Universal Bows Out of Apple Contract

iPodNano.jpgIn what appears to be an attempt at a power grab, Universal decided not to renew their contract with Apple — the one that lets the Cupertino-based company sell Universal’s music in the iTunes Store.

This is a huge development, because Universal is the world’s largest music label. Fully one third of all iTunes Store sales fall in the Universal camp.

For now, all of the songs are still available. Universal is pursuing an “at will” approach, presumably to gain leverage with Apple to look for variable (read: higher) pricing in individual track sales. It’s probably also an attempt to resist the push towards unprotected music sales.

We’re filing this one under “huge miscalculation.” Universal risks losing $800 million in revenue per year, and compatibility with the world’s most popular digital music sales platform, if they don’t come to some kind of agreement with Apple. Somehow we think Steve Jobs is going to come out the winner in this little showdown.

Universal in Dispute With Apple Over iTunes [NYT]