Challenging iTunes (or not)

In the world of big-time unbundled, distributed media, the new middleman is the aggregator. Anybody who’s a regular reader here knows why that’s the case.

This is why today’s news about Universal Music Group’s decision not to renew a long-term contract with Apple’s iTunes is so important. As I wrote last week about the iPhone, Apple is making a play to position iTunes as THE aggregator of all professional content, a distribution point for everybody’s unbundled content. This includes both television and music.

Universal’s decision doesn’t mean they won’t keep distributing content there. Moving to a month-to-month position, however, opens the door for agreements with other distributor/aggregators — a world that is both fluid and evolving.

In the end, I think, you’ll see fewer and fewer exclusive deals, so that customer service and choice will be the proper end game for the makers of unbundled content.

iTunes is a fabulous application, and perhaps there’s a sense that it’s getting too big and too powerful. In the iPhone story, I wrote that Apple is predisposed to avoid direct downloads of music via cellphones, which is why you can’t do it (yet) with an iPhone. The market will decide whether that’s a smart position for Apple (it isn’t), a company that’s accustomed to providing people with what they want.

The ultimate winner in the aggregator game is going to be the one that allows media companies to monetize their own distributed content instead of trying to take that role for themselves. The aggregator will make money by providing ads either around the distributed content instead of the content itself or in the search process itself.

We’ll see who gets there first.

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