Universal Balks at iTunes Renewal

The world's largest music label has become the first to potentially break with the world's largest online music retailer. Vivendi's Universal Music Group declined to renew its annual agreement with iTunes, selling content only "at will."

In other words, Universal tunes will remain on iTunes, but could be removed on short notice if a disagreement comes up. And all the major labels have had disagreements with Steve Jobs, specifically over his inflexible 99 cents per track pricing rule.

Apple is "still negotiating," it told the San Francisco Chronicle. Universal initially withheld comment but finally confirmed the report to Macworld.

According to Nielsen SoundScan (via The New York Times and news.com), three out of ten new releases sold in the U.S. are Universal product. Sales through iTunes and other online retailers provide more than 15 percent of Universal's revenue, and 76 percent of paid downloads in general. However, iTunes purchases account for only three percent of content on the average iPod.

Of the other three major music labels, Warner is also making unhappy noises. Sony BMG recently renewed its one-year contract with iTunes. EMI has started selling DRM-free content through iTunes and other retailers, shaking free of the digital rights management that binds iPods to iTunes.