The month-to-month approach mirrors UMG’s deals with other retailers and allows for some wiggle room in the rapidly changing online-retail universe.


Consider the Playing Field at Least Somewhat Leveled Following Morris and Horowitz’s Move
The first news to come out of the ongoing renegotiations between Apple and the Big Four over their iTunes deals is big, though apparently not as earthshaking as some had believed.

UMG has opted for a month-to-month deal with Apple rather than signing another long-term arrangement, sources said Sunday night following stories in the Drudge Report and The Wall Street Journal indicating that the marketshare-leading music group wasn’t renewing its deal with the powerful retailer. The move confirms speculation in recent months on the part of our own I.B. Bad.

The month-to-month approach mirrors UMG’s deals with other retailers, these sources point out, and allows for some wiggle room in the rapidly changing online-retail universe.

Rumors flew earlier yesterday that renegotiations between UMG and Apple had broken off, with the Doug Morris-led company on the verge of boycotting the iTunes Music Store, as some jumped to conclusions about what had gone down in the talks.

Contrary to these rumors, UMG has no plans to remove its music from iTunes, sources say, nor will it stop making new releases available in what is now the #3 music retailer behind Wal-Mart and Best Buy. While that move would have been inconvenient for Apple—which is, after all, in the hardware business—it would have seriously cut into UMG's bottom line considering the continuing lack of any viable competition for iTunes.

If and when a significant rival does appear—Amazon, for example, which is said to have plans underway to sell downloads to its millions of customers—UMG will be free to feed it some of the exclusives it now gives to iTunes. And while Steve Jobs’ stranglehold hasn’t been broken, Morris and Zach Horowitz have made a proactive move that has the effect of leveling the playing field to some degree.

In his story this morning, N.Y. Times media reporter Jeff Leeds revealed that Sony BMG had recently re-upped with Apple for one year, according to executives briefed on the deal.

It remains to be seen whether UMG’s refusal to ink another long-term agreement or Sony BMG's truncated arrangement will have any effect on the issue of variable pricing.

What is also unclear is who leaked the news of the deal, and to what end. An Apple spokeswoman told wsj.com that the company doesn't comment on "rumors and speculation."