Sunday, July 01, 2007

Universal reportedly not renewing its contract with Apple to sell its music in iTunes. Time will tell if this rumor is true, and just what it means if it is true, but I have to wonder what Universal is thinking. Picking a fight with a powerful adversary when their business model is in the toilet should just serve to remind everyone of just how impotent they are. iTunes is responsible for approximately 15% of Universal Music Group's revenues. And iTunes has little incentive not to let Universal walk away, as the profits from iTunes pales in comparison to their profit from the iPod. They want their customers to be happy, and have access to as much music as possible in iTunes, but they also know that if they reach an impasse with Universal, Universal will get the blame.

So, yes, I think this will most likely blow up in Universal's face, depending on how this purported showdown goes down. But I'll keep an open mind. For one, we don't know what will be the length of any short-term purchasing agreement between the two parties. The Wall Street Journal suggests that "short-term" means under one year. So, if they reach a six-month agreement, it may postpone an ugly stand-off long enough that Universal may, down the road, find themselves in a better bargaining position. And perhaps Universal is ready to imminently announce their abandonment of DRM, which they have been rumored to be considering. This would take the sting out of their departure from iTunes for iPod users, who would then be able to buy iPod-compatible files from other sources. Really, removing DRM is such a transparent means of combating Steve Job's influence on digital music distribution, it really baffles me why the labels are so slow to accept that losing DRM is vital for their survival. It would certainly be a smarter move then pouting and threatening to take their toys and go home.

Let me just remind Universal of one thing: People don't mind stealing from you. It's wrong, yes, I truly believe that stealing music is wrong. But I believe that gambling and drinking are wrong, too, and, well, I've been known to partake in a snifter of brandy after an evening of penny-stakes bridge. Or something like that. My point is, many people who buy music think stealing is wrong, but will gladly do so anyways if they can somehow justify it to themselves. The argument that, because Universal stopped selling on iTunes, I'm now justified to steal from them with impunity, is of course faulty. But it's an argument I would nonetheless embrace, and gladly pilfer Universal music with little compunction. So just don't do it, Universal; don't give me an excuse to do bad.

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