Abhishek Tiwari

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In fact this time around it sounds like an all out war. A month ago I posted about NBC Universal breaking ties with Apple, which I got a lot of heat for. However it is all coming true now. Last time it was just them severing ties. This time they are planning a total attack.

At the helm is one of the most powerful execs in the music biz Doug Morris (Chairman and CEO, Universal Music Group). For this war he is enlisting help of unlikely allies, Sony BMG Music and Warner Music Group. Together the trio will control 75% of the music sold in US. Their plan is to loosen Apple’s stronghold on the digital music business. They want to offer services, which take the music beyond the iPod / iTunes ecosystem and proliferate in other (aka not so successful) portable devices and mobile phones

According to Business Week, the new service will be called “Total Music”. The plan of attack includes a deep partnership with device manufacturers, whereby they can offer “all you can eat” models to the public. The business model includes absorbing the $5 subscription fee in the device costs, hence making the ongoing music cost for free. Morris is basically trying to beat Apple at its own game by taking it to the maximum level. You can catch all the details on Business Week or catch the conversation at TechMeme.

Now quite frankly this has been brewing for some time now. However, I wasn’t expecting a total offense from these guys and frankly such a joint initiative is impressive. I am sure the music execs have been thinking about this for some time now. They haven’t been happy about Apple controlling their online fates by mandating the $0.99 model.

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Apple, as most of you know enjoys the lion’s share (over 70%) in the online music business. Apple has managed to execute deals with major music companies and has a significant portfolio.

However recently (early July) one of Apple’s key partners Universal Music Group (Vivendi, world’s biggest music corporation) refused to renew its contract with Apple to sell their content via iTunes store. Universal obviously is looking for much more favorable terms, which is leading to this impasse. Both companies would suffer as a result of this. As 1 out of every 3 songs sold in America come from Universal, Apple would loose this significant chunk if the deal does not go through. Universal too could risk up to $200 Million as a result.

That was just the beginning. This past week Universal announced a key deal involving Google and gBox, part of its 6 month experiment to sell DRM free music. Under this deal Universal will purchase advertisements through the Google AdWords program. This is not related to Google’s Music referral service but purely ads deal. These ads will direct the user to gBox where they can purchase songs for $0.99. gBox a online music service, which until now was in stealth mode has been forced out as a result. The service is scheduled for launch on August 21st.

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