists. That’s the ones we love, not the leaches sucking the blood from our artists. The distribution of music sucks 90%-95% of the retail price. Whoa! So even if we go to the store, take our time, just to support our artists, only 5%-10% would be scraped of to the artists??? No! It’s even worse, the musicians have to pay the marketing costs out of their humble budgets themselves. Typically big artists have to sell more than a million CD’s, just to be break even!

It’s no wonder that the record companies cares so much about their current “symbiotic” relationship with the artists, and anything that could possibly upset it.

One thing that upsets the record companies the most is this new reality, they can't ignor it and keep their huge profits and they can't conform with it and keep their huge profits. Instead they are trying to fight this new reality, pissing everyone off.

The core problem to the record companies is that they can't monopolize distribution of music on the Internet, they aren't even needed to distribute music, if they could, they would most certainly shut down the Internet.


Solution - Taking advantage of reality

In order to find a solution that can satisfy both the artists and the consumers of music, we must make a concept based on reality.

The record companies must die, they are nothing but a pain to the consumers and artists, they have no purpose in the market economy anymore. That's even true for those who want's a physical CD, artists could distribute their music dirictly to any store or consumer through the Internet and then the store could print high quality covers and CD labels.

The music is obviously best distributed via the Internet. It makes no sense to produce CD's in America and send them by truck and boat to Europe, risking shortage or abundance of CD's, when it's almost free and free of risk to distribute the music via the Internet.

We can't force people to pay, but almost everyone (at least those who can afford a PC or MP3 player) can manage to pay some amount, but the individuals threshold for how much he/she is willing to pay varies a lot. A common man in Bolivia has a much lower threshold than a common man in Germany. Further a poor man in the United Kingdom has a much lower threshold than a rich man in the United Kingdom. But all of them can manage to pay some amount, however small. So, why not make everyone pay what they can manage to pay, instead of only making those who have a high income pay? The trick then will be to get people to pay as much as possible. Basically what I'm suggesting is motivated voluntary contributions.

Then, why not take advantage of the huge, world spanning and efficient distribution network already in place? The file sharing services like eMule, WinMX, iMesh, Bearshare, Grokster, eDonkey etc.? If contributions are voluntary albeit motivated, then the distribution network doesn't really matter, does it?

Further, what is making the file sharing services so efficient is that everyone is a server and everyone is a client. It's a bullet proof server, allways online, costs close to nothing and has enormous amounts of diskspace and bandwidth. The more widespread a track or a whole CD is, the faster it is to download. This means that if the system that I'm about to suggest works, if you can actually make people who have been riding free contribute, then it is in the interest of the artists that their files are as widespread as possible, in order to recieve as much contributions as possible. The reason why files become widespread is that they are free to distribute! Everybody can listen to music for free and then support the artists that they like.

So, what's the difference between the existing system of anarchy and my suggestion?

How would you support an artist with 2$ today? Huh? International moneyorder? Thats expensive? If you live in the same country as the artist, you might be able to make a fairly cheap transfer, but do you know the account no. of your artist? You could write an e-mail to the artist, expressing your desire to contribute 2$, I'm sure he would understand....

I think this illustrates the base of the problem, it has to be cheap and easy to contribute, else it won't happen. The more easy it is to reach the point both practically and mentally where one pays, the more contributions. We don't want to enter a lot of information like credit card number, expiry date, name and the like, especially not if it's only for a small amount of money. It has to be simple, like just entering an amount and the click "send", then it would be 1) convenient 2) economically manageable to everybody. Furthermore it should be possible to do while downloading or playing the music, while the user is at the computer anyway.

So here is what we’ve got to do

1. The very basic first step is to make it possible to make small contributions to artists.
2. The second step is to make it incredibly easy.
3. The third step is to motivate contributions.
4. The fourth step is to start a process that legalizes this kind of payment.

1. Make it possible

Some of the existing file sharing networks, MP3 players or a service like AudioScrobbler could create user accounts where users allocate a certain amount of money, the normal way by paying with VISA/Mastercard or the like. Then the user could allot small amounts on different artist accounts. The services maintaining the accounts could charge a fee like 5% of the contributions.

2. Make it easy

People are lazy.

What could possibly be more easy than having a contribution plug-in for WinAmp, showing the current artist playing, a text field for entering any amount and a “contribute” button? Well, yes, “auto contribute” to every piece of music played, but that should be an option.

