Universal Declines To Extend Contract With Apple's iTunes

Universal Music Group has reportedly declined to renew an annual contract with Apple and iTunes to sell songs and albums through the iTunes service. This is not a situation causing imminent threat of danger to iTunes, as the two will likely reach a short-term "at-will" agreement as they negotiate new terms for a new contract; rather, it will take some of the bargaining power away from Apple and allow Universal to remove songs from iTunes as it chooses.

The move is a response by one of the major labels to the growing clout (read: virtual monopoly) Apple has in online music sales. As consumers move away from physical CDs to buying digitally, the labels may continue in Universal's stead and force significant concessions from Apple in future contracts.

Conversely, Apple's iTunes is a major source of sales for labels whose physical sales continue to suffer. iTunes' storefront is a massive source of exposure, and since iPods are incompatible with other download services, labels who do not sell through iTunes will miss out greatly on sales through downloads. This bargaining chip of Apple's fails, however, if Universal and others move to DRM-free MP3 sales through other sites.

Bottom line: If labels are willing to give up DRM and make songs available through multiple outlets (just like brick-and-mortar record stores, what a novel idea!) they will not need to stick to Apple's way of doing things, and can start to take back the ability to shape their own business.

Wal-Mart To Trim Retail Space Dedicated To CDs, Replace With iPod Accessories

In a further blow to the CD industry (particularly of note in a week where Nine Inch Nails and Avril Lavigne are expected to peak at 200,000 units), Wal-Mart is removing approximately half of the square footage dedicated to physical album sales and replacing it with iPod accessories.

I won't buy music at Wal-Mart, nevertheless shop there in the first place. But I can still complain: Not just MP3 player accessories, but only for iPods? Next Wal-Mart will install physical iTunes download stations where I can download edited tracks onto my iPod for 93 cents each. Gotta shave a few pennies off, don't ya, Waltons?

Source: Kings of A&R

The CD Will Not Die

Interesting piece posted on Tuesday at Slate about the death (or life, actually) of the CD. According to the article, "Data from the Recording Industry Association of America show that between 2000 and 2005, the number of CDs shipped fell 25 percent to 705.4 million, while their value slipped 20 percent, from $13.2 billion to $10.5 billion. During the first six months of 2006, CD sales dropped 14 percent more." And sales are down another 20% for the first quarter of 2007.

This article follows an acknowledgement of the CD as a dying commodity in the New York Times this Tuesday. But CDs still count for 75% of all sales. And why would physical sales continue, when a CD costs $16 (or more), and a digital download can be as little as $8? While the Slate article pushes the CD off on older (read: over 25) consumers, I'm going to stop short of that, and make a bold prediction. Physical albums will have a revival. Just like vinyl, people will get all nostalgic, they will get sick of Digital Rights Management (DRM), and they will be frustrated by super-compressed MP3 files and other formats that sacrifice sound quality, and they will return to the CD.

Guitar sounds best on vinyl? Everything sounds better when it's on a CD as compared to a compressed, low bitrate MP3. And just like holding that giant black circle and putting the needle to the plastic holds this undescribably awesome, ritualistic feeling, soon enough holding that shiny silver disc will do the same, when you hear that super-fast spin and the laser starts reading that WAV file, and your speakers pump out the jams.

Sure, having an iPod with 100,000 songs at random is convenient and totally awesome coming out of the stereo. But just like the cassette was convenient compared to vinyl (can't spin records in your pickup truck, can you?), the convenience will wear off for the good old classic feeling soon enough.

iPod & Windows Vista Not Getting Along, Cite Compatibility Issues

A Digital Music News article points out that Windows Vista and Apple iPod are already having difficulties early in the relationship. While one might think iPod is getting jealous of Vista's current attention-grabbing behavior, the fact is, they just might not be compatible, but are perhaps willing to work out the kinks.

I called one relationship counselor, and he had this to say: "Life and love are both four-letter words, and each has one syllable, but they are complex things." That means that anyone who wants Vista should wait for the Service Pack before upgrading, or your iTunes and your iPod could get all screwy.

iPod Shuffle: In Living Color (5 of them, to be exact)

Apple today announced that the world's most wearable digital music player is now available in colors: blue, pink, green, orange and the original silver.

"iPod shuffle is the world's most wearable digital music player," said Greg Joswiak, Apple's vice president of Worldwide iPod Product Marketing, in the press release. "Music fans can now choose iPod shuffle in one of five brilliant colors, or they can buy one of each."

You can buy it now, $79 each.