Universal Music/Vivendi divorces from iTunes

  • Cupertino (CA) – Universal Music Group of Vivendi, the world’s largest music corporation, has announced that it will not renew its annual contract with Apple iTunes.  The move will allow Universal to negotiate separate pricing for songs.  The company could allow add and remove songs on short notice.

    Universal had been in intense contract negotiations with Apple and both sides so far have no comment about the announcement.  Apple chairman Steve Jobs has made public statements advocating a fixed 99 cent price for songs, something that iTunes has kept since its inception about four years ago.

    But this isn’t a complete divorce, at least not yet, because all of Universal’s songs and videos will stay on iTunes for the time being.  Universal will be able to negotiate separate pricing terms for songs that it considers to be “premium” content.  Songs can also be pulled from the iTunes library.

    The consequences could be severe for Universal, if it decides on a complete break from Apple.  According to market research, iTunes has approximately 76 percent of the digital music market and the NPD market research group recently announced that Apple has now become the third biggest seller of music behind number one Wal-Mart (yeah that surprised us too) and Best Buy.