Apple Renews Contracts with Big Four

Apple Computer has managed to keep their iTunes Music Store a one-price-per-song service after talks leading to renewed contracts with the Big Four (EMI, Sony BMG, Warner, and Universal) of the recording industry. From Bloomberg:

“This is a very big win for Apple,” Michael Gartenberg, an analyst at Jupiter Research in New York, said. “It validates Apple’s position that 99 cents is a sweet spot for songs.”

Shares of Apple rose $2.02, or 2.9 percent, to $71.62 at 4 p.m. New York time in Nasdaq Stock Market composite trading. They have almost doubled in the past year.

While spokespersons for all of the major labels declined to comment on the agreement, their position – that the fixed price of 99 cents per song encourages illegal downloading and hurts artists – is well known, though widely discredited in the light of iTunes’ massive success.

As I’ve argued before, though, dominance in this space may be fleeting due to the pace of change, and the push toward mobile phones. Apple needs to prove that they can duplicate iTunes’ success in the wireless space before they can be assured a solid future in digital music, as there are so many contenders positioning themselves to get a piece of that hot, hot, global market.

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