Vivendi Chief Criticizes iTunes Contract, Talks Diversification

Universal Music Group parent Vivendi sharply criticized Apple on Monday, part of a continued air of acrimony between the companies.

In comments reported by Reuters in France, Vivendi chief executive Jean-Bernard Levy pointed to a lopsided iTunes contract, and suggested revamped terms.  “The split between Apple and producers is indecent,” Levy said.  “Our contracts give too good a share to Apple.”  Apple gives roughly 70-cents to majors per 99-cent download, a figure that also includes publishing royalties.

That sounds generous, especially considering various overhead and credit card fees.  In fact, Apple – and other download stores – generate only modest profits from a-la-carte downloads.  But Apple still controls an huge percentage of digital music sales, and exerts a stronghold over pricing and configurations. “We should have a differentiated price system,” Levy said.

The tough talk is being backed by some action.  Earlier, Universal Music switched into a more flexible, month-by-month contract with Apple and its iTunes Store, a move that dangles the threat of a content pullout.  Universal also sprinkled DRM-free portions of its catalog to iTunes rivals, another spiteful move.

Elsewhere, the chief executive also pointed to diversification efforts at Universal Music, a broader trend among majors.  “People indulge in piracy but spend a lot of money on many other things that are linked to an artist,” Levy noted.