Does iTunes need Universal?

I'd say the answer is no. And especially not if Universal CEO Doug Morris is after what I think he's after: a cut of iPod revenues.

Sure, it worked on Microsoft. M$ was willing to bend over backwards to procure major label participation in its Zune store, an essential accompaniment to the launch of what many in the blogging community affectionately refer to as the "shiny brown turd." Universal actually held a few cards in those negotiations.

But now they've gotten cocky, and it's going to blow up in their unthinkable faces. Steve Jobs is the first to admit that most iPods contain very low ratios of iTMS-bought music to music secured in other ways. And I don't think you'd have to buy him too many drinks before he happily confided in you that Apple makes almost nothing on the iTunes store, compared to their iPod revenue.

Please believe me when I tell you that Steve Jobs is not losing any sleep over the fact that The Bloodhound Gang's catalog may disappear from iTunes.

The bottom line: Apple has a place in the future of music distribution/acquisition. Universal owns a lot of IP and that'll sustain them indefinitely, but their place as real players in the future remains in question. This latest (mis)step does little other than highlight how much they still don't get it.

[New York Times]

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