A Business Look At the Universal/Apple Contretemps

Frankly, it’s the Zune statistic that I found most interesting this this article: All Shook Up, Right Down to the Musical Core

In this environment, the music industry has a tempestuous relationship with Mr. Jobs, more respect-resent than love-hate. Label chiefs respect that he has revolutionized the online and portable music businesses at a time when so many others have flopped, and file-sharers and sites like Russia’s AllofMP3.com — a site that labels have accused of piracy — have wreaked havoc on the industry’s business models. (AllofMP3 was conveniently shuttered last week as President Vladimir V. Putin of Russia prepared to visit President Bush.) But the chiefs resent Mr. Jobs’s rigidity in areas like pricing — 99 cents a track, take it or leave it — and iTunes’ proprietary digital-rights management software, which has made songs sold there impossible to play on rival devices.

Most of all, they envy that Mr. Jobs is in a much higher-margin business of selling gadgets. Ms. Kevorkian of IDC said the label chiefs might still hold out hope that Apple will share someday the spoils of each iPod sold — along the lines of how Microsoft agreed to pay $1 for each of its Zune players, introduced last year. But only a million Zunes have been sold, while iPod sales have topped 100 million.

[…] Although his anti-protection measure stance is somewhat self-serving — European antitrust regulators had been circling the closed iTunes system — there is anecdotal evidence to suggest that Mr. Jobs may be on to something. And, if so, the other big label groups — Universal, Warner Music and Sony/BMG — could follow suit and offer protection-free tunes, although perhaps not with their entire catalogs, as EMI has done.

[…] Oddly, Universal or anyone else doing exclusive deals with iTunes’ rivals could end up reducing the clout of iTunes but spurring more sales of iPods — and that means more music to Mr. Jobs’s ears.