Universal Prepping New Music Service?

Univeral Music—the world’s largest record label—has made no bones about the fact it’s not happy with the digital music landscape. Although it was one of the major music distributors on board when Apple initially launched its market-dominating iTunes store, it increasingly came to see itself as the foundation upon which Apple’s digital music success was built: it was earning a few pennies per song while Apple was raking in hundred of million in iPod sales. So it’s no surprise that Universal folded Microsoft over a barrel and made the Redmond software giant pay it $1 for every Zune music player sold, more recently refused to renew its contract with iTunes (it’s on a month-to-month deal now), and then announced that, like EMI, it would offer its music in a DRM-free format…but explicitly not via Apple’s iTunes. Instead, Universal is taking its music—DRM-free and otherwise—elsewhere as often as it can, partnering with Amazon, RealNetworks, Wal-Mart, and even players like gBox.

Now, Businessweek is reporting Universal is in the process of developing its own digital music subscription service to challenge iTunes, and is trying to convince other major record labels to get on board. Reportedly called Total Music, the service would provide subscription-based music at little or no cost to consumers. How? Hardware makers—like Apple, but also Microsoft, Creative, SanDisk, and others—would subsidize the cost of the music subscription service by building the cost of the service into the device, while wireless carriers interested in the service would simple add the cost into users’ monthly subscription fees. According to Businessweek, Universal is eyeing a $5/month fee for the service, under the assumption that the average lifetime of a music player is about 18 months. In theory, access to Total Music would thereby add $90 to the cost of a digital music player—however, users would have all-they-can-eat subscription access to any music on the service for as long as they owned the player.

If Total Music takes off—and if (either through some heretofore-unimagined deal with Apple or by offering DRM-free music) it somehow manages to work with the market-leading iPod, something like Total Music could herald a fundamental change in the digital music landscape and shift a greater portion of control (and revenue) from the digital music market back to the labels and distributors—the same position they happily occupied before the digital music market blossomed.

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