Last November I speculated that Microsoft’s agreement to pay Universal Music Group for each Zune they sold as a form of recompense for expectations of music piracy and vary the price for songs were actually shots fired across the bow of Apple iTunes.
Today I read in the Wall Street Journal that Universal Music Group is looking to avoid long-term contracts with Apple for the sale of Universal artists’ music on iTunes. Never mind that iTunes is now the 3rd largest music retailer in the United States?
Highlighting continuing tension between the music industry and Apple Inc., Vivendi SA’s Universal Music Group is considering notifying the Cupertino, Calif., company that it isn’t renewing a long-term contract to sell digital-music downloads through the increasingly powerful iTunes Store, according to a person familiar with the situation.
Aside from continuing complaints that digital music encourages or enables piracy, Universal have been one of the most vocal record labels criticizing Apple’s $0.99/song pricing scheme.
Practically since the launch of the iTunes store in 2003, Apple and the four major record labels have been at loggerheads over two critical issues: pricing and the lack of so-called interoperability between downloads sold by iTunes competitors and Apple’s popular iPod. Apple from the start insisted on selling all downloads for 99 cents each. Record labels wanted to sell some music for more, other music for less.
I continue to be amazed by the ability of music industry executives to continue to fight battles that they’ve already lost, and now Universal seems perfectly willing to hurt their own sales and stockholders in a continued battle with Apple over flat-rate pricing.
Technorati Tags: iTunes, Competitive Inteligence
