Universal has confirmed earlier reports that it was seeking to end its long-term agreement with Apple’s iTunes.
Reports first surfaced in The New York Times on Monday that the label was looking to end its long-term contract with the digital music provider and instead opt for an “at will” contract.
These types of contracts are usually reserved for smaller distributors, but industry insiders say the change is aimed at giving Universal more leverage over iTunes in setting terms and perhaps even the price of music.
Universal has been one of the most aggressive in its digital music strategy, even signing a deal with Microsoft last November to receive a cut of the sales of that company’s music player, the Zune. Its stance on the issues may even cause others to follow suit.
Confirmation of the change in contract came in a statement on Tuesday. “Universal Music Group has decided not to renew its long-term agreement for Apple’s iTunes service. Universal Music Group will now market its music to iTunes in an ‘at will’ capacity, as it does with its other retail partners,” it said.
What this could mean to users is that if relations sour between the two companies, or they do not agree on terms for a specific artist, song, or album, songs that currently are on the service from the label could be pulled, or new music withheld.
The stakes, though, are high for Universal and Apple. 15 percent of the music sold on iTunes is the label’s, and messing with the catalog could disrupt a major revenue stream for Universal. Apple, on the other hand, stands to lose from the departure of certain acts, as it is believed that Universal wants to offer bands’ material exclusively via other providers.
Although not confirmed, it is also believed that the recent dustup may have something to do with the launch of ITunes Plus, its DRM-free service. Universal is one of the most pro-DRM labels in the industry.
Apple had not commented publicly on the matter as of press time.
Apple, iTunes, Universal, Rumors