Apple In Strong Position For iTunes Store Contract Extensions?

Apple is in a strong negotiating position to seek further concessions from record companies when it comes time to re-negotiate iTunes Store contracts, according to Reuters.

Last year, record companies tried unsuccessfully to introduce tiered pricing of individual tracks into iTunes. Instead, an extension was signed with no real perceivable difference in terms.

This year, Reuters reports that Apple is in an even stronger position after having signed up EMI to offer "premium" tracks without DRM for an additional fee.

"EMI struck a deal that puts all of us at a disadvantage," said a music executive who spoke on condition of anonymity. He said EMI had agreed to let Apple sell its music without anti-piracy protection to please shareholders concerned that the record company was behind in the digital music race.

Despite this, the record companies will most likely still try to gain concessions such as a higher wholesale price or the addition of a subscription model.

"The record companies like the idea of the recurring revenue," said Gartner analyst Mike McGuire. "The challenge will be to convince Apple that it's worth the extra costs involved in setting it up."

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