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Apple Denies Universal Departure Reports

Published: July 03, 2007

Apple is denying reports that the major music label Universal is refusing a long-term iTunes contract, opting for month-to-month deals with the option of outside exclusives. “We are still negotiating with Universal,” says Apple representative Tom Neumayr, speaking in an interview with the San Francisco Chronicle. “Their music is still on iTunes and their not re-signing is just not true.” Universal representatives have not replied with any statements of their own.

According to Tony Berkman of Majestic Research, if Universal is holding out on an iTunes contract, it may be because of widespread complaints in the industry. “The music industry has been frustrated with Apple for some time because they feel (Apple) has a veritable monopoly on downloading music,” says Berkman. “For a while, Apple had all the leverage and could dictate the terms to the publishers.”

The research firm NPD Group observes that the iTunes Store holds over 70 percent of the online music share, easily defeating competitors such as Napster and eMusic.

This position is not inviolable, warns Allan Klepfisz, the CEO of the future rival service Qtrax. “As much power as they might be perceived to have, Apple needs the record labels and the record labels need Apple. But it’s a mistake for anybody to think the record labels need Apple more than Apple needs the record labels.”

David Card of JupiterResearch calls Univeral’s efforts “hardball negotiations,” suggesting they may be insincere. “I’d be surprised to see Universal disappear from the virtual shelves of the iTunes Store.”