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Universal Tries to Teach MP3 Player Manufacturers New Tricks

As the music and movie industry wakes up to the fact that their biggest problem at this point is Apple turning them into its own revenue stream rather than piracy, there have been increasingly feeble attempts by the entertainment industry to beat Apple at its own game. NBC dumped iTunes and is streaming free episodes online and co-launching together with FOX. But its Universal parent has really gone to war with Apple, ending its deal with iTunes and fighting a public war of words. Now Universal is trying to deal with its biggest handicap which is that Apple’s vertical distribution model allows Apple to give away music and profit from the players while the music companies have to profit from the music and rely on MP3 player manufacturers to take up the slack.

With Sony and Warner Music supposedly already on board, Universal is said to be launching a new music store and promoting alternative players to Apple’s iPod (a tricky move with Sony on board) and trying to get hardware manufacturers to cover a 5 dollar monthly subscription which would essentially allow a free music subscription to be sold with their players, presumably new Napster or RealNetworks style. Cute.

Of course piling on a 60 bucks charge to the price of an MP3 player is not exactly going to make it competitive, even if hardware manufacturers are supposed to be absorbing the cost. On the other hand this could be a major feature that put together with the right company, e.g. Sony could create a real iPod killer.

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