Universal turns the tables on Apple

Posted Jul 2nd 2007 8:45AM by Douglas McIntyre
Filed under: Deals, Industry, Competitive Strategy, Apple Inc (AAPL)

The big music publishers have always thought they should get better royalties from Apple (NASDAQ: AAPL) iTunes, and with good reason. Their CD sales are diving as music downloads online grow and, in the case of illegal downloads, they get nothing.

Vivendi Group's Universal Music division appears ready to make a stand. The world's largest music publisher informed Apple last week that it will not take a standard one-year renewal with iTune. Rather, it will make its music available ad hoc. Vivendi has several big artists on its label, including U2.

While Universal could get into a nasty fight with Apple that it might no win, the music publishing industry cannot watch its revenue drop forever. Apple might consider blocking Universal's content, but that could lead to an antitrust showdown. Universal's artists might object to a deal that brings them less money.

But, Apple cannot afford to have several publishers follow Universal's lead.

Makes things a wee bit tense.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: ITunes, U2, Univeral Music, UniveralMusic

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Reader Comments (Page 1 of 1)

7-02-2007 @ 11:19AM

Jeff said...

"Universal's artists might object..."

Wait, when did this have to do with the artists?

7-03-2007 @ 9:32AM

george said...

Interestingly enough, your comments fail to point out that 15% of Universal's profits come from Apple.
The inverse is not true.

In this situation, there is a drivers seat, unfortunately for Universal, Doug Morris is not in it.