Universal, Warner to Leave iTunes' Party Shuffle?

October 26, 2007 11:13 AM ET

There might be a few defecting record labels on iTunes' horizon. After Universal Music Group's exclusive contract with Apple's digital-music service ran out earlier this year, UMG proposed a month-to-month contract that allowed the label to entertain offers from other music services. At year's end, according to the Washington Post, Warner Music Group may consider a similar contract. It's the latest move by the industry to tip the balance of power between themselves and Steve Jobs. Apple has had the upper-hand thus far, setting a price limit on MP3s and videos that some labels believe is under market value.

Considering that up to 20 percent of music revenue comes from digital sales, in the wake of declining CD sales, labels are eager to gain leverage to get Jobs to eliminate his price limit. That leverage, besides the elimination of exclusivity, is the iPodization of TV shows. NBC (a partner company of Universal) and iTunes are in the midst of a price war, which will likely result in banishment of all NBC/USA/Bravo shows when the contract ends December 1st. Can UMG be far behind? We know there are a fistful of competitors eager to fight for iTunes' throne. Or will Apple finally yield to industry requests to raise prices?

Related Stories:
World's Largest Record Label Threatens to Bolt From iTunes
Eureka! Labels Finally Discover They Can Sell Music On The Internet
iTunes Challengers Wal-Mart, MTV, Rhapsody Line Up for Large-Scale Assault

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