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News.blog: Apple rethinks revenue sharing?

The days of allowing Apple and other device makers to earn enormous profits off the backs of music artists is over, said the source. For a long time, many in the music industry have chaffed at the success of Apple's iPod. They acknowledge iPods were expertly designed and marketed, but they argued the gadget's real attraction was the loads of music that owners could store on them.

"At this stage in the game, the music industry feels it is entitled to something," said the source.

Apple hasn't discussed specific devices with the labels, according to the source. So one could only wonder whether the company would offer the preprogrammed music on a new high-end device, the next-generation iPhone, or some iPod models.

The FT reported that subscriptions would currently work only for Apple's iPhone devices, because it already has a monthly billing relationship with customers through the mobile phone operators offering the device. The "Comes With Music" model, on the other hand, would work with iPhones and iPods.

Universal Music has been driving the preprogrammed idea for some time in an effort to inject some excitement into subscription services, which have seen only lacklustre consumer interest.

The record company is in talks with other carriers in addition to Apple as it attempts to expand its relationship with device makers, said the source. Universal Music is dissatisfied with only licensing music. The plan now is to "partner instead of just being a vendor", said the source. Universal Music has aspirations of becoming more of an all-around entertainment company, the source added.

Cutting a slice to Universal Music is one thing, but what about the other three labels? That could mean some serious money and at the very least cut into Apple's margins.