Universal plays hardball with Apple’s iTunes

3 Jul 2007

In a landmark move for Apple’s music content providers, Universal has changed the terms of its contract, no longer content with the deal locking all of its digital content with the iTunes store.

Originally, Universal’s licensing deal was for two years, but renewed for one further. Now expired, Universal has decided to change the terms to literally a month-by-month basis, giving them the option to cancel the deal on short notice.

The iTunes deal had meant that any digital music Universal released had to also be provided for sale in the iTunes store, cutting out the possibility of exclusive tie-ins with any other online music portal.

Universal, which represents global artists from Pavarotti to Eminem, is reportedly refusing to renew its long-term deal with Apple on two fronts.

Currently, Universal’s entire back catalogue is tied down by Digital Rights Management (DRM), limiting its portability and the playing of their music to the iTunes format.

Added to this, the forthcoming launch of a music download service from Amazon could be a promising market for the music company.

If Universal pulls their back catalogue from iTunes, this would be a huge financial blow to both companies.

Apple iTunes sources around a third of its music content from Universal, while Universal relies on online downloads for up to 15pc of its total sales.

By Marie Boran