Universal Music refuses long term iTunes deal

Apple faces rebellion from world's biggest label

2 July 2007 10:36 GMT / By Amy-Mae Elliott

An industry insider has broken the news that the Universal Music Group, the world's biggest music corporation, has told Apple that it will not renew its annual contract to sell music through iTunes.

Universal, which is said to produce one in three of every album sold in America, is not pulling its catalogue from iTunes, but is apparently only signing up for a month-to-month rolling contract rather than agreeing to be locked into a longer deal.

iTunes has a virtual monopoly of the music download market boasting a powerful 80% market share.

Cory Doctorow of the Boing Boing blog, observes: "It's clear that Universal wants leverage against Steve Jobs so that they can set their own prices, but brinkmanship won't win it for them".

If Apple and Universal are unable to reach a new agreement it would be potentially very harmful to both parties.

Apple would lose a huge chunk of music on iTunes from artists such as Sting, U2 and Amy Winehouse.

Digital music sales made up around 15% of Universal's revenue in the first quarter of 2007, said to be $200 million, and although iTunes isn’t the only online outlet that Universal's music is available through, Apple's store obviously makes up the bulk of that revenue.

Neither party have made official statements.