Apple Inc (AAPL)

[BlueDjinn]

Re. Universal's bargaining position:

Universal is the largest label; let's suppose that they're responsible for 20% of iTunes total sales (vs. 80% for the other big 3 labels plus several thousand smaller/indy labels).

iTunes annual revenue is about $2 billion, which would mean Universal is worth about $400 million. However, they keep 65% of that, so Apple really only makes about $140 million per year off of Universal's music.

$140 million out of $20 billion in total company revenue = about 0.7%.

Meanwhile, iTunes is now responsible for about 10% of Universal's gross sales.

Which company do you think has the upper hand here?

Besides, no one who was planning on buying an iPod or iPhone is gonna change their mind just because their favorite artist(s) aren't available on iTunes, since they can simply buy the CD and rip it instead (or just pirate it if they're unscrupulous).