John Paczkowski

Recent Posts by John Paczkowski

Zune Royalties Apparently Enough to Buy Universal Music Group a New Set of Balls

These devices are just repositories for stolen music, and they all know it. So it’s time to get paid for it.”

–Universal Music Group Chairman Doug Morris, November 2006

reservoir-dogs-mexican-standoff.jpgThough Apple would have had it otherwise, Universal Music Group, the world’s largest music company, has indeed scrapped its long-term contract with Apple’s iTunes service, opting instead to continue the arrangement on an at-will basis that will give it an easy exit should disagreements over pricing or other terms become a problem.

“Universal Music Group decided not to renew its long-term agreement for Apple’s iTunes service,” the company said in a statement. “Universal Music Group will now market its music to iTunes in an ‘at will’ capacity, as it does with its other retail partners.” The move follows a bit of a Mexican standoff in negotiations, with Universal Music Group packing a catalog that accounts for one in three releases sold in the United States, Apple a 70%-plus market share of the music download business and a recalcitrant CEO who would probably rather eat a Zune than be pressured into bringing variable pricing to iTunes, opening the iPod to rival music services or handing over a percentage of iPod sales to record labels, as Microsoft has done with Zune.

“When your customers are iPod addicts, who are you striking back against?” entertainment lawyer Ken Hertz told the New York Times earlier this week. “The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they need to do that while Steve Jobs still has an incentive to keep them at the table.”