Universal Music vs. iTunes (and the significance of it all...)

Universal Music Group has opted to not renew its distribution contract with Apple's iTunes. The two sides have entered into an interim agreement but Universal, the world's largest record label, has the ability to pull its music from the iTunes Store at any time.

Since the inception of iTunes, major labels have pressured Apple to increase the price per song. Apple has long fought to keep prices down as their real profit lies in the sale of iPods rather than music. Traditionally, Apple has had the upper hand in this battle, as the iPod has dominated the digital music player scene. Now it seems Universal is throwing its weight around to see if it can't shake things up a bit.

This is a case, in which a major label is unwilling to adapt their business model to the changing times of the music industry. iTunes does now offer a higher price point for record labels willing to sell higher quality DRM-free music. (DRM-free music is not copy protected and can be played on any MP3 player not just the iPod.) EMI, another of the major labels, was recently the first to participate in iTunes Plus program. Universal, however, has stated that it will not sell any DRM-free music. Right now it seems Universal is setting up to part ways with iTunes and find a new place to call home where it can command a higher price per song and maintain DRM copy protection, all the while using its massive catalog as leverage.

Universal's stubbornness may bring itself some more dollars on the bottom line, for a little while. But the music business has changed. Power has shifted from the hands of the corporations to the ears of the fans. If Universal doesn't grow and adapt with the changing times, it will ultimately die a long slow death. And you have to ask yourself, "Would that really be so bad?" After all, music was here long before the music business and music will still be here long after the music business dies.