How?

Have an account at AudioScrobbler, Winamp or some other service, put some money on it and let the service distribute the money according to your choice. It’s really that simple, and in reality a little difficult to realize.

3. Motivate contributions

People are egoists.

People are different, some likes to show off, some likes to be respected for their authority, some like to be seen as good people and others need respect for their technical ingenuity.

So let people show off, earn respect, contribute money and contribute technology, make us feel good in our own egoistic ways.

Show off.
50 largest contributors? 50 largest contributors to a specific artist? To a specific song? Of the year? of the month? of the day? How much did he contribute? Let there be many winners!

Earn respect.
Some people just need respect for their honorable compliance with society. They would dutifully contribute to those in need and make rules apply.

Be good.
Some people are more idealistic, they would do whatever is needed to make the world a good one. They need to be good, because they need to be appreciated.

And contribute technology.
A very rare specimen in modern society are the wizards of technology, those that makes MP3, Winamp, Internet and all of that happen. They might only be interrested in contributing technology.

Another method to increase contributions is to emphasize that this is actually a form of democracy through the wallet, what you contribute is what you get. The musicians’ career would depend on how much the users like their music. The users no longer support artists on compilation CD's that they don't like, and further more their money have a stronger effect on the survival of the musician as not 5-10% of the money goes to the artists but instead 95%.

4. Make it legal

Legalizing this kind of contributions as a way of paying for art would beyond doubt increase the motivation to pay, especially amongst those authority people. Letting the users pay conditioned contributions that would only be paid to the artists when they accept this system as a legal form of distribution, could do this. If suddenly there were a considerable amount of conditioned money accumulated on a musicians account, he would probably sing a song to his record company about a “symbiotic” relationship that somehow broke into a million pieces.

Of course there would be a lot of artists who wouldn’t be willing to accept voluntary contributions as legal payment. Well, we the consumers wouldn't care too much, we copy the music whatever they want their money or not. It is important to note that this is not about revolution; it's about reforming the system and turning more and more musicians from the old to the new system. There is no need to have the support from all musicians right from the start, even though this might be the long-term goal. What we need are some pioneer musicians.

The mere news value could make some musicians accept this as a legal form of distribution. We have already seen musicians that have supported Napster, even though it's not in their immediate interest.

Also the fact that many (if not all) musicians don't enjoy the same freedom in the existing system could motivate a lot of musicians to change.

And there probably exists or could be created other motivating factors.

Perspectives
It will not be possible to get completely rid of free riders, there always are somebody that will not pay the price, but this was also the case before the invention of the Internet.

Certainly there are musicians that earn a lot of money today, but that's a very small group that is blessed by the record industry. The system I have described would probably create some concentration of money as well, but I think it's beyond doubt that a lot more musicians would experience to earn money. They don’t need to invest or make big contracts; they only need to be good at their art.

It is possible that the Users of the Internet would not pay anything near what they pay in the record shops, but at the other hand, if just 20% of the amount paid in the shops is paid on the net, then both the consumers and the musicians would have gained considerably, and that I think is very probable.

Conclusion
To me there are no doubts that copying of music can't be stopped, it will always appear in some form. If we try to prevent it we just end up hurting ourselves a lot. We would need some kind of totalitarian system to get rid of it, so the most constructive solution would be to make the best out of the current reality. We can't force the consumer, so why not motivate them?

I argued for a simple solution based on voluntary contributions that is to be distributed through a payment system, integrated in some sort of music service like WinAmp, AudioScrobbler or a file sharing service.

I believe that it is of greater importance to make it easy and manageable to a wide range of people to contribute with some amount, instead of trying to force people to pay a fixed amount.

I have also pointed out ways to motivate consumers to contribute, and ways to motivate musicians to accept this system. I hope that many more people would contribute with ideas in this regard.

I see a great possibility for musicians and consumers of music to get rid of a big and expensive record industry that neither of us really need.

This is not meant to be a revolutionary system, but a reformist system that slowly develops and is being tested/corrected through its development.

At last I want to say to all those sceptics that criticize this as pure romance, come up with a better idea, but do keep in mind that the distribution is already here and it's big, nothing suggests that it can be stopped and the consumers would demand a legal form of distribution on the Internet anyway.

[cosmicrob010 @ Jul 5th 2007 11:52AM]

"Can't be fun to be the Jobs-man today."

