updated 10:45 am EDT, Fri October 12, 2007
Universal Music Group is attempting to form a subscription service whose primary purpose would be to unseat iTunes from its comfortable position at the top of the digital music industry, according to a claim from BusinessWeek. Called Total Music, the service would break from the traditional model of selling music by receiving direct control from labels themselves: Universal at a minimum would offer a subscription rate of $5 per month but would ask cellphone carriers and device makers to subsidize the cost themselves, effectively providing some users a free, unlimited service. Though it would initially add to up-front costs, the reduced need to buy albums would more than offset the expenses of a subscription, Universal reckons.
The emphasis would also be on recruiting major labels to wrest control away from Apple. Sony BMG has already agreed to join the Total Music venture; talks with Warner are underway, the source reported. No mention was made of fourth major label EMI, which is the only label of the four to have made a long-term commitment to digital music without copy protection and has already struck deals with many online music stores hoping to sell unguarded AAC and MP3 tracks, including iTunes.
If realized, the subscription service would represent the third initiative launched by Universal to disrupt iTunes' 70 percent or greater control of the market and secure more favorable pricing. The music label began by declining to renew its multi-year contract with Apple in favor of a month-by-month strategy that would let Universal more readily offer incentives to other companies as well as end any existing deals on shorter notice. An August announcement had the music group begin a trial selling unprotected songs through several online stores, including Amazon MP3 and Wal-Mart but excluding iTunes; this was officially described as an experimental "control" by Universal but may have actually been an attempt to push Apple out of non-DRM sales by handing a larger music library to other stores, according to one claim.
Universal chief Doug Morris is said to be particularly incensed with Apple's control and how much of it was gained through deals with himself and over-eager label heads, who were willing to make significant concessions to offer a viable alternative to music piracy. He privately observeed that the labels "got rolled like a bunch of puppies," according to an attendee at one meeting where Morris was present. The executive is specifically upset with Apple's share of each song, which amounts to 29 cents of every 99-cent track. Morris has also demanded a royalty for every Zune player as compensation for piracy and received a hostile reaction from the online community by accusing owners of iPods and other royalty-free players of being "thieves."
No clues were provided as to when Total Music be activated or which hardware and service providers might already be onboard, though the development will likely require hardware and software with support for subscription-based digital rights management, which is primarily offered through Microsoft's PlaysForSure and the partly related Zune Pass.