Universal Music Group, the world's largest music company, has reportedly declined renewing a long-term contract to sell digital-music downloads over Apple's iTunes Store, in a move to negotiate separate pricing for songs while leaving open the possibility for exclusive deals with other services, according to an unnamed source. The company could also pull its music from iTunes Store on a short notice.
Apple's iTunes has gained great influence in the music industry, with more than 70 percent market share of all digital music sold in the United States and recently becoming the third largest seller of recorded music overall, behind Wal-Mart Stores and Best Buy. Universal will continue to sell music and videos through iTunes; however, they may be looking for some leverage against Apple's 99 cents per song pricing structure. It is known record labels want to sell some music for more, other music for less.
In another illustration of the tension between Apple and the music industry, Apple doesn't currently offer wireless downloads to its new iPhone or other wireless handsets. Currently, the iPhone can store only music that is loaded by a physical connection to a computer.
Record labels are trying to cash in the mobile market, but are concerned the newly released iPhone may give Apple further control in the mobile phone-based digital music market. Sales of digital music through iTunes and other sources represented more than 15 percent of Universal's worldwide revenue in the first quarter of 2007, or more than $200 million. Representatives for Universal and Apple declined to comment on "rumors and speculation."