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Universal's iTunes Deal Hits Sour Note

Major music vendor will pull out of long-term contract with Apple

By J. Kelman,  Newser User

Posted Jul 2, 2007 7:53 AM CDT

(Newser) – In the latest volley in the escalating war between the music industry and Apple's iTunes, Universal Music Group will not renew its contract with the online music seller, the New York Times reports. The digital retailer will still feature artists signed by Universal, the largest music company in the world, but the label can pull out at any time.

The move gives Universal, home to artists including U2, Mariah Carey, and 50 Cent, some leverage over the digital giant, but the numbers spell trouble for both parties. Although Universal's brands control one-third of new American releases, digital-music sales represented 15% of Universal's worldwide first-quarter revenue. Reuters reports that a month-to-month deal will replace the agreement that expired in June.

(FILES) A pedestrian passes a wall covered with Apple iPod advertisements...
(FILES) A pedestrian passes a wall covered with Apple iPod advertisements...   (Getty Images)
Apple CEO Steve Jobs plays a Beatles Song from a Beatles album playing on iTunes as he introduces the new iPhone at the MacWorld in San Francisco, in this Jan. 9, 2007 file photo. The launch of Apple Inc.'s iPhone has stoked optimism on the part of music company...
Apple CEO Steve Jobs plays a Beatles Song from a Beatles album playing on iTunes as he introduces the new iPhone at the MacWorld in San Francisco, in this Jan. 9, 2007 file photo. The launch of Apple...   (Associated Press)
A file photo shows   Apple Computers Inc.  iPod Nano on display in front of a giant Apple poster during  in San Francisco, Wednesday, Sept. 7, 2005.  The recent rollout of songs without copy protection software at Apple Inc.'s iTunes Store has given consumers new flexibility, but questions emerge over...
A file photo shows Apple Computers Inc. iPod Nano on display in front of a giant Apple poster during in San Francisco, Wednesday, Sept. 7, 2005. The recent rollout of songs without copy protection...   (Associated Press)
An Apple Nano and ITunes music card on a computer keyboard 07...
An Apple Nano and ITunes music card on a computer keyboard 07...   (Getty Images (by Event))
(FILES) Photo dated 20 April 2006 in Par
(FILES) Photo dated 20 April 2006 in Par   (Getty Images)
FILE PHOTO: Vivendi Universal To Sell Hollywood Holdings
FILE PHOTO: Vivendi Universal To Sell Hollywood Holdings   (Getty Images)
(FILES) Apple's iTunes website is reflected in an iPod in London...
(FILES) Apple's iTunes website is reflected in an iPod in London...   (Getty Images)
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