Apple Set Go Through Big Divorce Spat

Just when thing are looking rosy for Apple along comes a divorce split that could well impact their iTunes operation. It could also lead to competitors getting content that Apple will be denied.

The relationship between Apple and Universal Music Group, largest of the major recording companies, is starting to look like one of those sad couples who have grown in different directions and are now easing through the stages of a long goodbye.

First came the trial separation in July, when UMG announced it would not renew its longterm contract with Apple’s iTunes Store, opting instead for the flexibility of a month-to-month, non-exclusive agreement (see “Universal to Apple: Think of it as an open marriage”). Thursday, UMG announced it was going to start seeing other people who might appreciate its new free spirit.
Universal announced it would make a significant chunk of its catalog available without Digital Rights Management anti-copying technology in a months-long test deal with online music retail services run by RealNetworks, US retailer Wal-Mart, Amazon, Google and others — but not the iTunes store, where the tracks will remain encased in DRM.

Given Steve Jobs’ anti-DRM sentiment and Apple’s deal this spring to offer DRM-free tracks from EMI (see “That extra charge for restriction-free music? I learned that at iTunes U”), the market-dominating iTunes Store would seem to a natural outlet, but Universal is playing it coy for now. The official explanation is that Universal is using iTunes as a control group for measure the effect of the new deals on pricing, piracy and sales. But the key word in there is “control” — Universal and the other majors think Apple has a bit too much of it. “It seems like a bold-faced move to blunt Apple’s influence,” said Mike McGuire, vice president of research at Gartner.

And as annoying and counterproductive as DRM is, going restriction-free may not be the panacea that some would hope. Peter Kafka thinks the bigger issue in the minds of consumers is compatibility, and David Card at Jupiter Research agrees: “Yeah, DRM-protected downloads suck. But so does a who-knows-what’s-available-where shotgun approach. RealNetworks is doing Universal artists but hasn’t got EMI’s DRM-free tracks. iTunes has EMI but not Universal. eMusic has the indies. Sheesh. No wonder Amazon’s confused. Think of the what a buyer will face.”