Universal refuses to renew Apple iTunes deal

Apple Inc. is currently busy in thanking gaming enthusiasts for purchasing its much ballyhooed and eagerly awaited iPhone, faced a sudden blow yesterday when the world's largest recording company, Universal Music Group declined to renew its annual contract with Apple to sell music through its online iTunes Music Store.

Owned by French media giant Vivendi, Universal Music Group or UMG has refused to enter long-term deal with Apple to sell music through iTunes, according to a digital music industry source.

Although, the music company will not lock into a two-year agreement Apple had proposed, but the source familiar with the situation said Universal will continue to sell music via iTunes on a month-to-month basis.

The media company’s move, which has come on the heels of the launch of Apple's multimedia and Web-enabled iPhone device, may affect Apple’s dominant position in the digital music market.

Universal, the largest business group and family of record labels in the recording industry had extended a previous two-year agreement with Apple by 12 months last summer. That deal expired last month, and the music company last week had notified the computer maker turned Internet jukebox powerhouse about its intension's, the source said.

The move could allow media giant to remove its songs from the iTunes service on short notice if the two parties do not agree on pricing or other terms in the future, and to offer significant portions of its repertoire exclusively to new partners.

Universal's record labels have many of the world's biggest artists including Shania Twain, Bon Jovi, Elton John, Method Man, Tupac Shakur, Aaliyah, Jay-Z, Mariah Carey, Eminem, Dr. Dre, Diana Ross, Reba McEntire, Luciano Pavarotti, U2, Kanye West, and 50 Cent.

Apple's iTunes store was introduced in 2003 for commercial music downloads and it became instantly popular with online customers. Apple had started with a library of only 200,000 songs and today it has 3.5 million songs in his pocket.

The world's most popular online movie store carries over 400 movies, more than 4 million songs and 350 TV shows that can be downloaded and played on Apple's revolutionary iPod digital media players.

Movies purchased and downloaded from the iTunes Store can be viewed on a computer, fifth generation iPod and, soon on Apple TV. Most of them are priced at US$9.99 each. Movies downloaded from the iTunes Store are downloaded in near-DVD quality at a resolution of 640x480.

After igniting the personal computer revolution in the 1970s with the Apple II, the Cupertino, California-based Apple reinvented the personal computer in the 1980s with the Macintosh. Continuing with its tendency of revolutions, Apple is leading the industry with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. In digital music segment, it is moving ahead with its iPod portable music players, iTunes online store and most recent its much-hyped, iPhone.

Apple hopes to revolutionize the mobile market with its multifunctional phone, an all-in one cell phone/iPod/pocket computer, which has such potent qualities that make it potential for revolutionizing the handset industry.

Apple’s iPhone, which was touted as "revolutionary" by Jobs in the keynote speech in January at the Macworld conference, went on sale at 6 p.m. local time Friday (June 29) at Apple and AT&T stores as well as Apple's Web site.