Universal Music To Apple: Adieu Perhaps?

umg.pngUniversal Music Group (UMG) has turned down an offer to renew its contract with Apple for 2 years, instead moving to a month-to-month sales basis with Universal allegedly moving to end it’s music sales on iTunes all together.

Figures published June 22 had iTunes as the 3rd largest music retailer in the United States at 9.8%. If iTunes was a bricks-and-mortar operation Universal Music would never consider the move; cutting off a leading retailer in a market that is experiencing declining sales is pure stupidity. But it is easy to work out what it’s all about: greed.

Many music companies have never been happy with the iTunes 99c per track sales model. More recently Universal Music did a deal with Microsoft that saw Microsoft make a payment per Zune sold, Apple does not offer a similar deal. UMG is likely betting that it can offer its extensive music catalog elsewhere for a better price.

The real insanity though is what the actual effect of UMG pulling out of iTunes will be; it won’t be more sales, it will simply result in more piracy. Whilst there are legitimate concerns about the closed nature of iTunes and the near monopoly status Apple has in selling music online, there is little doubt that in popularizing legal music downloads, Apple has provided a challenge to music piracy. Music labels are profiting where they would perhaps have not profited before; given a choice of not being able to purchase their favorite tracks on iTunes legitimately customers will revert to piracy, and UMG will lose out even more so than by sticking with a 99c fee they don’t like. To paraphrase the old saying: better a paid download from iTunes than 2 higher paid downloads from a theoretical competitor (bush).