Umm.. I'm sure the man's not going to be losing sleep over this one. He just sold a ton of iphones and premiered a new Pixar film. I'd take his future over Universal's any day.

[Glenn Diaz @ Jul 5th 2007 12:00PM]

Exactly! I wonder if Universal has even realized that their threat in fact will cost them even more. Now people will resort to more P2P techniques to get their music fill.

[CharlieX @ Jul 5th 2007 11:51AM]

It seems to me that terminating sales on the number 3 music distributer is pretty stupid. are they hoping to scare apple into upping their prices? universal must be doing this in hopes of getting more money.... frankly the big music industry needs to realize that the profits of yore are not the profits of today.

[doesn't matter @ Jul 5th 2007 12:05PM]

while it is probably about money a lot of labels and artists are struggling with itunes. to get any decent placement on itunes you have to offer exclusives (usually remixes or live tracks). this is screwing other retailers and devaluing the product. for instance, the label might throw on a crappy remix just so they can get a listing on itunes' front page...

if universal signs a year contract apple holds all the cards. universal is actually smart... they're not going to pull out their music. that's stupid. but it allows them more freedom to negotiate with apple AND other retailers on an ongoing basis. placing "exclusives" with one retailer isn't good business practices... your trapped into marketing to only one set of customers.

[cs0875 @ Jul 5th 2007 1:04PM]

I think you guys are missing something. You mention that pulling music from #3 retailer is bad. It isn't necessarily a bad thing if done right. People don't buy music because they have an iPod, they buy an iPod to listen to music. If you can't get the music you want on iTunes for your iPod you either won't buy and iPod, or atleast not use iTunes. If you are a big fan of an artist on Universal and they leave iTunes are you going to stop buying their music? No, you will buy it somewhere else. Those of us who read Engadget understand DRM and why it sucks, but of the 100 million iPod users most of them have no clue about DRM and how it effects them. All they know is, I was able to get my favorite artist, now I can't. Why? Oh, iTunes doesn't have it, lets see who does, oh, Zune Marketplace does, I will get it there.

Like Microsoft or not, think they are scum or not, they now how to make money, and how to position themselves in unique places. Look at Office, if you want to be productive in business you need Office, thats why it is sold on Macs. They have the Xbox 360 which is a trojan horse into your living room. You can use it as a DVR, stream music and video from you PC, purchase TV shows, and rent movies with out even using you PC. It is what AppleTV should've been (without games of course). So an exclusivity with Universal on Zune Marketplace, and Xbox Live Marketplace for music videos could be lucrative for both parties. People will still buy the music, just not from iTunes.

[Eugene @ Jul 6th 2007 1:49AM]

@ cs0875 - but you see, thats just the thing - for some/many of us, there is no "second choice" to get the songs we want, or at least none that are as easy and work as well as iTunes. I'll be honest here - i has an ipod before i used itunes and for a long time iTunes wasnt available in Australia, so i was doing what everyone else seemed to be doing - pirating their music. When iTunes come out, and it made it so simple, i stopped pirating and started buying it legally - as did many others. Now i realise what you are saying, but the fact of the matter is that if universal DO pull out of itunes, there are going to be a lot of people who want their music, but they are not all going to want to subscribe and be locked into paying each month to keep listening, and they are certainly not all going to want to download their music in a "Play's for Sure" format that is most certainly not going to play at all on their iPod.

My personal hope is that they pulled out because Apple has been increasing the pressure for DRM Free music and universal wern't happy to join in the fun - with any luck the rest will and universal will see what they are missing and be FORCED to release their stuff without the crap.

[gibber9583 @ Jul 5th 2007 11:55AM]

It seems like Universal got sick and tired of bending over backward for apple. AT&T on the other hand...

[locknroll @ Jul 5th 2007 11:56AM]

NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!

Well I only buy from EMI anyway!

Here's to hoping they come back crawling. With DRM free music I might add.

[B-Sabre @ Jul 6th 2007 11:50AM]

And of course, this comes on the heels of Apple selling at least 500,000 new music players in one weekend....

I would also note that Apple's stock is up, while Vivendi (VIV) is basically flat on this news.

[Trojan @ Jul 5th 2007 1:33PM]

And I'll bet you that 80% of those 500,000+ already owned an iPod, so they won't count as "new" iTunes users, and there's nothing at all guaranteeing any of them are going to buy any(more) music from iTunes.

