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Negotiating in Public, Part XXIII July 2, 2007

Posted by David Card in Media.

Many are reporting that Universal Music is about to decline renewing its two-year deal with Apple’s iTunes store, instead preferring a pay-as-you-go monthly arrangement (as it has with most retailers). Predictably, the commentariat blames this on the continuing disconnect between Apple’s inflexible pricing and the industry’s desire for variability. TechCrunch’s Duncan Riley foolishly calls that “greed,” and seems to think Universal will pull its wares from the iTunes store. (His commenters are wiser.)

There are at least two sides to this story. My Jupiter colleague Mark Mulligan is more excited by variable pricing than I am, but it is inevitable, and will eventually be a good thing for the market(place) — digital distribution allows the fluidity to match supply with demand better than physical distribution. But Apple has a point, too — it’s still relatively early in digital music, and simplicity is an easier selling point. That, and the ability to even buy singles, which, though scary to artists and labels raised on album-oriented rock, is probably the natural order of pop music. And our surveys still suggest 99 cents is a still a sweet spot.

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