There is a little peeing contest going on between Apple and Vivendi’s Universal Music Group. In the midst of a power play, Universal is talking about removing all of its catalogs from iTunes which will hurt Apple to the tune (sorry) of 1/3 of all new digital songs sold. On the other hand, iTunes (and others) account for 15% of Universal’s music revenue, so that will really ding them. Who will blink first?
As you may have heard me say before, I think the record companies are hurting sales by selling one-off digital songs. It hurt sales by diminishing band loyalty. When I listen to only one “Taking Back Sunday” song (an example only) and a few stanzas of lyrics, I get a shallow understanding of the group – a hard way to build the love. Single song sales build infatuation not love.
This power play by Universal, might just be what the doctor ordered. If they remove their artists from iTunes, it will force more CD sales, which will build greater loyalty for their musicians. Down the road they should see a big positive blip in sales. By then, however, the power play will be over, Universal will have extracted higher margins, and be back on iTunes, and our dirty little secret will be safe. The business will still be in the shitter.