[B-Sabre @ Jul 5th 2007 9:27PM]

And....your point is? I never made a mention of "new" iTunes customers, and I think your statistic is completely fabricated. And so what if they don't buy from the iTunes store? Apple makes money on the hardware, not iTunes.

And so what it if you're right. To me, it shows that customers are committed to the Apple brand to the point that they are willing to shell out $600 for a new gadget, and that they aren't really tired of the iTunes "model" or the iPod "brand". If Universal thinks they can get equal market share or exposure through any of the competitors, they're smoking dope. Those iPhones, even if they were to a significant number of existing iPod owners, are just another layer of quick-drying cement on the market for Apple's lead.

How many people out there even realize that Universal is the one selling them music? Probably not that many.

Oh, and it looks like they hit 1 million handsets today.

Stock report: Apple up 4.3%, Vivendi, down 0.63 %

[Evan @ Jul 6th 2007 4:23AM]

Then what exactly was your point with relating the sale of the iPhone with this article involving iTunes and Universal?

You were the one who made the post, and the connection. Don't criticize someone else for wondering where you were going with that. On top of that, in your reply your basically said that your first statement did not have anything to do with the article. What exactly are you trying to say? I see the stock, what does that have to do with anything you said?

I am more curious than anything to where you are going with these comments/contradictions.

[B-Sabre @ Jul 6th 2007 11:46AM]

My point is, which one is in the stronger position regarding the distribution of digital music? The content provider, who while having a lot of material has only a number of 'also-ran" outlets to go to as an alternative, or the company which just demonstrated its continued dominance of the DAP market by moving a million high-end players over a long weekend?

Universal may own a ball, but Apple has the largest court to play on.

[rob @ Jul 5th 2007 11:58AM]

Some how I doubt even his worst day is really that bad.

[Zei @ Jul 5th 2007 10:00PM]

I wonder if, at the end of the next fiscal year, Universal will continue to blame slumped sales on piracy rather than crappy business practices.

[everrette powell @ Jul 5th 2007 2:32PM]

you mean blame the actual culprit? never

[joe e @ Jul 5th 2007 12:00PM]

Time to buy a Zune friends!

[michael @ Jul 5th 2007 4:25PM]

Are you just trolling, to make the Zune look bad? It's not working.

[Jose @ Jul 5th 2007 12:02PM]

NOOOOOOOOOOOOOOOOOO! I NEED UNIVERSAL ON iTUNES!

[kai @ Jul 5th 2007 12:39PM]

universal will still be on itunes, just not an exclusive, long term contract. this gives them more flexibility to provide music to other e-tailers, and in the long run stimulate more competition between online music retailers--which lowers the price for us at the end of the day.

it's a good things, folks. "locked" prices are bad, varying prices based on what the consumer values the product at is good.

[Drew @ Jul 5th 2007 12:23PM]

I don't see how price gouging is good...

[foo @ Jul 5th 2007 12:03PM]

all the apple hating aside, which there seems to be a lot of it for some reason. I guess when you're number 1 online music retailer you'd be hated on regardless of brand.

but from a business stand point, why is universal doing this to themselves?! it's a bad move...if you want to branch out and not be tied to one retailer then negotiate something to that affect, dont just shoot yourself in the foot. The industry is making less and less money so they're trying to make as much w/ whatever they can that generates an income

[siriusfox @ Jul 5th 2007 1:41PM]

People hate Microsoft in debates because they are they have most of the market, and must be evil.
People hate Apple for the same reason.

The only difference is, Microsoft one time actually did something bad to earn them that reputation. During the browser wars they played silly games and lied in the courts. Now it doesn't matter how many truths they tell, trust isn't coming back, and they are evil.

If Apple or Microsoft where to drop even, they would still be disliked. A new successor would arise in the market, and we would begin to dislike them if they grew in power.

[foo @ Jul 5th 2007 6:30PM]

agreed...it's the top dog syndrome, you can be the best of what you do and are nice etc etc but still be hated on because you're number 1

[Quix @ Jul 5th 2007 12:01PM]

No iPhone yet, but you nailed the others. Nice work booyaka!

Not surprisingly, I can also dial you in with uncanny accuracy. You live in your parents' basement, spend your days trash-talking in FPS games on your home-built PC (with see-through case and neon lighting awesomeness!) and have a poster of dreamy Steve Ballmer on your bedroom wall?

