iTunes Is the 'Control Group’–As in 'More Control Than We're Comfortable With'

These devices are just repositories for stolen music, and they all know it. So it’s time to get paid for it.”

–Universal Music Group Chairman/CEO Doug Morris on digital music players, November 2006

Universal Music Group appears to have finally taken Steve Jobs’s “Thoughts on Music” essay to heart–although not in the way the Apple CEO might have imagined. Heeding Jobs’s call to abandon digital-rights management, the company announced late yesterday that it will sell at least some of its music catalog online without copy protection for the next few months. Described by UMG as a “test” of the DRM-free option, the effort will see the label selling DRM-free tunes through retailers like Amazon.com, RealNetworks’ Rhapsody and Best Buy.

But not Apple’s iTunes.

Why exclude the third largest music retailer in the United States? Publicly, Universal claims it’s so that iTunes could serve as a “control group” against which to compare its sale of DRM-free downloads elsewhere.

A plausible explanation, but improbable. More than likely, this is an effort to temper Apple’s growing influence in the music industry. A month ago, Universal scrapped its long-term contract with iTunes, opting instead to continue the arrangement on an at-will basis that will give it an easy exit should disagreements over pricing become a problem.

And make no mistake, pricing is a problem. Apple is the No. 3 music retailer overall, according to NPD Group, and its ubiquity in the download space has given the company serious leverage in negotiating pricing with the major record labels. It’s fairly clear then that UMG’s DRM-free effort is a “test” not just of unrestricted digital formats, but of Apple’s growing influence in the music industry.

Said Mike McGuire, vice president of research at Gartner, “It seems like a boldfaced move to blunt Apple’s influence.”