Keep hating. Apple will keep rolling. Forward.

P.S. sadly, Engadget removed your original profane comment to this story, which revealed you to be the classless troll you are.

[Ali @ Jul 6th 2007 5:10PM]

weak

[Will @ Jul 5th 2007 12:02PM]

Incredible display of maturity here.. geez.

Of course fanboys will chime in, but is this really a "point for Apple" matter? While I'm sure there could be more discussion between Apple and the record labels, it's not like the labels are these giant altruistic organizations, seeking to further the cause of good music world-wide. They're looking to make money, plain and simple. The decreased market exposure (should Universal decide to withdraw its artist from iTunes) would hurt the bottom line significantly. I guess I see this akin to free-agents. Universal can move around as they wish, but they'll still have to play by the rules of the game. People won't pay a premium on iTunes to d/l Universal artists.

[Chicksta @ Jul 5th 2007 12:06PM]

It just seems like Universal's extortion tactics didn't work. Microsoft caved in to their demands and gave them a cut of Zune sales, or perhaps it was a bribe on their part, who knows. In either case, it hurt consumers and gave labels a sense of bravado. If Apple started catering to the labels' demands for more money like this too (which they have repeatedly refused to do), it'd be bad for every consumer, whatever media player they have. Universal isn't stupid enough to sever the tie completely at this point, but I'm sure they're hoping to get someone to fund their greed, and don't care who it is. Apple created the technology behind iTunes, manages the accounts, payments, servers, etc., marketed the software and created the third biggest music retailer from nothing - and the labels want to play extortion? And people think that's Apple's fault, and not Universal's greed? It's the classic issue of trying to claim that the product is more 'valuable' than service. Sometimes product owners forget that there's a whole lot of value in someone handling the service part of distribution for you too. They both need each other, and playing chicken out of greed helps no one.

[Mike @ Jul 5th 2007 12:12PM]

This is the truth. I could shop for my groceries at Albertson's, but their service is crap. Sure, the products are exactly the same as they are down the street at Publix, but at Publix the service and presentation are leagues ahead, so I shop there because it's a better experience.

[yoshi @ Jul 5th 2007 12:08PM]

Meh, who cares. I don't use anything that Universal makes anyway. And never will....

[ericdano @ Jul 5th 2007 12:09PM]

Sadly, this means higher prices. Expect Universal music to go up to $1.99 for new releases.

[L.M.L.Y.P @ Jul 5th 2007 12:16PM]

Hurray! hope that makes everyones songs go up the same amount. That would be funny balls. Here's to not buying online music.

[DW @ Jul 5th 2007 12:13PM]

Why are so many people here over-reacting as if Universal has actually PULLED music from iTunes?! They haven't. Nor have they threatened to do so.

This is only a negotiating tactic by Universal - nothing more. I'd even go as far as to say that the move is pretty smart: It gives Universal the ability to better work with other music services; keep their songs on iTunes to rack up sales; plus, remind Apple and others just how fragile/important the deals with the labels are.

Now, if Universal began allowing DRM-free tracks....

[andrew harrison @ Jul 5th 2007 7:37PM]

Or it's not that smart at all.

We all know Jobs doesn't like getting f***ed over, and I'm sure he doesn't like this deal [especially because it's been in the press as Universal - not Apple - making the decision.

I'm guessing we'll slowly see Universal music disappear from the front pages, and not be as promoted on iTunes. I wouldn't be surprised if Apple tells Universal one day that they won't be selling their music on iTunes anymore.

And I'm sure they won't make life easy when Universal come crawling back.

[Tony @ Jul 5th 2007 12:23PM]

Universal is simply universally stupid. If it goes up just ONE cent, guess what will happen? :-)
LIMEWIRE, EMULE, TORRENT ATTAAAACK!

Like I said, every company has a moron, in this case, its a universal ceo!

[Alex @ Jul 5th 2007 12:36PM]

Does this mean that they'll be removing NBC and partner networks, as well as movies? If so, they really shot themselves in the foot with this one.

[Tyk @ Jul 5th 2007 12:39PM]

Universal is the renegade of the media world.. first supporting HD-DVD .. now this! They do their own thing.

Now, we need to get Sony labels to stop supporting.. and iTunes is iGone, with 50%+ of the tunes not availble.